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Trade Secrets Q&A
What is a Trade Secret?
A trade secret is a defined item (or group of items) of information which is not readily available, having commercial or industrial application, and of competitive value to the persons knowing the information. Other terms more or less equivalent to "trade secret" are sometimes used to describe essentially the same thing, such as "proprietary information", "confidential information", etc. The term "know-how" usually connotes an element of confidentiality, but is sometimes used to refer to valuable commercial or industrial information of competitive value which is not, however, deliberately or necessarily maintained in secrecy.
Is a trade secret a monopoly akin to a patent?
No. A trade secret, whether referred to as such or by some other term such as "proprietary information", is not a property right like a patent right that affords an exclusive right for a limited term of years. In contrast, intellectual property rights such as those arising from a patent or a trademark are personal property rights that can be sold and licensed. Such personal property rights do not depend upon secrecy nor upon the existence of a contract between the owner of the right and anyone else. Contracts whereby trade secrets are imparted from one party to another are sometimes loosely referred to as "licences" or are coupled with patent licences or the like, whence the frequent but mistaken notion that a trade secret is a piece of property which can be assigned or licensed.
The trade secret has value not because it is a piece of property, but because access to the trade secret is limited, and an interested person may pay for the privilege of obtaining access to the trade secret.
How is a Trade Secret Protected?
By keeping the information secret. To this end, a person knowing and controlling access to the trade secret will ordinarily divulge the same only to a restricted group of persons, frequently in return for a financial consideration, and subject to an obligation of confidence on the part of each recipient of the trade secret, who will ordinarily be obligated not to reveal the trade secret to others, or only to a defined class of persons.
Is a Trade Secret an Alternative to a Patent?
Yes, to a certain extent since to obtain a patent an inventor is obliged to make a full and complete disclosure of the invention to the public, the inventor cannot both patent the invention and maintain the invention as a trade secret. Some inventions (e.g. common kitchen gadgets) are not effectively protectible as trade secrets, while other (e.g. chemical processes, computer programs) may be more effectively protected by trade secret than by patent. Some types of trade secrets (e.g. effective marketing techniques) may lie entirely outside the realm of the patent law, which is confined to compositions of matter, products, processes and machines. A well known example of a trade secret is the popular liqueur identified by the trade mark Benedictine. The formula for the drink has been a carefully guarded secret for centuries, and although there are imitations, there is no identical product on the market.
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