AJPark

What is a patent?

A patent protects an invention that is new and inventive. Many products that embody an inventive concept are protected by a patent.  A patent can be used to stop the manufacture and sale of a competing product that embodies the protected concept.  For example, a patent may protect the concept of a spoon located inside a separate compartment of a yoghurt container.  Therefore, anyone else selling yoghurt with a spoon inside the container may infringe the patent.

A patent can last for 20 years and is generally recognised as the strongest form of IP protection.  This is because a patent protects the concept of the invention (that is, how an invention works regardless of how it looks).  A patent gives its owner the exclusive right to use, produce or sell the invention.  So even if someone else coincidentally develops a product independently that includes the patented concept, they will infringe the patent as soon as they start making or selling their products in a country where the patent is in force.   Patent protection over a product or process can mean higher profit margins and exclusivity in the market for the product or process.  A patent is also a proprietary right in an invention, meaning patent rights can be sold or licensed to others. 

Once the lifespan of the patent ends, the invention becomes part of the public domain. It is, therefore, important to make sure the costs of patenting an invention do not outweigh the advantages that the patent will provide your business over the lifespan that a product is protected.

What is a trade secret?

The most legendary trade secret is the ‘Colonel’s secret recipe’.  It is also the best example of how effective a trade secret can be.  A trade secret (not to be confused with a trade mark) is any critical commercial information that is — and can continue to be — kept out of the public domain. 

The protection of this information as a trade secret is what prevents competitors from making identical competing products, or performing similar processes. For this reason, procedures to jealously guard the confidentiality of trade secrets are critical, and should be a normal part of your business’s operations.

Unlike patents, no registration exists for trade secrets. So there are no costs involved in making use of this protection—other than the costs required to safeguard the trade secrets (for example, employment agreements and confidentiality agreements).  The lifespan of a trade secret depends on how long the information can be kept secret—so, like the ‘Colonel’s secret recipe’, it can go on for some time.  

But trade secrets are always at risk of becoming public.  Unauthorised use, or misuse, of information does happen. Departing employees, industrial espionage, accidental disclosure, even mandatory disclosure (such as a list of ingredients on food packaging) can all result in confidential information becoming public.  Once lost, there is usually no chance of getting it back under the ‘cone of silence’.

Another risk to trade secrets, is that a competitor can discover the information through their own independent work, or by reverse-engineering publicly-available information.  As soon as the yoghurt container (with its spoon) hits the market, all the information needed for someone to copy the product is in the public domain.

A trade secret is most effective when the secret cannot be reverse-engineered or easily developed by competitors.  The main value of a trade secret hinges on the time required by competitors to independently develop the technology, or reverse-engineer your technology.

Trade secret protection generally does not suit processes that leave tell-tale marks on the product, or products that include secret ingredients that can be discovered through simple testing.  Long term, it suits very few products because once the product is on the market, it can be reverse-engineered—sometimes by just looking at it, sometimes by more sophisticated methods.

The best of both

It is possible to use a combination of patents and trade secrets.  For example, you could patent certain inventions, while keeping other important information a trade secret.  But this intellectual property (IP) strategy requires a fine balance due to certain minimum disclosure requirements during the patenting process. 

Importantly, in most countries once technology is commercialised (even secretly), a patent can no longer be filed.  The ‘Colonel’s secret recipe’ can now no longer get patent protection because it’s been commercially, even though secretly, used. If you have developed something exciting, and you’re not sure about which way to go, make sure you speak to an IP expert first.

An edited veriosn of this article was published in NZ Food Technology, February 2010.

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  Mike Biagio

  Associate