Inventors and companies often ask if they should file for a patent or keep their invention secret and protect it as a trade secret. The answer depends on the facts of each situation.
Patent protection is federally provided right that an individual or company files an application to obtain. Patents give the patent holder certain quasi-monopoly rights in the invention, including the rights to keep others from making, selling, importing, or offering to sell the patented invention. However, patents come with a cost both monetarily and in that patents only have a limited lifespan of 20 years. Patents can be particularly important, for example, if a product is simple to reverse engineer, in technical fields in which there are low barriers to entry, or if it is not possible to keep the idea a “secret”.
In contrast to patent law, trade secret protection is generally protected by state law. Under Idaho Code 48-801(5)Trade secrets can include any “information, including a formula, pattern, compilation, program, computer program, device, method, technique, or process that:
a) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and
b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
Factors that courts generally consider in determining if information qualifies as a trade secret include:
- The extent to which the information is known outside of the claimant’s business
- The extent to which it is known by employees and others in the claimant’s business
- The extent of measures taken by the claimant to keep the information secret
- The value of the information to the claimant’s business and in the industry.
- The amount of money and effort need to develop the information.
- The difficulty a third party would face in independently developing the information.
Trade secrets are theoretically protectable indefinitely, however trade secret protection is very limited and difficult to prove. Trade secret protection does not prevent third parties from reverse engineering the idea to determine the composition of the “secret”. Trade secret protection only provides protection against misappropriation of trade secrets, meaning only if a third party actual misappropriates the trade secret (meaning only if the third party steals the secret or obtains the trade secret knowing or having reason to know that the trade secret was misappropriated through improper means. The Uniform Trade Secret Act (UTSA) has been enacted by numerous states (forty or more) including the state of Idaho. Idaho’s trade secret act is located at Chapter 8 of Title 48 of Idaho Code, and can be found here.