Trade Secrets and Utility Patent Applications: A Perfect IP Combo

Trade Secrets and Utility Patents can work hand-in-hand to ensure companies the broadest possible protection – and increase your company’s value.

Trade Secrets and Utility Patent Applications: A Perfect IP ComboThis is especially true in software patents. In software utility patent applications, the method of the application can be patented. Then, trade secrets can be implemented to protect the source code.

In the patent application you do not disclose the source code, only what it does. For example, in many software applications, you are essentially patenting a black box function whereby data is inputted into the system, the system transforms that data, and an output is given.

The system that transforms the data is the inventive step and therefore the valuable part of the invention. By protecting it via trade secret instead of a patent, you are able to protect it indefinitely so long as you take certain steps to keep it a secret.

Please see my blog post on Trade Secrets.

One of the main drawbacks with trade secrets is that others can legally reverse engineer them.

But, by obtaining a utility patent and a trade secret, you are limiting that fear. It may happen that someone comes along and reverse engineers the source code, but they will not be able to use that source code in the patented process. Thus, unless that source code has some other unrelated application, they will not be able to do anything useful with the source code.

So, by protecting the method and the source code, you are obtaining the broadest possible protection. I have seen many inventors federally copyright their source code. In some cases that may be a good idea, but in many cases, I think it is much more valuable to implement a trade secret.

By federally copyrighting something, you have to disclose what you are copyrighting and it becomes public record. Additionally, a copyright does not necessarily afford the holder with much protection. A copyright only protects the expression of ideas, not the underlying ideas themselves. This means that someone could potentially come along and change the copyrighted source code and still achieve the same result. But, with a patented process, you can prevent that. Also, remember that copyrights are automatic upon completion. The main upside to federal registration is that it allows you to sue for copyright infringement. And if the infringement occurs after you have federally registered the copyright, the statutory damages are very high.

See my blog post on copyrights.

Before deciding how to proceed with any intellectual property, it is important that you contact an attorney.

I’m not just saying that because I am an attorney, either. After understanding your goals, cost constraints, and other concerns, an attorney can prepare an intellectual property protection plan that will benefit you and your company in the future. This plan may include copyrights, trademarks, patents, trade secrets, or any combination of those. Most often, companies need a combination to best protect their intellectual property because any single one of these will not provide the desired level of protection.

Well-prepared and well-instituted intellectual property can be the backbone of any company and can increase the company’s value exponentially. By investing in your company’s intellectual property, you are investing in the future success of your company.