Our Lips Are Sealed: Trade Secrets

by: Jordan Pynn

As I was drinking a Coke the other day, my mind turned to trade secrets. This isn’t as out-of-the-blue as you might think. The Coca-Cola formula, kept secret since the company’s inception in 1886, is one of the world’s oldest trade secrets. Although different formulas for Coca-Cola have been found over the years (one in the inventor’s diary), there’s no way to say if any of them are the true recipe, or the one used today. The actual secret formula is now kept in a vault at the World of Coca-Cola in Atlanta.

The Problem with Patents

If you have an invention you want to protect, but chafe at the cost, the public disclosure, or the 20-year expiry date of the patent process, there is still hope in the form of trade secrets. There is no cost, no registration is required and protection lasts indefinitely—as long as your secret stays secret. For instance, if Coca-Cola had opted to patent their recipe back in the late 1800s, it would have long since become public.  We might all be sipping Kumoi-Cola right now.

There are also other risks, particularly with software and business process patents. Because of rapidly changing patent law, one needs to be skilled at assessing the patentability of a software or business process before filing the application. If in the end it becomes abandoned during prosecution, it will become public property. More good reasons to consider using a trade secret instead.

Understanding Trade Secrets

What constitutes a trade secret?

  • The information must be secret (i.e. it is not known or readily accessible to people or businesses that deal with the type information)
  • It must have commercial value because it is a secret
  • The owner of the secret must reasonably take steps to keep this information secret (e.g. confidentiality agreements)

There are, of course, some drawbacks. Trade secrets are still vulnerable to reverse engineering, independent creation, and data leaks. But the benefits can outweigh the risks if these can be avoided. And just as for patents, there are some important steps necessary to protect and log trade secrets to ensure their value can be assessed by investors and possible acquirers.

So, do you have a vault-worthy invention? If you’ve got the real thing, sometimes things go better with trade secrets!

If you’re working on protecting your company’s intellectual property, make sure your taking all the proper steps; consult our IP Management Best Practice Checklist!

Free Bonus Secret Recipe

If you’ve read this far, you’re clearly interested in trade secrets and have probably worked up a hunger.  Why not dine on some homemade KFC – using what is purported to be the secret recipe?  Is this The Colonel’s trade secret revealed or a publicity stunt?  Whip up a batch and you be the judge.

This post was written by Sara Kumoi

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