The final topic in this blog series is the tactic of trade secrets. When a company develops a core competency that is very difficult to develop or copy, an effective strategy would be to keep key information, ingredients, processes a trade secret. Probably one of the most famous trade secrets is the recipe for the soft drink Coke. The full recipe is only known be a very closely held select few employees and extreme care is taken to protect the trade secret. While patents prove some nice advantages, once issued, patents are in the public domain and can teach competitors how to make a product, develop a composition of matter, or run a manufacturing process. Formulation companies that have products made from multiple ingredients are in a very nice position to keep some of the key ingredients a trade secret.
Under US law, “A trade secret, as defined under 18 U.S.C. § 1839(3) (A), (B) (1996), has three parts: (1) information; (2) reasonable measures taken to protect the information; and (3) which derives independent economic value from not being publicly known.”
The first condition an obvious part of being a trade secret, such as a key ingredient in a formulation, a confidential process method, or ability to provide a key feature to a product in a unique way. The part of a trade secret that most people overlook is the requirement to take reasonable measures to prevent disclosure of the trade secret. This typically involves security measures such as limiting the number of people who have access to the trade secret information, measures to safeguard the trade secret (lock and key storage), secure electronic storage (limited access and password protection, etc.). If the trade secret provided economic benefit, then it make good business sense to make the necessary investments to keep the trade secrets secure.
One significant advantage of a trade secret is that it can exist indefinitely and provide an advantage over patent protection. Remember patents only exist for a finite time period. The Coca Cola company does not have a patent on the Coke formula and have been very effective protecting it for much longer than the 17 or 20 years a patent would provide exclusivity. The downside is that if the trade secret is uncovered through lawful measures such as reverse engineering, there is no protection once the trade secret has been revealed. This is why prudent companies take very robust measures to keep their key trade secrets, just that a “secret.”
This is the final post in this series. If you or your polymer company have an intellectual property challenge, contact InnoCentrix at 1-877-887-6596 or visit our website to see how we can enable you to protect your valuable IP assets.
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