Basically, there are two types of trade secrets. On one hand, trade secrets may relate to inventions or production processes that do not meet the criteria for patent protection, and thus, can only be protected as trade secrets. These are trade secrets related to customer lists or production processes that do not have sufficient novelty to qualify for patent exclusivity (although they may meet the protection requirements of utility solutions). On the other hand, trade secrets may relate to inventions that meet all the protection criteria and can be protected by patent exclusivity. In this case, small and medium-sized businesses will have to choose whether to file for exclusive patent protection or keep it as a trade secret.
The advantages of trade secrets are:
- Trade secret protection is not limited by time (patent exclusivity typically lasts for 20 years). Therefore, trade secret protection can be indefinite as long as the secret is not disclosed to the public.
- Trade secrets do not require registration costs (although there will be high costs associated with keeping the information secret, including implementing technology-based protection measures).
- Trade secret protection takes effect immediately.
- Trade secret protection does not require procedures such as disclosing information to government agencies.
However, there are certain disadvantages in protecting business information as trade secrets, especially when the information meets the criteria for patent protection. For example:
- If a trade secret is embodied in an improved product, others can inspect, research, and analyze it (e.g., reverse engineering) to discover the trade secret and are fully entitled to use it afterward. In fact, trade secret protection does not create an exclusive prohibition against third parties using the trade secret. Only patent exclusivity and new utility solutions can create such exclusivity.
- Once a trade secret is publicly disclosed, anyone can access and use it freely.
- Trade secret protection is more difficult to enforce than patent exclusivity. The level of protection for trade secrets varies from country to country but is generally weaker compared to the protection afforded to patents.
- Users of legally obtained tools can register patent exclusivity for trade secrets-related information.
