From 2 No. 9 ADVSECOMP 6
Advising Start-Up & Emerging Companies

Trade Secret Value

If the process by which a company makes a product or offers a service is not readily ascertainable, that process may be subject to trade secret protection. Although for some inventions, trade secret protection is more desirable than patent protection, maintaining a process as a trade secret--as opposed to a patent-protected invention--is not without risk.

First, if a competitor develops the same process independently--an absolute defense to a trade secret misappropriation claim--there is nothing that the company can do to stop its use. Independent development generally is not a defense to patent infringement, however.

Second, the company runs the risk that a competitor who develops the process independently may elect to patent the process itself, thereby having the process “patented out from under” it. That is, the company's prior use may or may not be a sufficient defense in a patent infringement claim. Nor will the prior use qualify as prior art because the invention, having been maintained as a trade secret, was not in the public domain.

Third, by not pursuing patent protection immediately, the company may foreclose its ability to obtain a patent in the future. Using a trade secret process to produce a commercial product generally starts the clock ticking on the one-year statutory bar for on-sale bar purposes. Accordingly, under § 102(b), a company's invention will not be eligible for U.S. patent protection if more than one year has elapsed from the time the commercial product was first sold or offered for sale.
In light of the risks associated with maintaining an invention as a trade secret, the decision to file a patent application requires a company to balance the value of a patent's 20-year term with the potentially indefinite term of a trade secret, and to consider the likelihood that a competitor will stumble on and patent the trade secret.