Running head: Patents vs.

Trade Secrets

Patents vs. Trade Secrets Kristen Kerber Rasmussen College

This research was completed and submitted on July 21, 2012 for B491/GEB4520 Section 03 - B491/GEB4520 Section 03 Legal & Ethical Environment of Business class as instructed by Prof. Stephen Eisenberg.

Patents vs. Trade Secrets

Patents vs. Trade Secrets

1. Pick an existing product or idea that could fall into either Patent or Trade Secrets. 2. Indicate what you think are both the short term and long term goals that the company is trying to accomplish. For instance does the company want to be on its own forever or is the goal to be bought by a bigger company in a few years? Does the company intend to remain a small family business or grow to a large size? 3. Come to a conclusion as to which way you recommend that the company should go for protecting its widget or product. 4. Explain why you chose that position.

The company that I work for provides a Software as a Service (Saas) and those are typically best protected by patents. We have developed a software that is unique from the softwares of our competitors and we have a specific edge that we must maintain to stay in the market. Patents protect a physical invention or improvement, while the trade secret focuses on a methodology or principle that a company employs to remain competitive. In return for being protected by the government, after the term of the patent is up, that knowledge is fair use at that point. The way that works with our software is that in twenty or so years when the patent expires, it will be obsolete so it wont matter if the government does not protect it anymore. This has led to many medicines being patented by a name brand company and then when the patent expires, competitors make a generic version of the drug that is more affordable for the majority of consumers. Patents protect an invention at the government level while with a trade secret, the responsibility to keep it safe is on the company. Patents are protected federally, and trade secrets are legislated at the state level, with the majority of states having adopted the

Patents vs. Trade Secrets

Uniform Trade Secret Act (UTSA) (Heels, 2002), which standardizes the regulations surrounding trade secrets. One downside of trade secrets is that if the competitor was able to figure out the secret, there exists no protection from them using it. If it were protected by a patent, you could take them to court to fight their use of the protected material. In the example of the company I work for, our website could be analyzed by the competition, broken down, reproduced and sold for a profit, thus cutting into the inventors pocket, or my paycheck! Its in our best interest to keep our data safe and constantly continue to innovate so that even if someone figures out some secret, wed have already moved on to a new technology (Graham, 2006).

Patents vs. Trade Secrets Graham, M. (2006, July). Leveraging Your Intellectual Property: Trade Secret vs. Patent Protection. Retrieved July 21, 2012, from Frederickson & Byron, P.A.: http://www.fredlaw.com/articles/ip/inte_0607_mjsg.html Heels, E. (2002, February 5). Patents vs. Trade Secrets. Retrieved July 21, 2012, from Erik J. Heels: http://www.erikjheels.com/156.html