The Right IP Mix – How to Choose a Good Balance Between Patents and Trade Secrets

Eva Willnegger

In general, industry seems to file patent applications as a default mechanism once an invention is identified. The rising number of patent applications with around 150,000 direct European applications filed in 2012 shows that this still applies for many companies. Other companies keep major non-detectable innovations a trade secret. The soft drink formula of Coca-Cola® probably is the most prominent example of an efficient implementation of the trade secret approach.

Prosecuting and especially litigating patents often involves rather high costs, lengthy proceedings and some degree of uncertainty. On the other hand, any patent application will be published 18 months from the first filing. Consequently, proprietary knowledge gets publicly available even if the patent application is finally rejected by the office or faces difficulties in enforcement. Moreover, patent protection lasts for a maximum of 20 years. After expiration, the invention inevitably falls into the public domain. Therefore, it is crucial to choose the right mix between patent and trade secret protection.