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Five Advantages of Using Trade Secret Law to Protect Your Intellectual Property
Your San Diego business owns a lot of intellectual property (“IP”) even if you do not really think of some of your assets as IP. As we have discussed before, many aspects of businesses can be legally protected as IP, including your business name, packaging, logos, slogans, designs, client lists, internet domain names, methods and processes, etc. All San Diego and California business have several choices with respect to how to protect valuable IP. Depending on the type of IP, here are the four most common options:
- Trade Secrets
- Trademarks
- Copyrights
- Patents
In this article, we highlight five advantages of protecting your IP as trade secrets.
San Diego Corporate Law: What are California Trade Secrets?
San Diego trade secrets are protected under the California Trade Secrets Act (“CTSA”). See Cal. Civ. Code §§ 3426, et seq. To be entitled to protection under the CTSA, the trade secrets must be commercially valuable and you, and your company must take active steps to keep the information actually secret.
San Diego Corporate Law: Trade Secrets Can Protect Software and Other “Abstract Ideas”
With respect to software and other “abstract ideas,” using trade secret law is advantageous — indeed, required — because the US Supreme Court has limited patent protection for software. Under the Patent Act, codified at 35 U.S.C. § 101, abstract ideas are not patentable. In Alice Corp. v. CLS Bank International, 134 S.Ct. 2347 (2014), the court declared that certain software used for financial escrow services was not patentable because, according to the court, the concept underlying the software was merely an abstract idea.
By contrast, trade secret law will protect everything including abstract ideas as long as the two conditions are met – the information has inherent economic value and you have taken reasonable steps to maintain the secrecy. As such, many so-called “abstract ideas” like software can be legally protected from disclosure and use/theft by competitors.
San Diego Corporate Law: No Disclosure Required for Trade Secret Protection
A patent application requires disclosure of the device, invention, method, process, formula, etc. As such, the information is no longer secret. For many companies, this is the main disadvantage of using patent law and many tech companies have famously refused to trademark, copyright, or seek patent protection for software, engine algorithms, and the like. In short, using trade secret law keeps the trade secrets secret.
San Diego Corporate Law: No Uniqueness Required for Trade Secret Protection
Protection for patents, copyrights and trademarks also requires that your trade secrets be unique in some way that is provable. That “uniqueness” requirement can be difficult and expensive to establish to the satisfaction of government examining attorneys. By contrast, using trade secret law to protect IP avoids the problem of having to establish uniqueness. To repeat, only two things are needed – the secret has inherent economic value and reasonable steps have been taken to maintain the secrecy. Steps needed include secrecy agreements with suppliers and vendors, training for employees on how to protect trade secrets, nondisclosure provisions in employment contracts, restriction on access to trade secret information, etc.
San Diego Corporate Law: Trade Secret Protection is Permanent
Another advantage of protecting your IP via trade secret law rather than patent law is that trade secret protection is permanent. Coca-Cola has kept its formula secret for over 100 years. Had Coca-Cola used patent law, their secret formula would have passed into the public domain 80 years ago.
San Diego Corporate Law: Trade Secret Protection Requires No Government Filings
One final advantage of trade secrets is that no periodic governmental filings are required. With trademark protection, for example, one must make periodic filings with the US Patent & Trademark Office. Failure to do so may cause the trademark protection to lapse.
Contact San Diego Corporate Law Today
If you want more information or need legal advice related to your company’s IP, call business attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard was named “Best of the Bar” three years running by the San Diego Business Journal. To schedule a consultation, email us or call at (858) 483-9200.
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