IP Law Basics Part 2 – Patents and Trade Secrets

November 30, 2016

This is part two of a four-part series on the basics of intellectual property law. The goal of this series is to provide individuals and business owners with a primer on the different types of intellectual property in the United States, including patents, trade secrets, trademarks and copyrights. For the introduction to the series, click here.

Patents (and sometimes trade secrets) protect inventions and discoveries

A patent creates a legal monopoly on the right to use that particular invention or discovery within the United States for a limited amount of time.

The US Patent and Trademark Office (USPTO) grants three different types of patents. The first is a utility patent, which may be granted to anyone who invents or discovers new and useful processes, machines, articles of manufacture, or compositions of matter, or any new and useful improvement thereof.  Second, is a design patent, which may be granted to anyone who invents a new, original and ornamental design for an article of manufacture.  Finally, a plant patent may be granted to anyone who invents or discovers and asexually reproduces any distinct and new variety of plant.

Once a patent is issued, the monopoly granted to the owner is limited to a finite period of time – typically, design patents last for 15 years after issuance, and utility and plant patents last for 20 years after the date the patent application was filed. This can vary depending on what law was in effect at the time the patent was applied for.

Many famous products and brands hold numerous patents.  For example, the Coca-Cola Company has utility patents on beverage dispensers and processes that improve sweeteners used by the company. An example of a design patent is the iconic shape of the Coca-Cola bottle, which was patented in 1915.

I mentioned trade secret as a means to protect inventions and discoveries because by virtue of pursuing the patent process, the entity pursuing a patent must disclose the “secret sauce” – exactly how a product works, what ingredients are used in a formula, etc.  Coca-Cola, for example, has kept its recipe a closely guarded secret and has chosen not to disclose it to the world. In order to avoid such a disclosure and potentially open the door for competitors to develop a similar product that is just different enough to not constitute infringement on the patent, sometimes inventions or discoveries are treated as trade secrets. Unlike patents, trademarks and copyrights, there is no filing process for trade secrets that grant you additional rights to a particular trade secret.

Federal and state laws govern the treatment and protection of trade secrets, including the Federal Defend Trade Secrets Act of 2016 and the Pennsylvania Uniform Trade Secrets Act, which is the Pennsylvania version of the Uniform Trade Secrets Act, which has been enacted in some form by 47 states. It defines a “trade secret” as:

  • information, including a formula, pattern, compilation, program, device, method, technique, or process,
  • that derives independent economic value, actual or potential, from not being generally known to or readily ascertainable through appropriate means by other persons who might obtain economic value from its disclosure or use; and
  • is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Although the Coca-Cola recipe is one of the most infamous trade secrets, there are many other well-known brands that closely guard trade secrets, including Twinkies, KFC, Krispy Kreme, Listerine and WD-40.  Other examples of trade secrets include customer and supplier lists and sales methods and strategies.

Trade secret protection, as in the example for the Coke recipe, is indefinite provided that the owner continually takes sufficient steps to protect the trade secret.

Stay tuned for parts three and four of the series, where I’ll be discussing trademark and copyright, respectively.

Matt Landis is an attorney at Russell, Krafft & Gruber, LLP, in Lancaster, Pennsylvania. He received his law degree from Widener University School of Law and works regularly with business owners and entrepreneurs.