While, generally speaking, copyright law protects art, and trademark law protects branding, patent and trade secret laws protect information.  In deciding how to best protect proprietary information, innovators and businesses often come to a difficult patent/trade secret crossroads: do we keep this as a trade secret, or apply for a patent application?  However a company chooses to protect its ideas, it’s important to make those decisions early.

Unitherm Food Systems, Inc. produces thermal food processing equipment.  Unitherm developed a special method for preparing pre-cooked, sliced bacon.  Here’s a look at their process:

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Originally, Unitherm protected their mouth watering process as a trade secret.  (Okay full disclosure: I’m a vegetarian.  It’s not mouth watering to me at all.)  In 2007, Unitherm met with Minnesota-based Hormel Foods to discuss a pre-cooked, sliced bacon joint venture.  Both parties signed a confidentiality agreement.  Later, Unitherm discovered that Hormel had apparently disclosed the secret process to one of Unitherm’s competitors.  Worried about protecting their bacon process, Unitherm filed for a patent, which issued in 2009.  After further failed negotiations between the companies, Unitherm sued Hormel in 2014 for, among other causes, trade secrets misappropriation.

In a ruling dismissing the trade secrets claim, the federal district court judge stated, “While the process might have been a trade secret before July 2009, it is axiomatic that a thing patented cannot also remain a secret.”  Unitherm’s own patent disclosed their secret process to the world, rendering a trade secret misappropriation claim no longer enforceable.  Although Unitherm could theoretically maintain a trade secrets claim for actions prior to the patent date of 2009, the 3-year statute of limitations had already run for anything that far back.

At least Unitherm still has their patent.  The dismissal highlights the importance of a comprehensive plan for IP protection, without which, a company may unknowingly or unintentionally lose protections.

Both patent and trade secret systems have their advantages and drawbacks.  At their cores, the two types of protection have very different purposes.  Patent law is a quid pro quo. In exchange for a 20-year monopoly on your invention, you must disclose it to the public, so that it can be improved upon to promote progress.  Trade secrets had a less stable beginning and have been justified under various theories including property and unfair competition, but in either case results in rights to entirely secret information.  Following are a few advantages and disadvantages of each system.

Patent

  • Governed by federal law
  • No need to keep the idea a secret
  • Possibility for licensing and cross-licensing with other businesses/inventors
  • Easier to prove and enforce
  • Patent functions as a roadmap of know-how for potential infringers to copy
  • Expensive to obtain and maintain the patent for the full term
  • Patent not guaranteed, but application becomes public once the USPTO publishes it
  • May need to delay product launch while application is being prepared and filed
  • A single patent only lasts 20 years

Trade Secret

  • Governed by state law (some aspects can vary greatly by state)
  • Remains protected as long as it is a secret
  • But once secrecy is lost, so are rights
  • No rigid novelty or usefulness requirements encompasses much larger range of information
  • No filing fees, maintenance fees, or applications necessary
  • Requires effort to keep secret
  • Harder for potential infringers to steal, but also harder to prove misappropriation
  • No protection if competitors independently develop same process

This list is not comprehensive, and the two types of protection may lend themselves best to different situations.  For example, a product that could be easily reverse-engineered may be best protected under patent law for easier enforcement of rights.  A process that is readily concealed behind closed doors, making theft of the process even more difficult to uncover, may be best protected by trade secret law.  Two of the most well-known trade secrets are the KFC 11 herbs and spices blend and the Coca-Cola recipe.  Some situations may even require both levels of protection.

However you choose to protect your bacon, make sure you have a comprehensive plan in place so you don’t end up fried.