Written by Drew Bennett
In part 1, we learned that Jack, with the assistance of Jill, developed a small sequencing device that allows for the identification of unique cancer targets in patients, enabling R&D for small molecules that effectively block those targets. Recall that trade secrets and patents represent two of the most common methods of protecting intellectual property. Let’s continue to explore trade secrets more in depth here. Later, we will consider whether BioBank Therapeutics should consider keeping their sequencing device as a trade secret or protecting it through a patent.
Here are some factors for considering whether to keep an invention as a trade secret:
- Difficulty of reverse-engineering the invention- If an invention can be easily reverse-engineered, then a trade secret is not appropriate. For example, simple mechanical inventions generally, such as a car wheel, cannot be kept as a trade secret because the key features of the invention are readily apparent to any user. Even complex mechanical or electronic devices can be reverse-engineered by product teardown. In contrast, other inventions such as composition (e.g., secret formulas or recipe) or a process (e.g., process for manufacturing a composition) type inventions can be kept secret because of the difficulty in reverse-engineering the invention from the final product. A well-known example of such an invention is the secret formula for Coca Cola, which has remained a trade secret for over a century. Given the ability to sequence most recombinant molecules in a high throughput manner, reverse-engineering has become much easier in the Biotech industry. However, depending on the product, a trade secret may still be appropriate and may allow more time for internal product
development. One must really know…
- Competitive Risk- Knowing your competition is critical for any invention. If your competitors are attempting to develop a similar solution to a certain problem, then there is likely a risk that more than one party may develop an invention that solves the same problem. In this scenario, a trade secret is not appropriate. Trade secrets provide no protection against your competitors’ duplicative inventions. Trade secrets are attractive because if you can keep them, the intellectual property isyours for potentially a very long time. But, once the secret is out, all rights are then lost. Actively tracking competitors is critical for Biotech companies and setting up alerts only enable IP owners to know whether infringement may be a real concern.
- Ability to guard the core knowledge of the invention while scaling up- Maintaining a trade secret becomes more challenging as the business grows. For example, it’s much easier for a family-owned restaurant to maintain a secret recipe compared to a global chain restaurant. In other words, as production and distribution of an invention are scaled up and/or outsourced, more parties are likely to become privy to the trade secret. Thus, as an owner scales up commercial activity, the ability to maintain the core knowledge of the invention among a small and manageable number of key stakeholders may become more challenging.
In summary, one big business decision is whether to protect your invention using patents or trade secrets. In a nutshell, most of the answer comes down to how well the invention can be kept as a secret. The difficulty of reverse-engineering, competitive risk, and the ease of maintaining the invention secret in a commercial setting are factors that should be considered.