Plusses and Minuses of Trade Secrets and Patents


Is the patent approach still effective today?

The basis of the idea of a Patent is to give an 'inventor' exclusive rights to the patented idea for a limited period, after which the idea becomes available for the general good.

The original concept worked well in the early period of use. Gradually, however, as the store of patented ideas built up, and as search and research sources available to the patent examiners improved, it became more and more expensive and took longer and longer to get a patent application approved. Also a higher and higher proportion of applications were turned down.

These difficulties have taken patenting out of the reach of many individual inventors, and left it more of a strategy tool for large companies. Companies will apply for numerous patents covering minor improvements to their developed products, so that they can put 'Patent Number NNNN' or 'Patent Applied For' on these products. This is often enough to discourage others from attempting to copy or make similar products.

If the idea patented is an important basic one, competitors will examine the details of the patent grant and try to get round it by making a variant approach which can be asserted to lie outside the original area claimed, and of course they may claim the variant as a new patent.

Full details of the invention have to be given in the patent application, and as almost any human idea can be improved upon or approached from a new angle, the patent itself gives a good launch pad for developing a better idea based on the information disclosed.

Moreover, even if the trials and pitfalls of achieving a successful patent grant are realized by inventors, they will often assume that getting this grant will assure the idea's economic success. In fact the patent grant is only a side consideration in the game of developing an idea to the stage where it will make money for those involved. There are numerous sad instances of inventors spending years and all their money to get a patent on something, and then be unable to get any return on the patent before it expires.

For this reason, it can be a better strategy to keep a new idea as a Trade Secret. This just means taking precautions so that competitors or others are unlikely to be able to reproduce your product from what they could read about it or find from analysing it.

For example, if you were a manufacturer of alloy cogwheels, and you discovered that these cogwheels could be made appreciably harder by subjecting them to microwaves of a certain wavelength, this technique would be quite hard to discover by "reverse engineering" or analysis of the final product. You might get more value out of your discovery by keeping it to yourself, or by licensing the process under a confidentiality agreement. If you patented the process, its application would be rapidly known to all in the field and the advantage might be lost.

A danger in this approach is that someone else might independently discover the same process and patent it. If this happened, you would have to pay the new discoverer to use the process as long as they held a valid patent.

A counter to this problem would be for you to give the essential details of your discovery in an obscure place, say in a model railway enthusiasts' magazine published in Estonian. This would be unlikely to be picked up by other cogwheel manufacturers. Then, if someone was granted a patent on the technique, you could appeal against the patent grant on the grounds that the essence of it had already been published (classed as "prior art").

Obviously there are ramifications within ramifications. In the real world, a sprinkling of really good ideas lies jumbled among immense and extensive data garbage fields of every sort of past and present knowledge. A new technique offered by IdeasBank lies between those of Patents and Trade Secrets, a technique called Pop-Up. Pop-up exposes a few ideas at a time for exploitation and invites up to three takers, after which ideas are withdrawn or placed back in concealed reserves.

IdeasBank lists some memons called Green Memons in which no attempt is made to conceal details, they are freely offered for general use (unless someone already holds a valid patent on them). If not already patented, this listing "discloses" them or puts them into the "prior art" category, and later attempts to patent the memons should fail. Some of these Green Memons relate to basic ideas at the very beginning of a possible development cycle.

IdeasBank also lists Red Memons. These are memons for which no details are disclosed, only the broad intention of the memon, eg "A Scheme for Making Money" (not a real example of anything listed here). Red Memons could possibly be the subject of patent applications, and are only sold subject to non-disclosure and royalty agreements.



To go to a list of Memons currently listed on this site, click here.