Patent VS Trade Secret

Patent VS Trade Secret

Patent VS Trade Secret

Intellectual property can be the key to the success of a business, which is why it is so important to protect it. It is also important to choose the right kind of intellectual property protection for your business, as it will strengthen your future capabilities.

Both trade secrets and patents are used to shield intellectual property, such as recipes, patents, and processes, from being stolen. However, each is different and protects your property in different ways.


Patents are generally thought of as a claim to exclusivity for inventions, however, they cover much more than that. Patentable items include recipes, formulas for producing a specific material, and even original processes. For a 20-year period, a patent grants the holder exclusive rights to monetization and control of usage, meaning you’ll have two decades to control who can use your innovation and for how much.

Patents are utilized in industries where companies expect their products to become obsolete after a certain period of time, such as electronics. If a cell phone manufacturer invents a new, cutting-edge processor that makes their phones faster than the competition’s, they’ll probably benefit the most from a patent because, 20 years from now, the chip will almost certainly have been replaced with a better model, making holding on to the intellectual property rights to this particular invention pointless. However, the company will maintain the exclusive right to utilize and sell the design for that specific chip for the next 20 years.

Trade Secrets

Unlike patents, there is no registry office for trade secrets, and there is no regulation over them at all. The value of trade secrets comes from the fact that they’re hidden, and only those who know the intricacies of the secret may use them, making them valuable. When a secret is revealed, its worth disappears, as well as its value to any secret holders.

Coca-Cola is famous for having a trade secret and has kept the recipe for its eponymous beverage unknown for over a century. Only a small number of high-ranking Coca-Cola officials have access to it, and the only written copy is held in a large vault at the World of Coca-Cola in Atlanta, Georgia.

What’s the point of going through all this trouble? Simple: the recipe isn’t protected by a patent. Coca-Cola as a company would be devastated if it were ever provided to the public, since its signature drink would be copied by imitation makers all over the world. Instead, the recipe for making this globally popular beverage is so valuable because no one knows what it is and no one has been able to replicate it.  If Coca-Cola were to patent the recipe, they would have to make it entirely public, and they would only be able to benefit from it for another 20 years before losing their claim to ownership.

As long as the secret is protected, trade secrets can potentially be profitable for an unlimited period of time. They do come with a lot of additional risk, which is why they aren’t always a company’s first choice.  However, it can be done, and as a result, a company may hold the rights to a piece of intellectual property for far longer than a patent’s 20-year term.


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