Should I patent my idea or keep it secret?


“Some companies need patents to help raise money. Some companies have a massively disruptive technology that can only be protected through patents. Some companies develop patents as a defensive shield to balance potential assertions from future competitors.”
Tim Wilson, Senior IP Counsel, SAS Institute

Once you have found out whether or not your concept is eligible for patent protection, it’s time to decide whether you actually wish to apply for a patent to protect that concept.

Patents – Pros and Cons

Patents provide exclusivity to an idea for up to 20 years from filing a patent application. Having such a monopoly right to a concept can therefore be a very valuable tool in order to attempt to stop competitors doing what you are doing and ensure you have a clear differentiator from competitors.

Even if you’re not using the idea, patents can be of value. You can look to licence the idea to other companies and collect royalties, or perhaps even sell your patent to a company that wants to use it.

The fact that you own an idea or a piece of technology that no one else can use has many business advantages that don’t need spelling out.

For all of the reasons discussed above, investors often love patents too. They know that patents can help carve out a niche for company, or provide some liquidity if your company doesn’t work out. So having patents can certainly help attract investment and boost company value.

However, all of this comes at a cost. A monetary cost in that you have to pay to get patents filed and granted. And it’s not cheap.

In addition, part of the deal with patents is that governments will grant you a monopoly right for your invention, i.e. a patent, provided you disclose how your invention works. Sometimes you might not want your competitors knowing how your technology works, even if they can’t use your implementation.

The alternative – Trade Secrets

“Often, the most valuable IPRs are those which are intentionally not published and kept secret.” Jeffrey Sears, Chief Patent Counsel, Columbia University

If you don’t want to disclose your idea to the world, or you think you’d gain a bigger advantage by keeping your idea from your competitors then a trade secret may be the way forward.

Trade secrets have the advantage of preventing anyone from knowing how your technology works. Another key advantage is that unlike patents they can be free. However, they too come with various risks.

If you keep your idea a trade secret and a competitor comes up with and uses the same idea, then there is nothing you can do to stop them. Even worse, they could try to patent the idea and there may be nothing you can do to stop them because your idea wasn’t in the public domain.

The other key risk is keeping it secret. How do you ensure that employees don’t give the secret away? What happens if an employee that knows the secret leaves for another company?

These are real risks and usually the only way to deal with this is by having systems in place to protect the secret. Simple logistical systems such as ensuring no single person knows the whole picture is a good means of protection. However, ideally you want legal provisions in place, perhaps within a contract of employment, that strictly define what information someone is allowed to know and who they can talk to about that information.

So while trade secrets are theoretically free, in practice it is best to spend a bit of money to ensure that they are properly protected and minimise the risks.

When weighing up whether a trade secret makes the most sense for you it is worthwhile considering whether or not a competitor could work out how your invention works by reverse engineering your product. If so, you can’t keep it secret, a patent may be the best route to take for protection.

Making the decision

“Before seeking a patent, critically ask yourself why you need it – and what you will do with it once you have it. Ultimately, a patent is a commercial asset and requires a significant financial investment to obtain – you should seek it only if you have a clear commercial goal in mind”. Jeffrey Sears, Chief Patent Counsel, Columbia University

Ultimately, the final decision is likely to be a business decision weighing up the cost of the two approaches and the benefits to your company.

When budgets are stretched, which is usually true for startups, but can equally be true for large corporations, it is worth keeping in mind why you need the patent and what the value is to the business.

Michael Hsu of Adobe points out that patent are “just one tool, one of many tools that a business has to succeed”. Don’t lose sight of that fact.

Sometimes, one option can be to patent broader aspects of your invention while keeping the details secret.

In other circumstances, the nature of the technology can decide for you. If your invention is software working on a remote server that no one can access then it’s easy to keep secret.

In addition, if you had a patent, it would be difficult to know if competitors, whose software is also working away on a remote server, is infringing your patent. In these circumstances it may just make sense to keep your invention a trade secret.

Whatever your situation, just because you have something patentable, don’t assume that you should then file a patent application. Weigh up the options and then look to proceed.

Answer last updated: 17 Jan 2018