Do you keep an invention secret or tell the world by seeking patent protection?
In an innovation-driven world, that's an important, early business decision, said lawyer Steven Auvil.
``You have a dilemma very early on that you have to confront,'' Auvil said in a March 6 presentation at the Plastics News Executive Forum in Tampa. He chairs the intellectual property practice group at Cleveland-based law firm Benesch Friedlander, Coplan & Aronoff.
Auvil discussed the pros and cons of each option when facing this ``fork in the road'' decision of trade secret vs. patent.
A patent costs from $10,000-$30,000, and the patent protection lasts for 20 years from when the application was filed.
Since it takes about two years to get one, Auvil said some short-life products, such as toys, are not worth patenting.
A patent boom continues. About 8,000 plastics-related U.S. patents are issued each year, Auvil said. That includes about 6,000 patents for resins and materials and 2,000 for ``article shaping'' of plastics, which covers machines, processes and polymer-related products.
Auvil said a patent is more expensive than a trade secret, but it has some advantages. It can warn competitors to keep out of your area of technology. ``If you file multiple patents in a particular area, you are sending a strong signal to your competitors not to play in your playground,'' Auvil said.
Of course, once you get a patent, you can't keep the invention quiet. A patent lays out all the details.
Auvil said a trade secret is cheaper up front than a patent, and it could have an infinite life. But over time, costs of maintaining the secret add up - for security, training employees and the need for immediate legal action if an employee who knows the secret moves to a competitor and is a threat to leak it. Also, as your company grows larger and gets more customers, it gets harder to keep the secret.
If the secret gets out, the value of your asset can be destroyed. ``Its value is in its secrecy, and it's only good so long as the secret is retained,'' Auvil told forum attendees.
Trade secrets do not work for some innovations. ``If it's easy to reverse-engineer your product, in that instance, trade secret protection's not going to help you at all,'' he said.
Auvil gave one famous example of a trade secret: the formula for Coke, developed in the late 1800s. Only two people know the Coca-Cola Co.'s secret, and they're prohibited from traveling together, he said. The recipe is locked in a vault; opening it requires a resolution from the board of directors.
``That's somebody that's serious about protecting the franchise,'' Auvil deadpanned.
Of course, no intellectual property speech would be complete without mentioning China, which Auvil called ``the source of most of the counterfeit products these days in the world.''
The lawyer said China is making some moves to respect IP. In February, he said, the government passed a law that requires trade show officials to report counterfeiting, trademark violations and piracy by an exhibitor.
Auvil added that China is graduating a huge number of engineers, and business in the country will become more innovative.