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ANN ARBOR - The environment for obtaining patents is changing, thanks in part to the April 2007 Supreme Court ruling in KSR International Co. v Teleflex Inc. (KSR) [1], which essentially makes patents more difficult to obtain and enforce. Other movements are afoot that seek to broaden the rule-making authority of the U.S. Patent and Trademark Office (USPTO) and severely limit the rights of patent applicants. All of this activity is amid sweeping fundamental changes to the patent laws that aim to change the U.S. from the current “first to invent” patent protection environment to a “first to file” approach practiced throughout most of the world. These changes present a good opportunity for companies to re-evaluate the best approaches to protect their intellectual property, according to Kelly K. Burris, an intellectual property attorney in the Ann Arbor office of Brinks Hofer Gilson & Lione, one the nation’s largest intellectual property law firms.

“The decision to protect intellectual property through a patent or a trade secret can be critical to a company’s long-term viability,” says Ms. Burris. “Key factors to be addressed include: the cost to obtain patent protection versus the cost of protecting a trade secret; whether the process or product requires the twenty years of protection that patents offer or if it will likely outlast the twenty years; and, whether a trade secret can remain as such without independent creation of the same information by another party.”

Ms. Burris explains that a patent is a property right on something new and useful and represents a right to exclude others from using the patented invention, not a right to use the patented invention. It offers a 20 year monopoly that prevents other people from practicing the patent during that time frame.

“A patent offers one of the broadest forms of intellectual property protection,” affirms Ms. Burris. “When seeking patent protection, a key question is, ‘Will this product or process be viable 20 years from now or will it be replaced by the next best thing in only a few short years?’ If it’s timeless, a patent may not be the best option – a trade secret may be.”

Ms. Burris defines a trade secret as information that derives independent economic value from not being generally known and is the subject of efforts to maintain its secrecy.

Trade secrets are often referred to as “know-how,” but companies don’t always recognize that the information may be protectable as a trade secret.

“The most famous trade secret is the recipe for Coca-Cola,” explains Ms. Burris. “A trade secret can provide a company with a monopoly forever, offering both economic and competitive advantages, provided the information is maintained in secrecy. A key question when opting for a trade secret form of protection is, ‘Can the process or information in question be reverse engineered? That is, can someone else figure it out by studying the end product?’ If the answer is yes, then by definition, the information cannot be entitled to trade secret protection. In another important scenario, if the information is independently developed by a competitor or another third party, that party can then file for patent protection and stop the creator of the trade secret from using it,” continues Ms. Burris. “In that case, a patent would likely be the better option.”

Ms. Burris uses the example of a manufacturing process to illustrate the patent versus trade secret dichotomy.

“Manufacturing is unique in that one can see the final product yet have no idea what processes were used to manufacture that product. And even if a general process were known, such as a molding process, there’s no indication in the product itself as to the proper processing profiles with respect to temperatures, pressures, and times used to efficiently manufacture the product,” says Ms. Burris. “Should such a process be patented or be treated as a trade secret? Again, we look at a number of factors, including the ability to reverse engineer the process and its long term viability, to help make that decision.”

Some other differences between trade secrets and patents? Patents are typically costlier than trade secrets and are governed by federal law. Trade secrets are governed by both federal and state law and require proof that a trade secret was maintained as such and that efforts were made to keep the information secret. That’s why Ms. Burris cautions that, while the entire patent process can be a significant investment of time and money, there are hidden costs to maintaining trade secrets as well.

“Unlike patents, there are no governmental fees and no formal process to file and obtain a trade secret, yet there are typically attorney fees associated with seeking advice on properly maintaining information as a trade secret. More importantly, in matters of litigation, the courts demand proof that a trade secret was truly treated as a secret. That means precise and sometimes costly security measures have to be in place to reflect that a trade secret has been treated as such,” says Ms. Burris. “For example, if employees not otherwise bound by a nondisclosure agreement or contractors/vendors have easy access and there are no security protocols to protect the trade secret, it’s highly unlikely a court will consider the information in question a legitimate trade secret.”

Founded in 1917, Brinks Hofer Gilson & Lione is based in Chicago with four additional offices across the country, including Ann Arbor, serving the intellectual property needs of clients from around the world. The firm is one of the largest IP law firms in the country, with more than 170 attorneys, scientific advisors and patent agents specializing in intellectual property litigation and all aspects of patent, trademark, copyright, trade secret, unfair competition, intellectual asset management, and technology and licensing agreements. Brinks routinely handles assignments in fields as diverse as electrical, chemical, mechanical, biotechnology, pharmaceutical, nanotechnology, Internet and computer technology, as well as in trademarks and brand names for a wide variety of products and services.

[1] 550 U.S. ___, 82 USPQ2d 1385 (2007)