To Patent or Not to Patent? Preserving Trade Secret Status During Prosecution

3 minute read | December.10.2018

Amid a growing body of unsettled law regarding the patentability of software and business methods patents, companies are increasingly choosing to maintain their valuable innovations as trade secrets rather than risk a rejected patent application. There are pros and cons to both forms of intellectual property protection. However, the decision need not be binary – at least not during the pendency of the patent application. Instead, by opting to go the “non-publication” route, inventors can maintain trade secret protection over an invention during the patenting process and decide whether to forego trade secret status and allow the patent to issue at the end of the patent prosecution process.

Under U.S. patent law, the patentee is granted a monopoly on his or her invention for a prescribed period of time (generally, between 17-20 years) in exchange for sharing the details of the invention with the public. The public obtains the full use and benefit of the patented innovations upon the expiration of the patent term. Any information disclosed in an issued patent is, by definition, published and therefore cannot qualify for trade secret protection. United States patent applications are typically published 18 months from the filing date pursuant to 35 U.S.C. § 122(b)(1)(A). However, if the invention that is the subject of the patent application is not the subject of a foreign patent application, the patentee can file a non-publication request under 37 CFR 1.213(a). This means that the application will be maintained as secret throughout the application process (which can sometimes span up to a decade). The inventor can thus maintain trade secret protection over the invention during the patenting process and make the decision on whether to forego that status only once the patent examiner has decided whether to allow the patent to issue.

Inventors have sometimes tried to thread the needle between trade secret and patent protection by failing to disclose key elements of the invention in the patent application and specification. In Pike v. Texas EMC Management LLC, EMC Management sued Pike for trade secret misappropriation. Pike countered that the information that EMC contended Pike misappropriated is the subject of an EMC patent application and therefore could not be trade secret. However, EMC explained that it “purposely excluded certain information” from the patent application in order to maintain it as trade secret. The Texas appellate court agreed with EMC and rejected Pike’s argument that EMC’s trade secret claims failed as a matter of law. While that tactic worked to preserve the information at issue as trade secret, inventors may risk invalidating a patent by admitting to withholding information from a patent application.

In sum, it is possible to maintain trade secret status for information that is the subject of a patent application. Inventors should consider filing a non-publication request so long as they are not pursuing foreign applications on the same invention. Doing so gives inventors trade secret protection throughout the patent application process and enables inventors to decide whether to abandon trade secret protection in favor of patent protection at the end of the patent application process rather than at the outset.