Trade Secret

Unlike patents, trade secrets are not registered with a government and do not have to be publicly disclosed. They are protected for as long as they remain secret and the owner takes reasonable steps to keep them confidential.

Famous examples include secret recipes for soft drinks and sauces, which companies have protected for decades. Many businesses also treat software code, pricing strategies, supplier terms and internal processes as trade secrets.

For example, a company that has developed a unique way of producing a material more cheaply might choose to keep the process secret rather than patent it, since a patent would require disclosing the details and would expire after about 20 years.

Companies protect trade secrets through confidentiality agreements with staff and partners, restricted access to information and security systems. If someone steals a trade secret, the owner can take legal action.

The main risk is that protection ends once the secret becomes public. And unlike a patent, a trade secret does not stop competitors who independently develop the same information or work it out by studying the product.