The Tension Between Patents, Trade Secrets and the Flow of Information
Authors: Sajewycz M. 
Published: March 2010

Guest Editorial

Mark Sajewycz is a partner with the law firm of Gowlings Lafleur Henderson LLP, and practices exclusively in the area of patent law and prosecution. In addition to being a lawyer and registered patent agent, he is also a professional engineer with a chemical engineering background. Mark's practice concentrates on the patenting of a wide range of chemical and mechanical technologies. Mark can be reached by email at mark.sajewycz@gowlings.com or by phone at (416) 862–5795.

Picture of Mark Sajewycz (Available in full paper)

New technology is being developed faster than ever today, spurred by competitive pressures and the promise of ever-increasing economic rewards. In this advanced economy, strategic business decisions can be more complex than ever, and it is important to understand how new technologies fit in to the marketplace and in law.

Paying attention to legal issues can be critical to the commercial success of a new technology. Patent law and the law relating to trade secrets are two particularly important considerations.

In the rush to commercialize a new technology and take it to the marketplace, it can be easy to overlook these important legal issues. Rushing in blindly may erase competitive advantages associated with trade secrets, as well as advantages under patent legislation. As well, there is a legal tension between patents and trade secrets, and it is important to recognize the bases for this tension in order to preserve the rights engendered under either regime.

Patenting Results in Loss of Trade Secret Protection

Filing a patent application eventually leads to the public disclosure of the invention. As a necessary incident, this extinguishes trade secret protection relating to the invention. In most countries, a patent application is published the earlier of 18 months after it is filed or 18 months after its priority date (the filing date of an earlier application to which priority is claimed). At the very least, the invention becomes publicly disclosed once the patent application matures into a granted patent. Accordingly, deciding to file a patent application necessarily leads to the eventual extinction of trade secret protection relating to the invention.

Dealing With Improvements to Patented Technologies

One thing to keep in mind when engaging patent legislation mechanisms is the fact that filing a patent application only protects developed technology described in the patent application. Accordingly, any technology improvements developed after filing the application for the basic invention may not be protected by the patent application. In this respect, patenting vs. trade secrecy considerations should be revisited with respect to the technology improvements, prior to commercialization of the technology improvements, so as not to compromise patent protection for the improvements. Patent protection for the improvements may be compromised in some cases by commercialization alone, without incidental public disclosure. It can be compromised when commercialization of the technology leads to public disclosure of the improvements, and such public disclosure attracts "prior art " significance.

Moreover, this analysis should, at the very least, be undertaken before the 18-month mark of the initially filed application, as publication of the initial patent application will affect patentability of the technology improvements (due to the public disclosure aspect and resultant "prior art " significance of such publication).