Basic Requirements and Relationship to Patent Protection

A trade secret may consist of any formula, pattern, device or compilation of information which is used in one s business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it. It may be a formula for a chemical compound, a process of manufacturing, treating or preserving materials, a pattern for a machine or other device, or a list of customers. [4 Restatement of the Law of Torts 5 (1937)] 

As the Supreme Court noted in Kewanee Oil Co. v. Bicron Corp., 416 U.S. at 484-91 (1974), under this definition a trade secret may be clearly unpatentable, doubtfully patentable or clearly patentable. 

Use As is not the case with patented inventions, a company with trade secret information must actually make use of the information in order to gain protection for it. See 1 R.M. Milgrim, Trade Secrets 2.02 (1980). At a minimum, courts are unwilling to afford companies protection for ideas or information that have no commercial value, which the companies do not have the capacity to exploit, or for which they are not willing to take steps to find someone who can exploit them. Beyond this, the courts have taken a wide variety of views as to how actively a company must be trying to exploit trade secrets before the courts will protect them. The content of chemical substances or mixtures that are being used experimentally can be protected as trade secrets, even when the substances are still too experimental to qualify for patent protection. 

Even where a duty not to disclose trade secrets arises by virtue of the employer-employee relationship, a trade secret agreement can have significant advantages. For instance, the contract can be used to help establish that the information disclosed is trade secret. The contract, within limits, can specify which state s law will govern construction of the agreement. The contract may expand the remedies that would otherwise be available. 

Maintaining new product information as trade secrets can pose commercial risks when others may seek patents if they develop similar products. Exactly the extent of this risk is uncertain. Section 102(g) of the Patent Act, 35 U.S.C. 102(g), provides that a person may obtain a patent over an invention, even if he was not in fact the first to invent, if the first inventor has concealed or suppressed the invention or otherwise not acted diligently. Thus, a second inventor may be able to obtain patent protection over an invention when the first inventor has relied on the trade secret doctrine for his protection. The reported cases to date have not addressed the question as to whether the second inventor, having obtained a patent, can thereafter sue the first inventor for infringement. 

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