Did you know that the recipe for Coca Cola is, in fact, not patented, but a trade secret?
It’s a secret
The difference between the two is that a patent is publicly recognized and registered with the government, while a trade secret is not. The business world’s equivalent of classified documents, a trade secret must consist of information, e.g. technical information and business information. These practices or processes of a company are generally not known outside of the company, but have an intrinsic economic value. Finally, judicious efforts, guided by a business attorney, must have been made to retain its secrecy. Merely wanting or intending to keep information a secret is not acceptable.
Trade secrets can be easy to steal and exploit, so why did Coca Cola choose that over a patent then?
A patent has a limited life of fourteen to twenty years. Once the patent expires, the information it protected must be publicly disclosed, and is then free for anyone to replicate.
Can you keep a secret?
Imagine knowing exactly how your competitors make that indestructible item, manage their cash flow, or access the top clients. Gaining such competitive advantage sounds great until you put the shoe on the other foot. Now imagine that one of your employees is fired, and in a disgruntled rage shares confidential information about your trade secrets or sensitive information upon working for a competitor or starting his or her own business.
To safeguard them, you need all your personnel that are privy to the data to sign non-compete agreement. To avoid a non-compete agreement dispute a la Kai-Fu Lee and Microsoft, it is a good idea to hire a business law attorney to draw up a water-tight contract.