So which do you prefer: Samsung or Apple? Just kidding, that’s not what we are going to be discussing today, but just for fun, here’s my opinion: an apple a day, keeps malware away.
So here’s the gist: sometime last year, nine people and two companies were indicted for selling Samsung’s curved-edged OLED display technology. Apparently, when it comes to its display technology, Samsung is like a protective dad. You can’t really blame Samsung though; it took the company six years and $134 million to develop the stolen technology. Also, in January(definitely this year), an Apple employee was also charged with stealing Apple’s self-driving project secrets (who knew Apple was into cars?).
The Samsung and Apple stories show just how important trade secrets are as IP rights especially in the tech sector. A trade secret is ‘a formula, process, device or other business information that is kept confidential to maintain an advantage over competitors’. One thing makes trade secrets particularly distinctive; unlike other IP rights, they are the invisible component of a company’s intellectual property. And often, the value they add to a company is MASSIVE; take Coca-Cola’s secret formula for example. Essentially, trade secrets are literally secrets that bring about some economic advantage to the owners.
Trade secret protection has become a viable method of sustaining certain advantages in the technology sector. They are more advantageous than patents and the likes because:
- Unlike patents they are not limited to a certain period of time.
- They require no registration cost, although there might certain costs in obtaining the several legal measures that make something qualify as a trade secret.
- They do not require disclosure to even government authorities, Coca-cola has refused to divulge its secret formula even after two court orders to do so (damn! And I thought Samsung was the protective dad).
I know what you are thinking: ‘you have found the ultimate intellectual property protection’…well, not exactly, because there some major caveats:
- Trade secrets are not enforceable like patents, thus, if another company obtains the exact content of a trade secret (through legitimate means of course), they cannot be prevented from using it or even patenting it (yeah! Checkmate).
- Trade secrets used in a particular technology such as Samsung’s favourite display tech, can be extracted by competitors through reverse engineering and analyzing it.
- Trade secrets derive their protection from being secrets, so the moment they stop being secrets (become accessible to the public), they stop being protected.
These caveats however have not removed the relevance of trade secret in the technology industry and it is understandable because trade secrets give unexpected blows to competitors unlike patents that give competitors insight into the developments of a company. Patents also give adequate time to strategically mitigate its impact on the competition. Patenting a particular technology would allow competitors to study the technology, manufacture their own version of it that is ‘totally different’ and does not infringe on the patent at all but trade secrets simply keep them in dark.
Without doubt, taking the route of trade secret protection is a big risk and should be used sparingly and reasonably, it however seems to be a no brainer for cutting edge technologies that could give enough economic advantage to make it worth the risk.