Trade secrets protections continue to flourish

R. Mark Halligan (Nixon Peabody) writes that even before the president signs the America Invents Act (expected today), trade secrets protections were flourishing even as some patent protections were weakening. For example, a business method for hedging risks such as the one at issue in Bilski still can be protectable as a trade secret. And Licensing Trade Secrets provides examples of how trade secrets can add to licensing revenue streams.

Most analysts believe patent reform will stimulate more use of available trade secrets protections. Fernando Torres of IPMetrics agrees:  The change to first-to-file from first-to-invent “would bring the U.S. system into accord with most patent systems overseas, but the transition would bring about several changes to the strategy of patent filing and the relative value of maintaining inventions secret a competitive tactic.”  

As an example that trade secrets can provide substantial protections, earlier this month, after a three-person arbitration panel found Colorado-based ADA-ES Inc. had induced two former employees of Norit to break their confidentiality agreements that mandated keeping secret Norit’s proprietary information on the best locations on which to build activated-carbon product plants, Norit agreed to a $40M upfront cash settlement, plus royalties on all related activated-carbon sales for the next eight years.