Certain unpatented intellectual properties, such as trade secrets and proprietary information, can be of utmost importance to a business. For example, it is believed that the lasting success of The Coca-Cola Company is attributable to one of the world’s most guarded trade secrets – the Coca-Cola formula.
Trade secret generally means valuable business information that is not known to others and has been maintained in secrecy. In Canada, misappropriation of trade secrets may give rise to remedies in contract, property, tort laws and in equity, if there is unauthorized use of a person’s confidential information to the detriment of that person.
Unlike patents, trade secrets are vulnerable to a third party’s discovery. As soon as the secret is discovered through an examination of the product or other honest way, the discoverer has the full right of using it.
More fundamentally, because trade secrets and confidential information are rooted in the relationship of confidence, they cannot simply be characterized as “property”:
The word property as applied to . . . trade secrets is an unanalyzed expression of certain secondary consequences of the primary fact that the law makes some rudimentary requirements of good faith. Whether the plaintiffs have any valuable secret or not the defendant knows the facts, whatever they are, through a special confidence that he accepted. The property may be denied but the confidence cannot be. Therefore the starting point for the present matter is not property . . . but that the defendant stood in confidential relations with the plaintiffs, or one of them.
As a patent requires full and complete disclosure of the invention, a patented product or process cannot be simultaneously protected by trade secrets. However, under some circumstances patents and trade secrets may coexist with respect to a complicated system. For example, one of the components of the system can be patented while the design parameters and process required to make and install the whole system can be maintained as secrets.
Trade secrets are strategic choices that are opposite to patents in nature. Therefore, any decision about going one way or the other should be assessed on a case-by-case basis.