Patents and Confidential Information / Trade Secrets

The modern patent system was created to encourage inventors to share information on their inventions with the public, through public disclosure in return for limited rights of exclusivity, as obviously, innovations can also be protected without patenting by keeping them confidential. This has the advantage of indefinite commercial exploitation by its owner through the non-disclosure of the technical and scientific information to the public. The recipe for Coca Cola, for example, is not patented - it remains a trade secret until today. It is therefore not uncommon to find businesses using confidentiality to protect its competitive edge in the market. The unauthorised use of such information by persons other than the owner is regarded as an unfair practice and a violation of the trade secret. Unauthorised use can also be considered to be theft, and so can be a criminal offence, instead of just a civil transgression.

Often, information is kept confidential by giving express notice to the recipient via the establishment of confidential disclosure agreements, under which the party that receives the patentable technology assures the owner that it will not disclose the innovation to third parties. A contravention of the agreement results in a breach of contract and is subjected to the normal contractual principles relating to damages.

Confidential disclosure agreements can be useful in situations where a research organisation is unsure of the commercial viability of an invention and would like to retain the option to bring the invention to market after a more substantial study. Filing a patent is not, in such a situation, a good strategy because of the high costs associated with patent drafting and application. In such cases, appropriation of the invention by others can be prevented through a confidential disclosure agreement.