Every entrepreneur hears this at some point. Maybe from an investor, maybe from a well-meaning adviser. The assumption is always the same: patents equal protection.
But here’s what nobody tells you: sometimes keeping your innovation secret works better than making it public through a patent.
The Patent Promise (And Its Limits)
Patents grant you exclusive rights to your invention for up to 20 years. Sounds perfect, right?
The catch is that you have to tell the world exactly how your invention works. Every detail goes into the public record. Once your patent expires, anyone can use your innovation freely.
Competitors also get a roadmap to work around your patent. Look at the vacuum cleaner market after Dyson’s bagless technology patents. Dozens of manufacturers studied those patents and developed their own versions that were just different enough to avoid infringement. Dyson’s innovation? Now it’s everywhere.
Walk down any supermarket aisle and you’ll see the same pattern. Branded products protected by patents sitting next to copycat versions that found legal workarounds.
The Trade Secret Alternative
Some innovations work better as secrets. Coca-Cola’s recipe has stayed confidential for over 130 years – far longer than any patent would have lasted. KFC’s blend of herbs and spices, Google’s search algorithm, your bakery’s signature technique – these all rely on secrecy rather than patents.
Trade secrets work when you can actually keep something confidential and when reverse engineering won’t easily reveal your methods.
What Actually Determines Your Strategy
The right approach depends on your specific situation:
Your innovation itself – Can it be reverse engineered by looking at the final product? If yes, a patent might make more sense than a secret that won’t stay secret.
Your market position – Are you first to market with time to build brand loyalty or do you need legal barriers to keep competitors out?
Your resources – Patents cost thousands to file and defend. Trade secrets need robust confidentiality agreements (NDAs) and internal security.
Your timeline – Need investor funding soon? Some sectors expect patents. Building a lifestyle business? Trade secrets might serve you better.
Your industry norms – Pharmaceutical companies patent everything because regulators require disclosure. Software companies often rely more on trade secrets and speed to market.
The Investor Pressure Trap
Here’s what causes problems: making IP decisions based on what investors expect rather than what your business needs.
Not everything can be patented. More importantly, not everything should be patented. An investor pushing for patents might not understand your specific innovation or market dynamics.
Patents signal credibility in fundraising conversations, but they don’t guarantee market success. Plenty of patented products fail while unpatented trade secrets generate millions.
Getting It Right
The choice between patents and trade secrets isn’t about which one is “better.” Both have their place. The question is which one fits your innovation, your market and your business model.
Sometimes you’ll use both – patenting your core technology while keeping manufacturing processes secret. Sometimes you’ll use neither and rely on speed to market and brand strength instead.
Ready to work out the right IP strategy for your specific business?
Book an IP Strategy Call and we’ll help you figure out what actually protects your competitive advantage – whether that’s patents, trade secrets or something else entirely.
