Robotics inventors and businesses recognize intellectual property as a valuable commercial and corporate asset – protecting precious market share, quantifying innovation, and providing a competitive edge. Trade secrets are a common form of IP protection for innovations of companies whose robots interact with few humans, live behind closed doors on factory floors, or serve only in top-secret military missions.
But today?s robots are in the ?public? eye like never before, and when robots are designed for homes and businesses, companies may mistakenly believe that trade secrets should take a backseat to patent protection. For any robotics company, trade secrets provide a crucial component of a robust intellectual property portfolio and should not be overlooked.
A technology-driven business plan needs to consider which innovations can be protected more effectively (and potentially indefinitely) as trade secrets, which should be patented, or how to use both forms of IP.
What Is a Trade Secret?
The Uniform Trade Secrets Act, a legal framework which many states have adopted, defines trade secrets as having two key features. A trade secret is information that: (1) derives economic value from not being generally known or readily ascertainable by proper means; and (2) is the subject of ?reasonable efforts? under the circumstances to maintain its secrecy.  When a trade secret owner makes a claim for trade secret misappropriation, the owner must prove that these two criteria are met, by clear and convincing evidence.
Generally, to have made ?reasonable efforts? to maintain secrecy, a company must have robust employment agreements and policies, non-disclosure agreements with investors and contractors, and mechanisms to prevent public disclosure – both intentional and accidental. The magnitude of these requisite efforts depends on the value of the trade secret.
Much like with patents, laboratory notebooks can prove invaluable to assist a company in identifying, protecting, and then proving the existence and maintenance of trade secrets. Many companies also maintain an inventory or some other mechanism to identify trade secrets internally. Such systems can assist in proving the existence of trade secrets, that the company adequately protected those secrets, and can help quantify the value of the trade secret – for legal and financial purposes.
Which Is Better for Robotics: Trade Secrets or Patents?
Depending on the circumstances facing your business and the technology itself, a thoughtful approach might counsel in favor of patents or trade secrets, or even some combination.
Innovation in robotics spans technologies and can take any form. Beyond the robot itself, or its component parts and software, innovations often come in the form of new methods of manufacture to make the robotics lighter, faster, or more flexible. Whether one or the other, or both types of protection make sense depends on the invention itself. Of course, business circumstances matter just as much; no robotics company is the same.
For burgeoning companies, patents (or at least applications) may be necessary to prove and provide value to investors, who are frequently unwilling to submit to non-disclosure agreements and may have difficulty quantifying the value of a trade secret. For companies with many or ?equal? competitors, who have patent portfolios covering their innovations, a robust defensive or offensive patent portfolio may be a good strategy to leverage against competitive threats. For example, the ability to attack a competitor with potential counterclaims if accused of infringement can help level the playing field.
In competitive fields, filing patent applications early creates prior art that can block competitors from obtaining their own patents. As a first step to determine which form of protection best fits the circumstances, a company must first and foremost familiarize itself with the benefits and drawbacks of each form of protection. Several of these are discussed below.
Patents create the right to exclude others from practicing the claimed invention, and arguably may, depending on all the circumstances, provide stronger protection than a trade secret. Although defendants and would-be defendants can challenge patent validity once the patent issues, an issued patent is presumed valid.  Unlike published patents, trade secrets are by definition kept in the strictest confidence, because even accidental disclosure can irreparably destroy the secret and extinguish any enforcement rights. For example, if a careless employee discloses the secret to a third party in casual conversation or otherwise, there may be no further protection. And, although many courts allow sealed filings and carefully worded protective orders to reduce disclosure risks, bringing suit against another party may require disclosure of your trade secrets. 
Trade secrets can protect subject matter that patents cannot, even when the secret is shipped with the robot. In such products, trade secrets offer value if the secret cannot be reverse-engineered.  Of course, trade secrets work especially well in circumstances where the trade secret is not apparent or easily discoverable in the end-product – for example, perhaps the invention operates behind the scenes to create the end product or in a controlled environment where those that see and work with the robot are sworn to secrecy. Or, for the many robotics that rely on software, perhaps the secret is not in the executable code that is shipped with the robot, but instead lies in source code that is kept under lock-and-key in true trade secret fashion.
A trade secret may also protect more than what is implemented in the robot, it may protect information about what was not done; patents do not necessarily reach such ?negative know-how.? Knowing that many more-obvious iterations/approaches were not the best solution to the problem-at-hand can have great value. Unlike patents, which require publication of a detailed description of the invention, enabling others to make/use/build the invention, trade secrets help keep competitors behind, having to start at ground zero, and thus protect a long history of trial-and-error development.
For many technologies, a patent?s limited life-span of twenty years from filing provides adequate protection for the innovative company. But for technologies and inventions whose useful life spans have the potential to be much longer, trade secrets offer a more valuable option because the protection can last indefinitely, i.e., as long as the secret can be kept. Many famous inventions have taken advantage of trade secret protection – the formulations of WD-40 and Coca-Cola come to mind. And because patents all eventually expire, trade secrets can be critical to inventions that may not gain market acceptance and momentum for a long time.
The remedies available for trade secret misappropriation and patent infringement include both monetary and injunctive relief. In patent cases the successful plaintiff can be awarded a reasonable royalty and/or lost profits, but cannot disgorge the infringer?s profits. Unlike patent cases, a trade secret judgment can award the plaintiff its losses as well as the defendant?s unjust enrichment. Both types of protection also permit additional monetary relief for a defendant?s willful or malicious conduct.
Many companies leverage their patents and trade secrets in the same lawsuit. With the addition of trade secret claims, the courts can provide additional remedies to monetary compensation, such as barring the defendant from competing in the field. In addition, threatened trade secret misappropriation is immediately actionable, whereas threatened patent infringement generally is not.
By its very nature, a patent infringement action requires proof that the defendant practices each and every element of the claimed invention. With some inventions, it may be difficult to identify and therefore prove that a competitor infringes the patent. In robots that work in warehouses and on manufacturing floors, where they are not readily obtainable on the open market for dissection (to verify patent infringement suspicions), or that have innovations deep within their software, companies have trouble detecting actionable infringement. Under these circumstances, such innovations may be best protected with trade secrets.
Every Robotics Invention Should Begin as a Trade Secret
Savvy companies almost always use trade secret protection initially, often operating in stealth mode until a technology is developed and proven. Because the disclosure of a patentable invention starts a clock ticking when one must file a patent application without the danger of that prior disclosure becoming prior art against the application, companies must practice the art of secrecy for their inventions until such time as it becomes necessary to file. And, although at least U.S. patent law provides mechanisms to challenge those that file patent applications on inventions derived from others, avoiding such situations certainly saves costs and prevents unnecessary business disruptions. At some point, the company must decide whether to maintain the secret, or to file for patent protection.
Especially in the new ?first-to-file? system established by the America Invents Act (AIA),  it may be worthwhile to file a provisional patent application initially to preserve your invention date, which can be relied upon for one year without risk of publication, i.e., it remains a secret. The provisional patent application secures the early filing date, and allows the applicant to file for a non-provisional patent within one year if it decides that patent protection is necessary.
Patent applications publish about 18 months from their earliest effective filing date (the provisional filing date, if there is one). Thus, usually, the decision to keep the invention under wraps as a trade secret can be delayed for nearly 18 months after filing a patent application, which the applicant can withdraw prior to publication. This should provide sufficient time to investigate and determine the potential value of a patent and/or trade secret.
Trade Secrets Are Even More Important after the America Invents Act (AIA)
Patent law has recently undergone significant reform with the enactment of the AIA. One such reform improves the value proposition of trade secrets.
Before the AIA, an accused infringer who had practiced a patented invention in secret for many years prior to the patentee?s filing date could not rely on a so-called ?prior user right,? unless the patent was for a so-called ?business method.?  Under the AIA, prior user rights were extended to any technology.  Having a robust trade secret, and practicing that trade secret, prior to later patenting by another can provide an invaluable affirmative defense to patent infringement charges (through prior user rights).
The AIA also expanded what is available as prior art to patent applications and patents, thereby expanding the universe of material prior art over which a claimed invention must be novel and non-obvious. In view of these developments under the AIA, companies may now opt for trade secret protection; because a trade secret does not require novelty or non-obviousness to be valuable and protectable.
As demonstrated above, robotic innovations may be protected by patents and/or as trade secrets. Deciding which path to follow is made more difficult with the expansive changes introduced by the AIA, but the authors believe that with careful consideration of the technology and business concerns, the right choice can be made.
 In a district court proceeding, this presumption can be a significant hurdle because the accused is required to prove that the patent is not valid by clear and convincing evidence. However, the accused now has even more options to pursue a post-grant challenge at the U.S. Patent and Trademark Office under the America Invents Act §ion;§ion; 311-29, where no such presumption exists.
 Even arguably the most famous trade secret of all time, the secret Coca Cola formula, has been provided to an opponent in litigation. See, Coca-Cola Bottling Co. v. Coca-Cola Co., 107 F.R.D. 288, 289, 227 U.S.P.Q. (BNA) 18, 19 (D. Del.1985) (the plaintiffs successfully contended that in order to prevail they needed to discover the complete formula for the Coca-Cola drink, one of the best kept trade secrets in the world). Of course, this does not destroy the trade secret or its value per se, it just means that at least one more individual(s) may know the secret recipe, albeit under the threat of likely jail time or significant monetary damages if disclosed outside of the court?s protective order.
Copyright © Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm?s clients.
See Also: Patents or Trade Secrets: The Choice Is Yours PDF Download
About the Authors
Michael R. McGurk is managing partner of the Boston office of the intellectual property law firm Finnegan, Henderson, Farabow, Garrett & Dunner, LLP.
He has over 25 years of experience in IP matters involving all aspects of patent law, primarily in pharmaceutical, chemical, medical device, and mechanical technologies, including robotics.
+1 617 646 1619
Rachel L. Emsley is an attorney in the Boston office and focuses on district court litigation, appeals, post-grant review proceedings including inter partes review, patent prosecution, and client counseling.
As an electrical engineer, she concentrates her IP practice on electronic technology, computer software, robotics, business methods, internet applications, and medical devices.
+1 617 646 1624
Both are members of Finnegan?s Robotics Group.