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Intellectual Property 101: Patents & Trade Secrets

In my previous blog post, I wrote about the differences between trademarks and copyrights, and the importance of both in protecting your business’ assets. If you need a refresher on the foundational business tasks that Rocket Lawyer can help with, please revisit the first blog post.

In this final installment of our three part series (for now!), I’ll be exploring patents and trade secrets. You should be able to then identify your valuable IP that needs protecting.


A patent is a grant of rights by the U.S. Patent and Trademark Office. Patents are given to inventions or processes that are considered new or useful.

Under the umbrella of patents are three different types of patents: utility patents, design patents, and plant patents.

  • Utility patents are given to new inventions or processes or new improvements upon currently existing ones.
  • Design patents are given for new designs on existing items.
  • Plant patents are given for those who discover and reproduce a new species of plant.

In discussing patents, it’s important to note what a patent actually is. A patent grants its holder the right to exclude others from manufacturing or selling that particular invention, but it doesn’t automatically confer the holder the right to manufacture or sell it either.

U.S. law has also changed recently with regards to patents. While the system previously gave priority to the “first to invent” when it came to filings, the law now states that it’s the “first inventor to file” that matters.

One of the big issues in patents right now is the proliferation of lawsuits from non-practicing entities, or “patent trolls” as they are often referred to. Patent trolls do not actually create or manufacture anything; rather, their money is made off of infringement lawsuits based upon patents they hold that are usually quite broad.

Apple recently had a $533 million decision against them thrown out in the suit brought by Shockwave LLC. In the case, Shockwave alleged that Apple was infringing upon their patent, which broadly covers online data storage. Many trolls choose to go after smaller companies that don’t have the resources for a protracted legal battle and often settle out of court.

And while there’s nothing you can do to ward off trolls entirely, understanding our patents and some of the more notorious trolls operating can keep you on guard. Remember, all patents have a limited life unlike trade secrets.

Trade Secrets

As the name suggests, a trade secret is valuable information used in your business that you want to remain confidential. According to the USPTO, a trade secret “can include a formula, pattern, compilation, program, device, method, technique, or process.” Trade secrets are distinct from other types of IP protections in that all that is required for protection is for it to remain secret.

There is no filing with the government, as that would be disclosing that information to anyone who cared to look. There is no limitation to the life of the trade secret as long as it’s secret. But maintaining trade secrets requires diligence on your part as well, as restricted access and confidentiality agreements are essential to preventing your secrets from getting out.

Stealing trade secrets is a very serious business, with very real consequences. Former DuPont employee Edward Schulz was recently convicted for his part in a plot by a South Korean company called Kolon Industries to steal trade secrets surrounding the production of Kevlar.

According to the FBI’s reporting on the matter, Schulz worked for DuPont for 30 years until leaving in the year 2000, and despite having signed a confidentiality agreement, he held on to documents from his time working on technical research and development for Kevlar.

When Kolon Industries reached out to Schulz about consulting position and began inquiring about his work with Kevlar, Schulz willingly turned over his documentation to the company. DuPont became aware of the conspiracy between Schulz, another former DuPont employee, and Kolon Industries, and went to the FBI. And while Schulz’s sentence was not disclosed, it’s safe to say that the consequences far outweigh whatever his temporary awards were.

Use Traklight’s risk assessment as a guide to ensure you’re not missing any important early stage tasks! Traklight’s entire software platform is free for Rocket Lawyer visitors. Go here to get started.


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