Finding Value in Trade Secrets

tradesecretThere is a new report you should read about the underlying value of Trade Secrets to the global economy. Ms. Katherine Linton published in June a report entitled: The Unexpected Importance of Trade Secrets: New Directions on International Trade Policy Making and Empirical Research.” The article represents the views of Ms. Linton and not the International Trade Commission or its commissioners for whom she works.

According to the WIPO, Trade Secrets are “Broadly speaking, any confidential business information which provides an enterprise a competitive edge may be considered a trade secret.” This can include formulas, practices, processes, designs, instruments, patterns, commercial methods, or compilation of information that are used competitively and kept secret.

Ms. Linton’s key findings are that Trade Secrets:

1. Are as, or more, important than patents in many industries;

2. Provide different, and important protections to companies;

3. Can be protected without government help;

4. Domestic laws and Trade agreements are aligning to protect Trade Secrets; and

5. Research into IP value and innovation focus on patents because they are easier to measure and collect data on.

While Trade Secrets tend to stay below the radar. Linton’s report is useful because it combines research into the perceived value of patents, copyrights and trade secrets across multiple industries, with recent insights into trade policy and agreements.

As a patent and technology asset broker, the value of trade secrets on the sale of technology assets cannot be underestimated. Unlike patents, which are publicly disclosed and subject to challenge and a high probability of elimination, trade secrets are, well, secret. And they provide value to a firm as long as their secrecy is maintained, and their contribution to the success of a technology or service in a market continues.

Trade Secrets will never be an asset class separate from the company and technology or services they enable, but they are an important means of establishing value and differentiation in the sale of technology assets. In cases where companies do not have strong patent coverage, there can still be value, if they have developed and protected their trade secrets.

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