Merchandise 7X

By Orly Lobe via http://blogs.hbr.org   Article

Filing for a Patent Versus Keeping Your Invention a Trade Secret

“Why do some companies choose to patent their innovation while others choose to hide it? Compare the paradigmatic early American trade secret – the one and only recipe for Coca Cola – to the paradigmatic patent – the telephone. Alexander Graham Bell patented the telephone in 1876 as United States Patent No. 174,465, the most valuable patent in history.

Ten years later, in 1886, Dr. John Pemberton created what is now the world’s most famous trade secret: the Coca-Cola formula.Insiders know it as Merchandise 7X. No single contractor has the full recipe; each is tasked to prepare only parts of the classic blend. The company has kept the secret for over a century by purportedly storing it in a vault in downtown Atlanta, and restricting access to only a handful of executives. Coca Cola could have patented the formula, but that would only give the company twenty years of exclusivity rights to their classic taste. Instead the formula is locked up, literally and indefinitely.

A well-kept trade secret could theoretically last forever. But there is a risk. Unlike with patents, it is perfectly legal to reverse engineer and copy a trade secret.  A patent lasts only 20 years, but during that period, the protection is far stronger: independent invention is no defense in a patent suit. …

Patents and trade secrets present opposing choices. Trade secrets derive their legal protection from their inherently secret nature. Patents, by contrast, can only be protected through public disclosure. In fact, a patent will be invalidated if the inventor refrains from describing important details. This requirement, called enablement, requires a patentee to disclose enough information for others to use the invention after the patent has expired.”

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