Psst, HZO Has (Trade) Secrets
Posted on June 4th, 2015 by hzodev
At HZO we spend many working hours, and some dwell time too, developing our intellectual property. This IP includes inventions for which we file patent applications (200+ to date), but also includes a decent number of trade secrets. By its very nature a secret, we can’t go into a deep dive of HZO, but we find trade secrets particularly interesting and hope to ignite a conversation among our readers.
Trade secrets jurisdiction may vary state to state, but to qualify as a trade secret, the invention includes two straightforward conditions. The trade secret must:
· Have economic value; and,
· Be kept quiet by its owner.
As owners of trade secrets including engineering plans, processes and procedures, HZO uses two contractual actions to protect these intangible assets. Our hiring practice requires all employees sign a non-compete, ensuring if an employee leaves HZO, he can’t use knowledge learned here to benefit himself or another company. We also require an executed non-disclosure agreement before getting deeply engaged in new projects – to date we are at 100+ NDAs and counting. These simple but essential contracts ensure HZO is protecting its trade secrets.
Some trade secrets we wished we knew:
· The formula for WD-40
· The processes Intel uses for making integrated circuits
· The Google search algorithm
If you are wondering why anyone would decide to make an invention a trade secret rather than a patent, here’s the way our General Counsel, James Larson, explained it to us. There are a few reasons why companies keep their inventions safe as trade secrets. First, some ideas are not patentable. Second, trade secrets exist in perpetuity as long as the owner continues to meet the requirements of the trade secret whereas a patent expires in 20 years. Most intriguing is the fact that sometimes a company does not want to disclose how a product is made, a requirement that needs to be incredibly involved when applying for a patent, but not a trade secret.
Here’s something else James taught us on this area of IP. Sometimes it may be best to break up inventions into parts – part patentable invention and part trade secret – making reverse engineering more difficult.
If we aren’t completely clear whether to file a patent or protect an HZO invention as a trade secret, there’s a loophole. Inventors may file for a patent, which is kept secret for the first 18 months. During that time, HZO or any other inventor can decide what is the right path to protect that invention.
We were left wondering if the best trade secret of them all – the Coca-Cola formula – was always planned as a trade secret, intended for a vault for decades, generations and centuries to come. What do you think?