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IP Part 5: The IP Hidden Gems: Trade Secrets and Industrial Designs

Patents, trademarks and copyrights are often the stars when it comes to intellectual property. However, industrial design registrations and trade secrets can be just as valuable. It’s important not to overlook these types of IP as they can offer a wider range of protection, a long duration of protection or even save you a few dollars! 


What are Industrial Designs?

Industrial design protection covers the aesthetic features of your product. In the United States, protection is by way of a design patent. This type of protection can go hand-in-hand with the patent on your invention (in the US known as a utility patent) which protects the function of your product. Combining industrial design and patent protection can be a great way to protect multiple aspects of your innovation. 


Industrial design protection cannot extend to the solely functional features, or the method of creating your invention. Rather, this protection may include the shape, configuration, pattern, ornament, or any combination of these features in your product. Design protection can cover a broad range of features. For example, the shape and design of jewelry, the shape of the Coca-Cola bottle, the famous Eames lounge chair, and the look of Dyson vacuum cleaners and KitchenAid mixers.


Design protection also extends into the realm of technology. Some design features of Apple iPhone are covered by design protection, for example the shape of the phone with the rounded corners. In some iterations the location of the home button and the graphical user interface (GUI) are protected. Even your app logo design can be protected. 


Industrial design protection allows you to have a monopoly on the look of your product. You can then carve out your niche in the market and strengthen your brand since the protection gives you the power to prevent others from copying your design or even coming up with something substantially similar independently. 


Applying for Industrial Design Protection

Similar to a patent, your design must be novel. This means that your design, or a very similar design, cannot have been previously disclosed anywhere. Again, like patents, both the US and Canada offer a 12-month grace period for applying for a design registration or design patent. Even the EU and UK offer a 12-month grace period for industrial design registrations, (which is not true for their patent protection). This means if you have disclosed your design you have a 12-month window in which to file your application. 


Design protection is territorial: your protection is valid only for each region in which you are registered. Much like other forms of IP there are methods by which you can file internationally (but no such thing as international design protection). This is known as the Hague System, which allows you to file one application in order to apply for protection in multiple countries. There are currently 75 countries that recognize the Hague System, including Canada, the EU, the US, and the UK. 


Once granted, design protection lasts for different time periods in each jurisdiction. In Canada, protection can last 15 years from the filing date or 10 years from registration, whichever is longer. In the US, design patents last 15 years from the date of grant. In the EU and UK, design registrations can last up to 25 years.  


Industrial designs can add tremendous value to your IP toolbox. They can be excellent stand-alone protection or complement your existing IP. Many products can simultaneously be protected by multiple forms of IP. Returning to the Apple iPhone example, it is not only protected by industrial design registrations, but also the technology is protected by patents, the software by copyright and the brand (name and logo) by trademark registrations. 


Trade Secrets

Protecting your invention as a trade secret can sometimes be an alternative to patent protection. Trade secret protection can cover almost anything that adds value to your company by virtue of being secret, including a process of manufacturing, data, algorithms, formulae, distribution methods, client lists, or any combination of elements. This can provide your business with a competitive advantage if you are successful in guarding your trade secret.


Trade secrets differ from patents in a number of ways. First and foremost, trade secrets cannot be registered since that would actually be counterproductive to keeping secrecy. Further, in Canada we do not have any trade secret legislation. This means if your trade secret got out, you have to claim breach of contract, breach of a duty to maintain confidentiality, or breach of fiduciary duty, etc. There are also new sanctions under the Criminal Code and deliberate taking or disclosure of a trade secret can be punished by substantial fines or up to 14 years in prison. The US does have trade secret legislation at both the federal and state levels, which offers trade-secret specific enforcement in the event of a breach. 


However, once a trade secret is out in the public there is nothing you can do to get it back. With a patent, if you were to sue an infringer you still have the life of the patent remaining. However, if someone discloses your trade secret, even if you sue the infringer, you’ve lost the commercial advantage that your trade secret provided you.


Despite the risks, if protected properly, trade secrets have many advantages. A trade secret is far less expensive than a patent. There are no filing fees, maintenance fees or drafting fees. This means you have protection from day one without any of the costs and hurdles associated with obtaining a patent. Trade secrets also have no expiry date, they are valid so long as you protect the secret. A patent has a 20-year lifespan, which means that 20 years after filing you lose your monopoly, and anyone is free to take advantage of your patent. In contrast, a trade secret can survive forever. 


Consider the recipe for Coca-Cola which was invented in 1886, and to this day remains a trade secret. Once the recipe was written down it was placed in a bank vault, and only recently relocated to a vault at the World of Coca-Cola. By protecting the recipe and limiting the people who know the formula to only a select few the Coca-Cola company has managed to maintain their trade secret for more than a century. Had this recipe been the subject of a patent, Coca-Cola would have lost their monopoly a long time ago, and perhaps would not have been as successful as they are today.


The other side of this is that a trade secret may also be the best option for technology with a short lifespan. If you know your product will have a short shelf life before the “next big thing” it may not be worth the time, effort, and money to obtain a patent. Rather, if you can keep the secret for a few years, you can enjoy the benefit of the monopoly without the expenditure required of a patent.


Protecting your trade secret

Not everyone has a sealed vault in a museum to protect their secret formula. This highlights the real risk of trade secrets. Once your secret is out, it’s out, so you need to take steps to protect your product. Even if you don’t have a vault, you can still physically protect your secret. You can keep confidential and non-confidential documents in separate areas and use a physical lock and key (or key card) to protect your files. For digital secrets, you can use passwords, 2-factor authentication, encryption methods and other means to prevent unauthorized access. Protection also includes limiting the amount of people who need to know the secret. Perhaps a select few know the entire secret, while others have just enough information to allow them to complete their job. 


On the legal side, you should also take care to enforce the confidentiality of your secret using non-disclosure and confidentiality agreements with employees, contractors, clients, and anyone else who may be involved. Be sure to remind everyone, including employees and board members, about the importance of keeping information confidential.


Lastly, since trade secrets are not registered, there is nothing to prevent a competitor from reverse engineering or coming up with the invention on their own. If someone else enters the market with the same product or process there is nothing you can do to stop them. Moreover, if they apply for a patent on this invention the nature of a trade secret means it does not count as prior art to prevent the patent from granting. That said, a competing patent is not the death of your business. If you can demonstrate you held the same product or process as a trade secret, you may be permitted to continue practising it. This would mean that you would have a single competitor - the patent holder, rather than multiple competitors, unless the patent holder decides to license others.


Trade secrets are an often-overlooked form of protection that should be considered during the decision of whether or not to patent. Not all inventions are eligible for patent protection, be it due to subject matter or a crowded industry with a lot of prior art. Financial constraints and timelines can also be valid reasons for considering trade secret protection. It’s important to decide whether or not you want to use a trade secret before applying for a patent because once you file a patent application and it is published, there may be no turning back. If you attempt to obtain a patent and are unsuccessful, the information is out there and you cannot take advantage of trade secret protection. Therefore, it’s advisable to talk to a patent agent about the best protection options for your invention. 

ventureLAB can help you navigate your IP strategy. Located at the heart of Ontario’s innovation corridor in York Region, ventureLAB is a leading global founder community for hardware technology and enterprise software companies in Canada. Our initiatives focused on raising capital, talent retention, commercializing technology and IP, and customer acquisition have enabled thousands of companies to create over 4,000 jobs and raise more than $200 million in investment capital. Join us.

About the Author

Maddie Lynch is an IP Intern from Osgoode Hall Law School where her studies focus on intellectual property. At Osgoode Maddie is part of the IP Osgoode Innovation Clinic helping inventors with the early stages of patents and trademarks. Prior to law school Maddie obtained a PhD in Neuroscience, working in an Alzheimer’s disease therapeutics lab. Most recently, she summered at Bereskin & Parr LLP, an IP law firm and looks forward to continuing her education in intellectual property law.

Original Article on ventureLAB

ventureLAB is a leading global founder community for hardware technology and enterprise software companies in Canada. Our organization is led by seasoned entrepreneurs and business leaders with decades of industry experience in building IP-rich start-ups, scale-ups, and global multinationals to help you scale your business. Located at the heart of Ontario’s innovation corridor in York Region, ventureLAB is part of one of the biggest and most diverse tech communities in Canada. We enable technology startups to accelerate the commercialization of transformational products on a global scale.

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