Does a patent professional need to raise the trade secret option with the client?

I recall being in a meeting a while ago where the matter under consideration was whether to seek patent protection. All of the assembled, save this Kat, were patent professionals principally engaged in the non-contentious, registration side of the patent practice. Well into the discussion, this Kat raised the question of whether it would not also be useful to address trade secret protection, given the nature of the technology under discussion. One of those in attendance sniffed and said, “Come now--you can really protect only what you disclose”, meaning presumably that what you protect is only what you can register as a patent. No one took issue with this and the discussion continued, focusing solely on patent registration matters. The message conveyed to this Kat was that he was instructed, more or less, to return to his basket and do what he was told.

The question that has nagged this Kat since that meeting is the extent to which an attorney who is engaged in patent matters, or a more narrowly licensed patent attorney, has any duty or obligation to raise the trade secret option to a client and, if so, actively to counsel how the client might behave to protect is trade secret. From a different angle, if the patent professional is a licensed patent attorney but not a licensed lawyer, is he/she prohibited from providing legal advice on the trade secret aspects of a client’s invention? That trade secret protection, as weak or as strong as one views it, is an alternative form of protection for an invention was emphatically recognized by the United States Supreme Court in the 1974 case of Kewanee Oil Co. v Bicron Oil. There, the Court addressed the bedrock issue under United States law of whether the federal patent right, anchored in the U.S. Constitution, pre-empted the state law of trade secrets, rendering the latter legally void. In ruling against pre-emption (and thereby preserving the validity of the trade secret right under various state laws), the Court devoted extensive attention to explaining how trade secret protection was a desirable and robust legally alternative to the patent law.

The problem is that one who is engaged in the registration of patents derives no direct pecuniary benefit if a client seeks to protect his invention as a trade secret. As such, absent any legal mandate to do so and assuming that there is no legal prohibition, the incentive to address the possible trade secret aspects of an invention may be lacking or, in the current academic nomenclature, there may be a misalignment between the lawyer and his client.  Kewanee Oil sharpens our understanding of the circumstances in which the patent/trade secret interplay might arise: (i) the trade secret is clearly patentable subject-matter; (ii) the patentability of the trade secret is uncertain and (iii) the so-called invention is not patentable. Having regard to option (i), if the client seeks patent protection and the trade secret is clearly patentable, the rationale to expect the attorney to raise the trade secret option is weak. Regarding option (iii), since there is no reasonable patent option, the only question is whether the implications and operation of trade secret protection should be raised. More difficult is option (ii), which lacks the certainty of alternatives (i) and (iii). Should the patent professional pose the problem as choosing between two options—patents or trade secrets, or rather focus only on the patent option, setting the risks and likelihood of success?

But choosing between a trade secrets and patent protection does not depend solely upon the registrability of the invention. There are at least two additional factors. First, there is the issue of costs. Rarely can a client afford patent protection for all possible client inventions. Priorities must therefore be established about what to protect as a patent. In counselling the client on what his patent portfolio should look like, should such advice extend to actively suggesting how to manage those aspects of the client’s developments that will be protectable (perhaps by default) by trade secrets? Secondly, there is the potential role that trade secrets may play in the client’s broader business context. The report by Wesley Cohen, Richard Nelson and John Walsh, “Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not)”, NBER Working Paper 7552 (2000), is frequently cited for the proposition that (at least for R&D managers), first-mover advantage, undergirded by trade secret protection, may be the preferred way to monetize a company’s developments, except for the pharmaceutical and medical instrument fields. Should these research findings play any part in the counsel and advice given to a client who expresses an interest to patent a putative invention?

Circling back to the questions posed above, this Kat has no ready answers. Still, he has the lingering feeling that the nature of the relationship between the patent professional and the client does not always optimize the client’s appreciation for the potential trade secret alternative. Whether the patent professional can (or should) be doing so is a separate question.