Thus sang Rumpelstiltskin triumphantly and thought he was safe. And many an inventor might sing the same song, for he, too, prefers to keep his ideas secret and turns his invention into a product that is fit for the market without anyone noticing. The competitors do not have a clue. The market launch of the innovation comes as a surprise to both the customers and the competitors. For a short time, this gives the inventor a competitive edge. But how safe is this method on the long run? Can intellectual property successfully be protected by keeping an invention absolutely secret?
Writing about inventions which are kept secret is not easy, precisely because the public hardly knows anything about them. Still there are famous, widely known examples such as the caffeinated soft drink Coca Cola. Since 1886, it has been prepared according to a secret recipe which is said to be known to just a few employees. In the meantime, the Coca Cola Company uses this secretiveness as a marketing strategy. Visitors are voluntarily shown the steel vault and the box containing the secret formula. Thus, attention is constantly drawn to the soft drink’s uniqueness.
Today, the main ingredients of the recipe are known – all but for one. From time to time, the public is alerted by newspaper articles claiming that the secret of the recipe has been unveiled and the missing ingredient discovered. At the same time, there is no comment from the Coca Cola Company. Almost 130 years after the market launch it is obvious: Secretiveness certainly gives a competitive advantage and has up to now done the Coca Cola Company more good than harm.
No secret is really safe
But this is an ideal case. In reality, inventors always have to be on their guard. Depending on the distribution and success of the product, the competitors will not rest until they have uncovered the idea. The inventor becomes a prey with the competitors hard on his heels. He may trust nobody and has to be prepared for anything, from espionage to treason. What is worse: If a competitor uncovers the secret, he can obtain exclusive patent protection himself and thus legally market the innovation. The original inventor will go away empty-handed and, in the worst case, will even have to pay the patent owner a license fee in order to be able to sell his own innovative product.
Therefore, a cartoon by the European Patent Office strongly advises against trying to protect intellectual property by keeping an invention secret. The EPO considers such a “strategy” one of the seven deadly sins an inventor may commit.1
The right of prior use – one of the inventor’s last resorts
At least there is one legal “back door” the secretive inventor may use. He has to claim the “right of prior use”. This means that he describes his invention and deposits the document on paper or stored on an electronic medium with a notary public. The notary public as an official registers the entry date and stores the documentation of the invention, similar to a will. In case that another enterprise uncovers the secret of the invention and files a patent of its own, the original inventor will be allowed to market his invention without having to pay a license fee. The deposited documentation of the invention can be used as evidence to assert the inventor’s right of prior use.
There are other tricks allowing the inventor to secure his right of prior use. Michele Ferrero, the Italian confectioner and inventor of the world-renowned hazelnut spread Nutella, is said to have had the recipe of his spread translated into Arabian so that he could then deposit the document with the intellectual property office in Cairo.
However, when push comes to shove and each of two rivalling inventors insists that the invention was his own, there will be litigation in spite of all previous strategic tricks. Usually, this is handled by a mediator or a sworn assessor. He examines in private whether content and technology of the patent filed correspond to the secret documentation of the invention. The patent applicant himself is not permitted to view the documentation of the invention but has to accept the assessor’s judgment. This protects the inventor who wants to keep the invention secret – he cannot be forced by a staged lawsuit to disclose his invention.
There are certainly reasons why corporate know-how should not be disclosed. Especially small and medium-sized enterprises (SMEs) do not have a patent department of their own or lack qualified staff to carry out patent searches or monitor their competitors’ activities. What is more, each published patent discloses information to competitors; so inventors fear that their invention might simply be copied using the patent document a construction manual. However, a secret cannot be kept to eternity and sooner or later it will be uncovered by others. Thus it is not unusual that inventions available on the market are “disassembled” by competitors in order to copy them.
Expert interview with PROvendis
We have interviewed Dr Schäfer from PROvendis GmbH, an expert with practical experience, on the topic “Keeping an invention secret”.
As a patent marketing agency for 27 universities of North Rhine-Westphalia, PROvendis offers the industry exclusive access to a large pool of research results, protected by intellectual property rights, of approx. 20,000 scientists from the colleges of medicine, natural sciences and engineering.
The company is specialized in assessing, obtaining patents for and marketing university inventions and acts as an interface and moderator between industry, universities and research scientists with the objective of advancing the transfer of technology between industry and science.
FIZ KA: Dr Schäfer, in your everyday work, do you come across inventors who do not want to disclose their inventions?
Dr Schäfer, PROvendis: This is rarely the case, which is mainly due to our type of customers. We deal with inventions from scientists and professors from universities and other academic institutions. These people are very interested in publishing their inventions, because each publication increases their scientific reputation. And a patent document, too, is a publication. Sometimes we even have to stop our customers. We then suggest they wait and develop a prototype first.
It is different with manufacturing companies and companies doing research. These do keep their inventions secret in order to gain an economic advantage.
FIZ KA: What do you think are the main reasons why someone would want to keep his invention secret?
Dr Schäfer, PROvendis: As I said, first of all one has to decide whether an invention has market potential. An adverse factor are the costs for filing a patent, e.g. patent attorney fees, fees to be paid to the patent office, the administration of patent rights, etc. There is also the fear of disclosing too much valuable information to the competitors if the invention is described in detail in the patent document. Or the field of technology is very innovative, which means that the market cycles are very short. In this case, one innovation is launched shortly after the other. It is hardly profitable to file a patent in such a market environment. The IT sector comes to mind where, for example, data mining programs are not disclosed. Another very famous example of something being kept secret is the algorithm sorting the Google hits.
In the end, it all comes down to a purely economic assessment of all factors.
FIZ KA: How do you at PROvendis proceed if your customers signal an invention to you?
Dr Schäfer, PROvendis: Our contract customers are academic institutions. At PROvendis we have experts – innovation managers - for any field of technology. At present, we are 18 innovation managers who are responsible for the signaled inventions. First we check whether the invention can be patented at all. This is followed by a profitability estimate. Is there a market for the invention? How big is it going to be? PROvendis has sound experience in this field, because after all we have 300 to 400 inventions reported to us each year. Once the above mentioned steps have been completed, patents are not by any means filed for all inventions. Only about 25 per cent of the inventions are forwarded to the patent office where a patent application is filed on behalf of the academic institution. However, the inventions for which the institution does not file a patent are not discarded. They are restituted to the original inventor, i.e., a professor or scientist. He may then market his invention himself, without his academic institution being involved. The other inventions, i.e., those for which the institution chooses to file a patent application, are then offered to suitable companies. The business enterprise not only receives the patent itself, but also the related know-how of the inventor that is necessary to actually use the invention. This know-how is not contained in the patent document but consists of tips and tricks related to the entire technology and reflects the inventor’s experience. The know-how transfer is secured by confidentiality agreements with our customers so that this additional information can be presented to interested businesses without any risk.
FIZ KA:Do you support your customers by performing searches on the state of the art?
Dr Schäfer, PROvendis: Of course. This is a very important part of our work. If we receive information about an invention, the innovation manager checks whether the idea is patentable at all, i.e., whether it fulfils the requirements for a patent application. A professional search for the state of the art is very important for this. Only if we know the state of the art we can determine whether the invention has the necessary inventive step. Or in other words: If the idea already exists we know at this stage of the process that a patent application will not be successful. A search for the state of the art can be very complex, because we have to discuss each new result with the inventor; his feedback helps refine the search. Thus we may have to go through numerous communication loops until we can accurately depict the state of the art of an invention.
FIZ KA: Do you also use STN International for your searches and what do you like about STN?
Dr Schäfer, PROvendis: Yes, of course we also use STN International. When examining the state of the art as mentioned above, we first approach the topic by conducting a rough search on the internet. But as soon as we are doing more precise searches we switch to professional databases. And in this case, precisely STN as a provider of high-quality patent information is often our provider of choice. We appreciate the large variety of national and international patent databases combined on one single platform, one important aspect being the fact that STN also offers value-add databases such as the Derwent World Patent Index by Thomson Reuters (DWPI). We also like the possibility of ordering the corresponding full-text document directly after a search in STN through the delivery service FIZ AutoDoc. An additional benefit for us is that FIZ AutoDoc ensures that all copyright fees are correctly paid.
FIZ KA: Dr Schäfer, we thank you for this interview.
The interview was conducted by Dr Babett Bolle, FIZ Karlsruhe.