Pros And Cons Of Trade Secret Law

Trade secret law provides incentives for inventors to create new, even though the invention would be for example too obvious to receive status of patentable invention. Without trade secret law, there would be a gap, relying only to patent law, which excludes the protection for invention that don’t quite fill all the requirements to be patentable. Ideas, such as secrets should be protected in some way, although not patentable. Thus, trade secret law enhances incentives to create.

The argument for incentives lays its ground on the public goods character of the information. The best way to make something, lowers its costs, thus making the price of the good to be low for the customers. The gain from this increases the customer’s surplus in the market for a cheaper good. Also finding something better to make creates new products. Customers benefit from these features, thus creating an effect of innovation to welfare. In reverse, innovations have the power of restructuring industries, or even make industries appear or disappear. Fast economic growth is something that many societies strive for today. A company with innovations gains competitive advantage, which leads to extraordinary profit, which in turn rewards the innovator for taking the risk. The
As patents have a time limit for their existence, an inventor who can keep the idea or concept a secret may thus choose the trade secrecy over patent, to get a life time protection for his or hers invention. The inventor then has the option to assume that the social value of the invention is greater than the patent law assumes. In order to prove the greater value, the inventor needs assistance from trade secret law. The trade secret law increases the odds that if someone does duplicate the invention in hand, the person or entity will rather do so by invention, for example reverse engineering, than stealing it. Thus the trade secret law supplements the patent