With a significant rise in the importance and prominence of branding, brand owners typically seek to protect and distinguish themselves from others by utilising a raft of intellectual property (IP) rights, ranging from patents to copyright. But is there still a place for trade secrets in your brand's protection portfolio, and do they still give brands that competitive edge in the market? Or are trade secrets an outdated concept that hold little relevance today?
How do trade secrets differ from other forms of IP protection used by brand owners?
Brand owners can rely on a number of IP rights to protect their intangible assets; whether it's a patent protecting a new invention, copyright to protect iconic artwork/images, designs to protect the appearance of a product, or trademarks to protect logos, slogans and other indicators of the brand. Each of these rights has its own benefits and limitations, but in most cases (unregistered designs and copyright aside) they come with a fixed specification as to what a party has actually protected. While this is beneficial from an enforcement perspective, it also gives copycat businesses or competitors an opportunity to design around these features.
Trade secrets, on the other hand, benefit from the fact that they are, and must remain, confidential. Historically, trade secrets were used where IP rights were not as readily available, and relied on the business keeping information secret from the public, the market and its competitors. Unlike the IP rights listed above, which are publicly disclosed and often recorded on a register, the information that gives a business its competitive edge is kept strictly under wraps.
Below, we've set out some of the advantages of trade secrets for brand owners.
Trade secrets and brand protection
The power of the unknown
There is no denying the excitement and buzz that can be created for a brand due to a "secret" element. We've all discussed KFC's chicken batter recipe (in just what ratio are those 11 herbs and spices added?) or the process for making Krispy Kreme's donuts (how do they make them so light and fluffy?).
Ultimately, we all have an innate curiosity and want to know what we aren't allowed to know. This mystique can be the attractive force that keeps us coming back to a brand for more. TV shows such as 'Snackmasters' (UK, Channel 4) or 'Snack vs Chef' (Netflix), where chefs try to work out the unknown elements behind well-known food products to create the closest replicas, are evidence of this. The very fact things are secret entices and excites us, gets us talking (meaning that brand owners can benefit from valuable word of mouth marketing as a result), and adds a mysterious feel to a product - which can all help to boost sales.
Part of a brand or its strategy
Trade secrets work especially well where they form part of a company's branding and identity. Coca-Cola's secret recipe is so ingrained within its brand that it is openly referred to and acknowledged by Coca-Cola itself.
The fact that a brand has a "secret" can also be used strategically. Twinkies allegedly keeps its recipe under wraps because it is worried that if parents heard the chemical sounding names of the ingredients, they would be scared off and would no longer buy Twinkies for their children – thus losing the company sales. Additionally, everyday products can be given a boost by simply referring to a "secret" – most people wouldn't typically know what was in an everyday household product, but the "legends and myths" surrounding it can encourage us to ask questions and learn about the brand.
Part of a brand's protective rights
Trade secrets can also be used for protective purposes, where another intellectual property right wouldn't have the same effect. As mentioned above, trade secrets can prevent competitors from "designing around" a brand's unique selling point. Provided that the information remains secret, a trade secret could provide enduring protection for a brand that would outlast any other intellectual property right, and create clear space between its business and those of its competitors.
However, there is an inevitable amount of risk if a brand were to rely on trade secrets alone. It takes only one person to breach their confidentiality obligations in order for the trade secret to fall away. As a result, many brands that own trade secrets use them as part of a wider brand protection arsenal – Angostura Bitters and Irn Bru, for example, own recipe trade secrets but have continued to use other intellectual property assets, such as trademarks and creative marketing, alongside these.
It's all in the brand
Although all of the factors set out above have their own value, trade secrets undeniably have more utility where there is already a strong foundation. Put simply, is there really any point in a trade secret as a core part of your brand if no one is even aware of your brand? Without a clear and coherent brand identity, often created through clever marketing, word of mouth and a great product or service, there is very little to be gained from spending a lot of time and money protecting your trade secret.
The success of trade secrets as part of any brand identity, therefore, very much depends on how they are used, how they are protected, and why they are kept secret at all.
Our global Brand Protection team delivers a comprehensive brands service, with expertise in trademarks, designs, copyright, domain names, confidential information, trade secrets and licensing.
We understand the challenges and opportunities of brand management and offer legal expertise, paired with commercial insight, to help ensure your brand works to your advantage.
To discuss any of the issues raised in the above article or more broadly regarding brand management and protection, please contact Khemi Salhan or John Coldham.
Footnotes
[] Who knows the secret formula of Coca‑Cola?
[] Trade Secrets: 10 of the Most Famous Examples