Trade secrets serve as a substitute or complement to patents. Trade secrets are often a lower cost alternative to other IPR, although enjoy relatively weaker protection. Cybertheft and economic espionage are increasing concerns. However, trade secrets are vulnerable to reverse engineering and misappropriation or theft. Trade secrets have a wide scope of coverage and support the innovation ecosystem by protecting process, product, market and organisational innovations, and by providing a key complement and support to other IP.įirms choose trade secrets to maintain a competitive advantage by avoiding the disclosure associated with other types of IPR. Trade secrets can be highly valuable firm assets, although most trade secrets are not. Larger firms rely on trade secrets more than smaller firms. Trade secrets are particularly important to UK firms in the R&D services, tech, and across manufacturing and non-manufacturing sectors. 70% of UK firms who develop product and process innovations use trade secrets to protect these innovations (Hall, Helmers, Sena & Rogers, 2012). Trade secrets are a preferred strategy for innovative UK firms. Key findings on economic and innovation impact: The US, EU and Japan have all recently made major changes to trade secrets policy. Enshrined in the WTO’s 1996 Trade Related Aspects of Intellectual Property (TRIPS) agreement, trade secrets are an increasingly important innovation policy. Misappropriation or theft of trade secrets, according to industry estimates, is said to cost between 1-3% of GDP in developed economies (Passman, 2014). This report summarises and critiques the publicly available economic research on trade secrets and highlights key innovation aspects.Ī trade secret is knowledge that is secret, valuable and reasonably protected. Trade Secrets are a flexible innovation tool that are used across sectors and types of firms. Searle holds a Bachelor’s from Georgetown University and both a Master’s and a Doctorate from the University of St Andrews.
She previously held appointments with the UK Government, the universities of Abertay and St Andrews, and Goldman Sachs. Searle has authored two books on the economics of intellectual property and regularly engages with policymakers and practitioners. An economist who specialises in the economics of intellectual property and the creative industries, Dr. Nicola Searle is an EPSRC Digital Economy Fellow and Senior Lecturer at Goldsmiths, University of London. This report was delivered by Dr Nicola Searle on behalf of the IPO.
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