Using trade secrets to protect software and software-based innovations

While a patent is often regarded as the ‘gold standard’ of protection for inventions, patents are not always the best option when it comes to software.

Firstly, software patents are notoriously tricky to obtain. You can of course patent the right type of software, but your invention needs to meet strict criteria. Secondly, the patenting process involves disclosing your invention and disclosure may not be in your best commercial interests.

With this in mind, trade secrets often offer software developers a viable alternative to patents.

At the top-level trade secrets can of course protect subject matter that would not be eligible for a patent. These can be protected by trade secrets because any piece of knowhow (and ‘knowhow’ covers formulae, algorithms, practices and code, all of which are fundamental to software) can be protected as a trade secret as long as it can be shown the secret will retain its commercial value as long as it is kept secret.

Trade secrets also offer additional benefits for software developers. 

Obviously, there is the disclosure factor. If any aspect of the software could be placed at risk by being made public, trade secrets would mitigate these risks as, by definition, they ensure key elements are never made public. Similarly, trade secrets can also prove useful when there is the potential that any infringements of a patent would be so subtle, or could be hidden from view, they could pass undetected.

From a more practical perspective, trade secrets have the potential to last forever (as long as they’re kept secret) while patents have a defined 20-year lifespan.

Moreover, trade secrets are much more cost-effective as there are no drafting or filing charges. They are also more time efficient as they can be put in place almost immediately. This makes trade secrets ideal for fast-moving technological fields like software, particularly as there is a risk that the underlying tech will have moved on once the patent process has concluded.

When it comes to deciding whether you are best to pursue a patent or take advantage of trade secrets, the devil is of course in the detail. Every case is different and depends on not only the composition and construction of your software, but also on your commercial objectives and business plan.

For many software developers the optimal IP strategy is a combination of patents and trade secrets. The patents would protect your key and most valuable technical innovations and functionality. The trade secrets would protect the more specific (and perhaps unpatentable) aspects.

However, this is us speaking generally. If you’d like to discuss a possible protection strategy for your software, you can speak to one of the software specialists in our dedicated electronics and communications team.


While you weigh up the pros and cons of using trade secrets as opposed to patents to protect your software, you may wish to consider these points before you make a final decision:

Can you identify and classify your trade secrets?

You will need to determine exactly which aspects of your software are valuable and unique. This can include proprietary algorithms, elements of your code, the design of your architecture, or any other specifics that genuinely give your software a competitive advantage.

Can you maintain secrecy?

Trade secrets can only remain secrets if they’re kept secret! Can you put the internal controls in place to ensure your trade secrets maintain their secrecy? This could involve putting non-disclosure agreements (NDAs) in place with employees, contractors, and partners with access to your software. You may also want to put specific clauses in your employment contracts in case people move or even talk too openly to competitors.

Can you mark your secrets accordingly?

You will need to know exactly how to label all your trade secrets to underline the fact that the information is confidential. This establishes the legal basis for their protection.

Can you add trade secrets to your internal training?

An important part of maintaining trade secrets is educating your employees. You need to explain the existence and importance of your trade secrets and set out each employee’s responsibilities to protect them, including the internal policies you will have put in place.

Can you support a ‘need to know’ basis?

Limited disclosure is the key to maintaining trade secrets. You will need to keep the number of people who know your secrets to a minimum and restrict access to anyone who has not signed the appropriate agreements.

Can you introduce the required ‘physical’ security?

You will have to implement tangible security measures to protect your software’s secrets. This would include access controls, encryption and firewalls and any other measure that will prevent unauthorised access or theft.

Can you resource the monitoring and enforcement of your secrets?

As a software expert, putting measures in place to continuously monitor the usage and access to your software to detect any unauthorised activity should be straightforward. However, if you find out your trade secrets have been breached, you will need to take immediate action to legally enforce your rights.

We appreciate this may look like a long list, particularly as we initially presented trade secrets as a cost-effective and time-efficient alternative to patents! However, we cannot stress highly enough that trade secrets will only be protected as long as they remain secret. As soon as the information becomes publicly known or is independently developed by others, your trade secret protection will no longer apply so all the measures outlined above are critical to establishing successful trade secret protection for your software.

The good news is we can make the first step very easy for you.

Potter Clarkson’s SafeGuard audit has been designed to identify the potential trade secrets within your software and provide a straightforward step-by-step process that will help you protect and maintain some of your business’ most valuable assets using trade secrets.

If you would like to find out more about SafeGuard you can either speak to one of our trade secrets specialists or download a copy of our brochure.