It’s no secret that new technology is vital to the oil and gas industry – the number of patent applications for downhole technology filed annually at the European Patent Office has increased by 50% since 2009.
Gaining a patent can discourage and stop competition in a defined technical niche. But to patent you need to disclose; indeed, the word “patent” is derived from the Latin “laying open”. So how viable is it to keep your ideas secret, instead of laying them open?
While some innovations are disclosed when sold, famous examples of trade secrets include recipes for Coca-Cola or KFC.
However, other know-how can also be kept secret, such as improved manufacturing processes, and in Europe “black box” technology which is not disclosed by its sale or use.
For example, chemical blends used in the oil and gas industry are often supplied with a “non-analysis agreement” and, save declaring unsafe ingredients, much of the blend can be kept secret.
For such innovations, a decision is required on whether to patent or to maintain the innovation as a secret. What are the benefits of each option?
In principle, trade secrets can last indefinitely. And they don’t, by definition, lay open your innovation to others. They can be useful where the innovation may not meet the requirements to gain a patent. They also avoid the costs associated with gaining a patent.
If choosing this route, reasonable steps should be taken to keep them confidential. The information should be identified as such and those party to it should be minimised.
Business continuity should also be ensured, should key people leave or die. Earlier this year QuadrigaCX, a Canadian- based crypto-currency, collapsed when its owner died taking the secret encryption keys to his grave.
Trade secrets provide no protection against those who independently develop the technology. Patenting, by contrast, provides a monopoly against those who develop the invention independently, as well as those who copy.
It reduces the risk that a competitor will develop the same technology, gain a patent for it, and try to enforce it against you. A patent also allows access to the “patent box” in the UK, which is a discounted corporation tax rate for profit derived from patented activities.
Patents last up to 20 years, and after that the invention is open for others to commercialise.
Patents can be a deterrent to competition but the cost of litigation often discourages companies from choosing the patent route.
While patent litigation is rare, there are a number of options to protect SMEs from larger competitors: revenue can be generated by licensing the IP to others, some law firms may take on a strong litigation action on a contingency basis, and insurance can fund a court action and also provide a strong negotiating position.
Patenting and maintaining trade secrets are not mutually exclusive. The core invention may be patented and some details kept secret and treated as “know-how”.
As technological development in the oil and gas industry intensifies, a balanced, commercial approach to the development of any IP portfolio is becoming increasingly important.
To discuss the best way to protect your technology, contact Craig Watson at cwatson@hgf.com or on 01224 258510.
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