For decades, the gold standard of intellectual property protection was clear: if you invented something new, you patented it. Patents offered exclusivity, enforceability, and prestige. But in today’s fast-moving, software-driven economy, that model is being re-evaluated. Increasingly, companies are turning to trade secrets — not as a fallback, but as a deliberate, strategic choice.
This shift reflects more than just a change in IP strategy. It speaks to a fundamental transformation in how innovation occurs, particularly in sectors like AI, software, digital services, and data-rich technologies.
Patents in a Rapidly Evolving Landscape
The limitations of the traditional patent system are becoming more apparent in the context of digital innovation and IP counsel are reconsidering their approaches to protecting innovation. Several overlapping challenges are driving this reconsideration:
- Patentability Uncertainty: Courts in the United States, Europe, and Australia continue to narrow the boundaries of what is patentable. Subject matter exclusions for abstract ideas, schemes, and business methods have made patent prosecution — especially for software-based inventions — increasingly unpredictable and costly.
- Speed of Development: In agile environments where code is deployed weekly (or daily), the 2–5 year patent timeline is mismatched with the product lifecycle. By the time a patent is granted, the underlying technology may already be obsolete.
- Open Development Ecosystems: AI models, open-source frameworks, and shared development pipelines have blurred the line between proprietary and public domain making the boundaries of patent claims more difficult to define.
In short, the risk/reward ratio for patenting has shifted — and for many businesses, patents are no longer the default option. Patent applicants, particularly in the computer-implemented invention space, are often left in the unfortunate position of having disclosed their technology in a patent application without being able to obtain any patent rights.
Trade Secrets: A Modern, Agile IP Asset
Trade secrets offer an alternative that often aligns more naturally with how digital businesses operate. They protect a subset of confidential information that has commercial value — without requiring registration, public disclosure, or rigid formalities.
Critically, trade secret protection is immediate and indefinite — provided reasonable steps are taken to keep the information confidential.
Trade secrets are hidden, yet ubiquitous in the technology we all use including for example:
- Battery algorithms that extend the life and range of electric vehicles;
- AI model training data and tuning methods powering everything from voice assistants to personalised recommendations and search engines;
- Precision manufacturing processes used in smartphones, semiconductors, and medical devices;
- Sensor fusion logic in autonomous vehicles and robotics that enables real-time decision-making; and,
- Custom firmware and embedded control systems in everything from washing machines to drones.
In many cases, trade secrets are the crown jewels of a business — yet too often, organisations don’t fully understand what these critical assets are or how to properly protect them, leaving significant value exposed outside traditional IP frameworks.
The Trade Secret Advantage
Compared to patents, trade secrets offer several strategic benefits:
- Immediate protection without disclosure: Trade secret protection applies as soon as reasonable measures are in place to protect the secrecy of the information - with no registration delays or public disclosure requirements. Unlike a patent, information protected by a trade secret is not publicly disclosed.
- Greater Breadth and Flexibility: Trade secrets can protect valuable know-how, methods, and evolving processes that don’t qualify for patent protection — whether due to lack of novelty, inventive step, or formal subject matter eligibility. This makes them ideal for fast-moving or complex innovations that fall outside the bounds of traditional IP rights.
- Lower Cost, Higher Agility: Businesses avoid the high legal and administrative cost of global patent filings, freeing resources to focus on product development and security measures.
But this agility comes with a caveat: trade secrets are only as strong as the systems protecting them.
Trade Secrets Depend on Cybersecurity
Unlike patents, trade secrets can be lost instantly — through a breach, leak, or accidental disclosure. That loss is irreversible and can’t be recovered through court enforcement if confidentiality was not properly maintained.
In this sense, cybersecurity becomes the foundation of trade secret protection. Consider the following common vulnerabilities:
- Sensitive source code stored in open repositories or shared folders;
- Weak access controls on proprietary datasets or design documents;
- Lack of audit trails, version control, or encryption for high-value information; and,
- Employees using unsanctioned applications (shadow IT) or personal devices.
Legal agreements, such as NDAs or confidentiality clauses in employment agreements and supplier contracts are usually insufficient measures without further controls. While they set important expectations and form part of a trade secret protection framework, they don’t prevent leakage on their own. Without technical and operational controls, confidential information can still be lost, stolen, or exposed, whether through human error, insider threats, or cyberattacks.
Toward an Integrated IP and Cybersecurity Framework
Trade secrets have become some of the most valuable, yet vulnerable, assets in the modern enterprise. Unlike patents or registered IP rights, trade secrets depend entirely on the owner’s ability to keep them confidential. Yet in many organisations, the controls required to do this effectively are fragmented or incomplete. Even worse, many organisations don’t even know what their trade secrets are or could be.
Protecting trade secrets requires more than NDAs or confidentiality clauses. It requires a coordinated framework that aligns legal obligations with operational practices and technical safeguards. This means first identifying and classifying what information qualifies as a trade secret, such as proprietary algorithms, datasets, manufacturing techniques, or commercial strategies. Then ensuring that access to the trade secret is controlled, monitored, and governed throughout its lifecycle.
Effective protection combines clear internal policies, secure development and data environments, employee education, and real-time cybersecurity controls. Role-based access, encryption, secure collaboration tools, and incident response plans all play a part in making confidentiality enforceable in practice.
By integrating legal governance and cybersecurity into a unified strategy, businesses can not only protect trade secrets more reliably, but also demonstrate due diligence to investors, regulators, and partners — turning what is often an overlooked risk into a source of competitive strength.
Rethinking IP Strategy for the Digital Age
As businesses accelerate their digital transformation, it’s time to reassess whether current IP strategies match the pace and characteristics of modern innovation.
When governed and secured correctly, trade secrets can provide a flexible and valuable IP asset class that aligns with today’s realities. Trade secrets secure the knowledge that drives innovation -the know-how, systems, and insights that evolve constantly and lose their value the moment they’re exposed. They offer protection without slowing progress or revealing your competitive edge.
Final Thought
Trade secrets are no longer the overlooked stepchild of the IP world. In an era where data, software, and rapid iteration drive competitive advantage, they are becoming central to enterprise value.
But trade secret protection doesn’t happen by default. It requires intent, structure, and cross-functional collaboration. It requires a framework that connects legal, IT, HR, Cybersecurity, and leadership - not just for compliance, but to sustain innovation and secure long-term growth.
If you’re building your business on digital capabilities, be it software, automation, AI or proprietary data, now is the time to evaluate whether your trade secrets are adequately identified, protected, and aligned with your cybersecurity posture.
Get in touch with Invara today to explore how a unified approach to IP and cybersecurity can strengthen your competitive edge.
