The Corporate Preference for Trade Secret

47 Pages Posted: 25 Dec 2013

Date Written: December 23, 2013


Many inventions can be legally protected either by patent or by trade secrecy, and a conventional wisdom exists on how to select between them. This Article adds to that literature by showing that corporations should have an inherent preference for trade secret over patent for reasons relating to their legal form. Among them is the idea that corporations are perpetual entities and therefore perfectly suited to reap the perpetual returns that only a trade secret can offer. The Article also addresses the potential for a conflict between the inherent corporate preference for trade secret and the preferences of corporate managers, who may prefer patent for reasons of their own.

Keywords: Patent, trade secret, corporations, perpetual, signal, secrecy, lock-in, liquidity

JEL Classification: K00, K11, K2, K20, K22, O3, O32, O34

Suggested Citation

Schwartz, Andrew A., The Corporate Preference for Trade Secret (December 23, 2013). Ohio State Law Journal, Vol. 74, No. 4, 2013, U of Colorado Law Legal Studies Research Paper No. 13-19, Available at SSRN:

Andrew A. Schwartz (Contact Author)

University of Colorado Law School ( email )

401 UCB
Boulder, CO 80309
United States

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