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The advantages and disadvantages of using trade secrets

The advantages and disadvantages of using trade secrets

Business meeting

Most Chicago businesses have some sort of special ideas or plans that they believe to be unique to them and integral to their success. Whether a marketing plan or a completely new product concept, these trade secrets are generally considered highly confidential by business owners and entrepreneurs.

However, there may be both pros and cons to this approach.

The value of social impact and change

While protecting intellectual property can be highly essential for some entities, a Forbes story suggests that sharing such knowledge can stimulate change in a dramatic way, namely by promoting social change. The founder of Project Echo provides an example of this by his open door policy on what many would classify as trade secrets. The reason cited was the rapidity of adoption for new ideas and trends because a free idea is always easier to sell, essentially than one with a price tag.

Such business practices are not limited just to Project Echo as noted by BBC News. The American luxury car maker, Tesla is reported to be considering sharing what would otherwise be patented designs and related data. The reason is clear and simple—to stimulate the market overall by making it easier for competitors to enter the scene.

These companies have hit on a point not often discussed in business today—the fact that competition often breeds success more readily than does being the only player on the field. The computer industry offers yet another example of this with its open source concept for software development. Without this securely in place, the ability to successfully use a given piece of software on different hardware platforms would be simply a dream. Where would the software or hardware industries be today if that were the case?

Vulnerability is still real

While the competitive nature of a capitalist society is inherent to the ultimate success of not just individual businesses but to capitalisms itself, that does not negate the potential downfalls associated with the use of trade secrets. When such information is at the heart and soul of a business, the broad sharing of that can create a vulnerability that not every business can withstand. This risk must be considered and weighed carefully situation by situation.

Nothing is black and white

Like most things in business, the decision to hold close or to share trade secrets is not a cut-and-dried one. Every company must assess this on a case-by-case basis and can be aided by the involvement of an experienced business law attorney.

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