The research paper, delivered by Dr Nicola Searle on behalf of the IPO, is a short study summarising and critiquing the publicly available economic research on trade secrets and highlighting key innovation aspects.

In summary, a trade secret is knowledge that is secret, valuable and reasonably protected. Enshrined in the WTO’s 1996 Trade Related Aspects of Intellectual Property (TRIPS) agreement, trade secrets are an increasingly important innovation policy. The US, EU and Japan have all recently made major changes to trade secrets policy.

According to the paper, trade secrets are a preferred strategy for innovative UK firms. They can be highly valuable firm assets. They have a wide scope of coverage and support the innovation ecosystem by protecting process, product, market and organisational innovations, and by providing a key complement and support to other IP, particularly patents.

The paper finds that trade secrets support innovation but also restrict knowledge flows and labour mobility. Stronger policy benefits existing trade secrets holders and encourages investment in R&D yet reduces future innovation and creates barriers to entry. There is therefore a balance to be struck between trade secrecy that encourages innovation, and trade secrecy that blocks innovation.

According to the paper, global legal and economic trends suggest that growth in the use of trade secrets is outpacing that of patents. However, little is understood about trade secrets and their impact on the economy. The paper finds that further work is needed to develop an evidence base for trade secrets. Exploration of key themes, such as the interaction of trade secrets with patentability, could better inform policy. To access the research paper, click here.