The conversation pivots to patents when tech startups talk IP. Patents are the ‘big daddy’ signals of tangible, visible defensibility in a pitch deck and investor discussions. After all, tech insights are the jet fuel of tech startups. Sometimes those tech insights might not fully rise to the level of patentability. And copyright is not suited to protecting those ideas, despite misconceptions. Instead, there’s a quieter, neglected member of the IP family that can be far more aligned with commercial realities: trade secrets. Trade secrets are your fastest, most cost-effective, adaptable and future-proof IP tool. Let’s dig in.
🧠 What are trade secrets?
At their core, trade secrets represent commercially valuable information not publicly known and subject to reasonable steps to keep them confidential. Tech startups are often rich in potential trade secrets. You may call them trade secrets. But if they’re not identified, recorded, organised, and auditable, you may not have defensible trade secrets. And that’s one of the mixed blessings of trade secrets. There’s no central registry, mandated solution or even best practices necessarily. You can however develop best practices for you, that can be improved over time. The nature of trade secrets means there’s no fully prescriptive directions for a one-size-fits-all solution. This shift of onus can initially feel daunting. Pragmatically, you should embrace the freedom and flexibility and accept the challenge to translate what you’re building to defensible value.
💸 Why trade secrets?
There are many reasons, prime amongst these is defensibility. Tech startups are more vulnerable before fully establishing, so any setbacks can hit harder. Losing grip on your IP because it’s unsecured can be a massive blow when a lot of your value is wrapped up in unprotected intangibles. A tech startup can benefit from trade secrets at every successive phase of its lifecycle from founding to exit:
- Trade secrets are flexible, lean-friendly and economic
- Trade secrets buy time and clarity
- Trade secrets position you as far more investment worthy
- Trade secrets ease the way for partnerships
- Trade secrets can really boost exit valuations
This is the in brief, we’ll return for a deeper dive later on.
👀 Show me an example!
Straight to an example. Tech startup Acme is building collaborative drone swarms. Emergency response, search and rescue, and military and defence are the envisaged applications. Which will be the most important? Who knows! Starting with a trade secrets registry is a first step, and then moving to how that registry is used, operated and maintained.
01) Rationale
First, why create a trade secret programme? Developing a solid rationale is essential to securing buy-in and co-operation across management, engineering, IT and legal. Some aspects of Acme are relevant to its rationale. Acme in this case is in stealth and isn’t trading yet. Also, Acme is well placed to keep many areas of its technology confidential. It has robust IT and cybersecurity measures, and in the delivered product is building anti-reverse engineering measures in its hardware and on-board executive software. Acme is confident enough it can keep its trade secrets confidential for as long as they remain relevant. While Acme’s vision and capability are impressive, of the many possible futures it’s wildly uncertain how different markets will respond and what scenarios will predominate in importance. Even with significant market research and testing, no situation is static. What are prospective competitors building for the same markets? What technologies will emerge to alter the landscape? Dynamic conditions demand agile counter manoeuvres.
02) Technical taxonomy
Second, define the broad categories of proprietary technology under development. This can develop over time but is likely stable. A taxonomy helps navigate and think about your IP. And gain clarity on the areas you should focus your efforts, and relative emphasis. It is also a great communication tool for discussions internally and externally. Here we organise around a taxonomical categories of what’s important to Acme:
- C: Control systems / Autonomy algorithms
- N: Networking / Meshing / Comms
- D: Drone design and acoustics
- A: AI and threat detection
- O: Operations / Deployments / SOPs
- X: Operator experience interface and overrides
Bear in mind trade secrets can also be non-technical, so perhaps you’ll want to reserve category S for ‘strategic’, which we’ll briefly footnote at the end.
03) Reference schema and working titles
Third, you need working titles and reference codes. You can think of the reference codes as SKUs for your trade secrets, and the working titles are a helpful mental cue, an aide-mémoire. These are the handles for individual trade secrets that fit within the broader taxonomy above. I like the ergonomics of adopting a four-letter code to reflect a working title. This works well for day-to-day internal comms with the engineering teams. You can save Project Nighthawk for the press releases. And map bundles of different trade secrets to different strategic initiatives. Let’s identify a sample Acme’s trade secrets by a working title and reference code:
- ACME-TS-C101-DWCP: Dynamic swarm consensus protocol
- ACME-TS-N208-SSNR: Sub-second node recovery
- ACME-TS-D312-SPGU: Silent propulsion geometry for urban environments
- ACME-TS-A450-ATAA: Adaptive threat-avoidance AI
- ACME-TS-O601-JWDP: Joint swarm deployment protocols
- ACME-TS-X503-ZLOO: Zero-latency operator override bridge
04) Abstracts
Four, the next fill-in is an abstract or short description that gives a few more details but doesn’t give away the trade secret in full. Basically, a statement of the perimeter of the trade secret. Something that can be shared with trusted and contracted parties in certain circumstances. It also comes in handy navigating the trade secrets registry. So, just looking at the first trade secret TS-C101 this might be:
- TS-C101: A hybrid consensus protocol that blends time-windowed majority voting with priority-weighted nodes, enabling distributed drones to resolve conflicting instructions and reassign leadership roles within 100ms. Accommodates degraded network environments (e.g., inside buildings, heavy EM interference).
05) Full specification
Finally, the fuller technical specification of how TS-C101 is implemented: the details required to actually implement and practice the trade secret. This speaks to the need to document trade secrets with sufficient particularity. Particularity in trade secrets means sufficient specificity and detail to distinguish the trade secret from general knowledge or vague concepts. You cannot claim retrospective trade secrets, in other words. Particularity dovetails with the related concept of reasonable measures needed to protect trade secrets, which we’ll meet again later. A full specification should include all the necessary text and diagrams that give all the practical working directions to implement the trade secret. This coincides with the detail that is required of a conventional Invention Disclosure prepared for a prospective patent application. This is relevant to note, as trade secrets and patents ideally work together, as complementary business tools, as we’ll touch on later.
06) Attribution, access, authorisation, auditability
Trade secrets may be all about information but they are also fundamentally about humans. Who. We have to track down to individuals as it’s ultimately individuals who keep or spill secrets. Ideally a trade secrets registry should be recording:
- Attribution: who has contributed to trade secrets and what contributions rise to inventorship
- Access: who can access the trade secrets, on an individual level or to present tiered access levels
- Authorisation: who is charged with monitoring and changing access, assessing attribution
- Audibility: being able credibly trace through all the above after the fact
- BONUS: Acknowledgement: Remind people at various checkpoints of which trade secrets they have access to and their obligations accordingly. This may include at induction, upon grant and revocation of access, and when leaving the company.
Tracking attribution, access and authorisation requires a multi-faceted solution. While it can look like largely an IT task, this is only the underlying enabling technology. Broader IT policies and practices, and compliance with IP and legal is the foundation. And ultimately people make it all happen, so throw in HR as well.
07) Partnerships, policies, procedures
This is the less exciting aspect of maintaining trade secrets, but a very critical one. We won’t dwell long on it here. What you need to have in mind is the foundational importance of your contractual partnerships such as employment agreements, NDAs, partnership agreements. Backed up with internal policies that bulwark these formal contractual arrangements. Day-to-day you have contractual arrangements and implemented policies reinforced by daily working procedures. You cannot undermine the high-level intent with sloppy and counterproductive work practices that suggest the contracts and policies don’t really matter. Because soon enough they won’t. Worst case is you can undo the discipline and structure you’ve created. Some thoughtful guardrails and regular refreshers can keep everybody on the straight and narrow.
💸 Why tech startups should seriously consider trade secrets
Let’s revisit in deeper detail the thesis on why trade secrets. Trade secrets are in a sense the native right of any tech enterprise. This is because trade secrets can be (i) acquired at velocity, (ii) without expensive and protracted procedural steps, and (iii) re-oriented swiftly towards the shifting commercial and technological needs. Trade secrets ease dealings with investors, partners and acquirers as well.
As we now have the benefit of some context via our example tech startup, Acme, which is a stealth operation targeting the market for collaborative drone swarms. Here we expand to a broader context.
Bear in mind that these benefits cover the entire lifecycle of your tech startup, from founding to exit, and these benefits are presented in the order suggested by the relative importance at each successive phase. At inception, cost containment is paramount, once going, clarity tends to predominate. Then comes investor confidence, collaboration and cash out at exit.
01) Cost containment: Trade secrets are lean-friendly and economical
Trade secrets rely on systems and discipline, not filings. Sure, there’s certainly establishment costs, operational overhead and information infrastructure, though these can often be absorbed with existing resources. Basically, the main cost will be your available time and energy, certainly when you’re starting on a smaller scale. There’s no need to wait until you have a full-fledged legal department. Another aspect of the lean-friendly nature of trade secrets is that you can quickly generate what are in effect globally defensible rights, with relative ease and relative economy compared to the patenting route.
02) Clarity: Trade secrets help you arrive at strategic clarity
Still pivoting? Still settling on product-market fit? Still refining the business model? Trade secrets allow you to protect evolving ideas while your commercial strategy matures. IP strategy acts to serve the commercial strategy. So, as commercial strategy evolves, IP strategy adjusts. An IP strategy embracing trade secrets bakes in some flexibility. Sometimes it can be premature to commit to patents before validating the product or market. Large enterprises overwhelmingly report that their patent portfolios are both too big and too small—in different areas. Priorities shift over time even in mature industries.
03) Confidence: Trade secrets sharpen your pitch deck and investor discussions
Trade secrets, when properly recorded and organised, bring receipts to the discussion about your ‘valuable IP’. This can drastically affect investment-readiness, and push valuation negotiations in your favour, permitting investment that is less dilutive. As a tech startup, prospective investors are likely to challenge how defensible your business is without a cogent narrative around the ‘IP strategy’. You can showcase a far more compelling reply if you’ve already done the hard work around a trade secrets programme that withstands scrutiny, in fact, gets investors enthusiastic.
Sunburst diagrams and landscape tables categorising and indexing your secured trade secrets is certainly more persuasive than vague allusions to your secret sauce. Framing trade secrets as a core part of your moat shows investors you’re thinking strategically, not just tactically. As mentioned, patents have their place and tend to be the first thing that comes to mind for founders and investors. And in many cases, there is a strong case for patenting core technology.
Truth is, though, patents can fail in examination or under later challenge. Your investors may not be across this startling fact: more than half of the patents (about 70%) challenged in front of the USPTO Patent Trial and Appeals Board (PTAB) do not survive. Some call PTAB a firing squad. And this is a reasonably easy attack vector for your competitor/challenger to use against you. So if you have two patents, assume you have one, and if you have one, well perhaps you have zero. One solution is to flood the zone with patents, which is easy enough for larger enterprises, but you may not (yet) have the time, funds and focus to craft a suite of rock-solid patent applications that is assured to survive an invalidity challenge.
04) Collaboration: Trade secrets de-risk dealings with employees, contractors, manufacturers, technology partners
A significant part of this is handling contractual arrangements that interface with your trade secrets programme. As well as the blackletter contractual clauses, proper record-keeping, onboarding and exit procedures are key. At any time during or after or partnership you should be able to identify the trade secrets the partner had access to, and that you require them to confirm in writing that they are deleting all relevant information.
05) Cash-out: Trade secrets justify higher exit valuations
Dynamics here echo those that apply investor relations. Early on, with investors, the emphasis is the defensive posture of trade secrets. At acquisition, the focus shifts to accounting for (and negotiating around) all the intangible value that is being acquired. Or, failing that, sold to a competitor! At this pivotal moment, a data room that demonstrates a solid history and working through a robust trade secrets programme can clearly attract a premium.
⚖️ A note on corporate responsibility
Company directors and C-suite executives would be prudent to consider the issue of formalised protection of trade secrets through the prism of applicable responsibilities under corporate law, if for no other reason. Protecting trade secrets is in many cases essential for tech startups as the abundance of critical and proprietary IP can be so pivotal to corporate value. Naturally, businesses will vary in their reliance upon IP and in any event reasonable minds can vary. Let’s put the case most forcefully, while also avoiding hyperbole: Failing to take reasonable measures (the magic phrase again) to protect critical proprietary IP as trade secrets can be seen as failing to secure the best interests of your tech startup. Consider what reasoned counterarguments you’d offer if you were to be challenged in that way. Many intangibles cannot be captured via trade secrets, and instead success lies, for example, in so many extraordinary personal and team attributes such as leadership, culture, relationships, strategic insight. Still, that said, why would you overlook the formalised protection of trade secrets when we now have dedicated national frameworks in many countries, and an increasing body of recommended practices aligned with those frameworks?
🤝A word on patents, when to patent, when to trade secret?
Patents are complementary to trade secrets. A blend in some proportion is likely to strike the best balance to support the objectives of your tech startup. The ‘how-to crafting a mix of trade secrets and patents is a whole other topic. You can establish business logic that establishes sensible defaults on the patent versus trade secret discussion, you will want to avoid debating this from scratch in every instance. This is essentially a decision tree that touches on the risks around reverse engineering from products and patents, the importance of core and foundation IP, risks of competitive independent invention, time and cost facts and a lot of other more nuanced strategic issues. Starting from the position of capturing trade secrets by default, patenting when necessary is not the worst way to go. Absent a framework, even if it’s basic, you can just war-game the situation in terms of the competitive dynamics you’re facing. Every situation is different and will heavily depend on relevant circumstances. For example, the situation is vastly different if the technical IP is (i) embedded in customer products, (ii) buried in the operations of offshore manufacturing sites, or (iii) generated and indeed tightly confined within the tilt-up concrete panels of the company skunkworks.
One of the great compromises with patents is that patents are on the opposite end of the scale in terms of many of the natural advantages of trade secrets. Patents involve publication of technical details, take considerable time, focus and expense, but do provide a unique and often powerful form of protection. Very often you can pursue patenting and trade secrets in tandem, even for a single product generation. This strategy can exert powerful leverage over competitors. As an example, patenting broad architectural details of the product, but trade secreting critical manufacturing or operational details. That way, you can lock competitors out of the architecture (which they could easily copy) but also don’t need to give up tricks they could adapt and apply in their own facilities.
Large patent owners overwhelmingly report that their patent portfolios are both too big and too small. Too big where coverage is no longer needed, too small where coverage is needed. This is no small issue, it is in fact a significant overhead in enterprise patent departments. Patent portfolios reflect the priorities of 5–10 years ago. These priorities age well or poorly. Some technological edges only stay sharp for a short moment, say 3–5 years, and the bleeding edge pivots to a different solution. You can’t expect to always ‘get it right’, but informed projections can help you decide between the balance of trade secret protection and patent protection.
The one caveat with trade secrets is you have to be able to keep the trade secrets.. secret! And demonstrate reasonable steps in maintaining secrecy. This is reasonably simple as a small team, but grows in complexity as you scale, and requires heavier investment in legal/IP and IT. And of course, there are many cases where secrecy is not even feasible as it is apparent from the product itself, or through minimal reverse engineering, for example. And the more valuable the underlying IP, the more extraordinary efforts will go into reverse engineering and overcoming hurdles to reverse engineering.
📘Where to Start Capturing and Managing Trade Secrets with a Lightweight Framework
So what does setting up a trade secret programme look like in practice? The Acme example above should give a good starting point, but here is the step-by-step cheat sheet. Worth mentioning: step zero is author a policy as a high level statement that green lights the following program below.
- Develop a taxonomy. It’s probably just a flat, but could also be multilevel, that is, hierarchical, with some higher-level categories, say CX, Energy Management, Software Architecture, and allocated sub-categories within each as needed. It’s up to you.
- Log your trade secrets. You’re probably playing catch-up and have a deal already, many of which are easy to overlook, so start brainstorming, decide which need to be split or consolidated.
- Settle on a coding schema. Technically optional, but nice to have, so why not.
- Draw up your abstracts. This is easier than collating full specifications and gives you a chance to think through everything in overview.
- Document full specifications. This may take a while to capture, so infill the most critical ones first. This ideally includes versioning, with tracked timestamped changes, and/or iterative version numbering as needed.
- Capture the people involved. This is the attribution, access, authorisation, auditability.
- Index all your policies, protocols and procedures. This is the end-to-end of how everything works. Contractual arrangements with employees, suppliers, customers, protocols for external access, internal policies, and procedures for day-to-day handling.
Don’t overlook the most critical aspect: people. People safeguard secrets, ultimately. What’s not mentioned here touches on a critical area you don’t immediately think of: training and development. Proper training of employees and partners manages the human element and reminds good people to avoid needless errors.
👨💻 Still overwhelmed?
Even with the guide above, the entry point can feel impenetrable. This can be just because you’re unsure what IT tools should be used. The fact is the best the tools are often the tools you have and use, and represent the best solution for you right now. As mentioned, for very early-stage tech startups that could be Google Sheets and Google Docs. Or perhaps it’s Airtable and Notion. Or you have Teams, and call upon Confluence, Github et cetera within that ecosystem as well as so many other integrations. You can always migrate later as well of course.
One dedicated platform comes in the form of Tangibly from the United States. Speaking with Michiel de Bruijn at the company, “You don’t have to be perfect to be protected” is a refreshing reminder and sanity check against any inertia you may experience in getting underway!
The solution offered by Tangibly goes beyond the IT puzzle of indexing your defensible trade secrets. There are integrated tools for discovering and leveraging trade secrets, know-how and confidential information. As trade secrets by their nature do not have a prescriptive solution, there is some assurance in working with a partner that provides deep expertise directed to compliance with the reasonable measures standard demanded by courts globally. This can certainly be a safety net that saves you relying on your own research into all the recent developments in this fast evolving area. Especially when you go beyond the initial setup phase, and your attention is naturally drawn to more pressing matters.
🌏 International considerations: United States, Europe and beyond
Trade secrets are in many countries starting to be protected under dedicated national statutory instruments. And with more countries coming online (India). Or within existing legislation (competition law in China) or within existing legal principles (Australia).
- United States: Defend Trade Secrets Act, 2016. Also referenced as DTSA. NDAs, access controls, employee training all counts. Supplemented with state laws following Uniform Trade Secrets Act (UTSA).
- European Union: EU Trade Secrets Directive (Directive 2016/943). Businesses must show that the information was secret, valuable, and subject to reasonable steps to maintain its secrecy.
- Australia: No standalone trade secret legislation, but common law protections via breach of confidence and contractual law. Courts have acted decisively against misappropriation of trade secrets when breaches have come before the courts.
- China: Anti-Unfair Competition Law (amended 2019). Trade secret law is embedded within broader unfair competition law, with similarly structured provisions as US and Europe.
- South Korea: Unfair Competition Prevention and Trade Secret Protection Act (UCPA) provides comprehensive trade secret protection on a similar footing to other national instruments.
- India: Last but far from least—no specific legislation, but relying upon breach of confidence and contractual law similar to Australia. UPDATE: India is however actively moving towards a dedicated statutory trade secrets regime (as of August 2025).
Cross-border headaches are no different as with any other area of corporate law. You can greatly mitigate this in cross-border contractual partnerships by agreeing on a governing law and forum. And ideally valid international arbitration clauses following the New York Convention and which specify the most suitable of the various major arbitration forums. As a backup, consider clauses relating to international evidence-gathering instruments, such as the Hague Evidence Convention (HEC), and support the preservation and disclosure of digital and physical evidence. This avoids reliance on local national discovery procedures, which complicates matters. Though note, HEC only applies to actual judicial proceedings not arbitration.
Bottom line: across jurisdictions, if you want trade secret protection, you must treat your secrets like secrets. Document them with sufficient particularity, take reasonable measures for their protection, and contractual agreements structural for enforcement if that ever becomes necessary.
💡Trade secrets are non-technical, too
Don’t forget that trade secrets are not just for technology. There’s a wealth of non-technical, sensitive and proprietary commercial information that can also benefit from formal protection. These secrets are not in technical or engineering documents but data rooms, internal memos, strategic briefings. We mentioned in passing category S for Acme’s strategic trade secrets, so here are some possible examples:
- ACME-TS-S101-PRPD: future capability roadmaps for product or platform development
- ACME-TS-S201-PLCP: precise pricing logic for competitive tenders and multi-year procurement deals
- ACME-TS-S301-SRET: assessment memos of export and sovereign risks, economic tariffs and sanctions
- ACME-TS-S401-TPBA: tender playbooks with relationship maps, timing predictions, win/loss analysis
- ACME-TS-S501-CMPR: crisis management and PR incident response plans
👣 Final Thoughts
IP strategy flows from commercial strategy not the other way around. You can’t think of IP as a recognition award for innovation. It should be a commercial tool that takes you where you want to go. If you’re still figuring out your exact market, product, and revenue model, trade secrets can give you breathing space by sparing funds and without giving up defensibility. The best part may be that your most valuable IP might already be hiding in plain sight. You just haven’t named it, structured it, or protected it yet. Those steps might just be your best next strategic move.
David Perkins is a patent professional operating from Australia. His company EUREKA helps early-stage tech enterprises navigate IP within the broader innovation ecosystem, taking in landscaping, product innovation, corporate structuring and financing. The focus is broadly digital technologies in areas such as automotive, sportstech, batterytech. Follow David on LinkedIn.
