Diese Website verwendet Funktionen, die Ihr Browser nicht unterstützt. Bitte aktualisieren Sie Ihren Browser auf eine aktuelle Version.









secret d'affaires / segreto d'affari / secrets da fatschenta / trade secret

Trade secrets

in the spotlight





















An economic perspective

















When I was sitting in the train the other day, I happened to become privy to a secret.



A group of boys were planning what mischief they wanted to get up to at their upcoming school camp. One thing was particularly important to them – no one was allowed to say anything.

One of them stayed silent because it was his idea. Another kept his mouth shut because otherwise he would have given himself away. And a third promised to keep quiet because he had secured the necessary material.









If things go as they usually do with secrets among children...





... then at least one of them will spill the beans.









Section 1

Why do companies have trade secrets?











The example shows how quickly a secret can stop being a secret. It’s harmless in this case. However, for companies, disclosing a trade secret can have serious consequences. For example, they can lose an important competitive advantage.

Nevertheless, many companies rely on trade secrets, for example for manufacturing processes, recipes or source codes. There are many reasons for this:

  • Unlimited duration of protection: Trade secrets don’t have an expiry date. As long as the information remains confidential, it can theoretically be protected forever. This is different to patents, which have a limited duration.
  • Protection of non-patentable inventions: Some inventions can’t be patented, for example because they only slightly modify existing inventions. Trade secrets offer an alternative form of protection.
  • No disclosure requirement: Unlike patents, trade secrets don’t require information to be published that could allow others to copy an idea.
  • Suitable for inventions that are difficult to imitate: Using a trade secret for protection is particularly worthwhile if an innovation is technically difficult to decipher or is costly to reproduce (through ‘reverse engineering’).

A trade secret is generally considered to be confidential information that has commercial value. From a legal perspective, a company needs to have a legitimate interest in confidentiality as well as the will to maintain confidentiality, and it must take measures to protect the information, for example by means of organisational precautions.

Section 2

The importance of trade secrets in figures







Ich bin damit einverstanden, dass mir Diagramme von Datawrapper angezeigt werden.

Figure 1: Survey participants in a study from Singapore stated that trade secrets are important to their organisation.



Studies show that trade secrets are a protective instrument frequently used by innovative companies.

In a survey conducted in Singapore in 2021, 75% of respondents named trade secrets as the most important intellectual property (IP) right for their company. Patents were also considered important, but they only came in fourth (figure 1).

In a 2017 study, almost half of the companies surveyed said that trade secrets were more important than patents and trade marks. Furthermore, two thirds of the companies surveyed stated that trade secrets will be even more important in the future, partly due to technological developments.

A study from 2023 shows that around 80% of companies that could produce patentable inventions do not file patent applications. However, more than 90% of research and development activities are carried out in companies with at least one patent application.







Section 3

The cost of trade secrets











Quotation 1: Finding from a study conducted by the Intellectual Property Office of Singapore, 2021.





Measures are needed to protect trade secrets so that secret processes, recipes and data are not disclosed to competitors. Such measures are taken by many companies (quotation 1).

It’s advisable to take protective measures. A study from 2014 calculated that unlawful use of trade secrets causes damage of up to three per cent of GDP every year. For Switzerland, this amounts to around 23 billion Swiss francs.

Although protective measures, such as IT security, process adjustments and non-disclosure agreements, incur costs, they’re often already part of existing security practices. Trade secrets are therefore considered a relatively cost-effective strategy for protecting IP.

Trade secrets are also associated with indirect costs. These arise because access to knowledge is restricted, which can have a negative impact on the company culture and inhibit the company’s ability to innovate.



Section 4

Are trade secrets good or bad?







It’s worthwhile for companies to protect their IP using trade secrets if the profit minus the confidentiality costs is higher than using an alternative form of protection or none at all.

On a societal level, a different picture emerges:

  • Unlike with patents, there’s no publication based on which others could conduct further research or develop new solutions.
  • If the mobility of skilled workers is restricted by confidentiality agreements, this can inhibit the exchange and development of new ideas.
  • Further negative effects occur when companies keep knowledge about failed developments secret. Other businesses may then invest resources in approaches that have already been proven unsuccessful. This leads to an inefficient use of resources from an overall economic perspective.

Despite the restrictions on the innovation ecosystem, trade secrets offer companies an effective way to protect their innovations. Innovative players should therefore analyse the opportunities and risks of this protection instrument and incorporate it into their IP strategy where appropriate.