Patents or know-how protection? How to choose

When it comes to guarding technological achievements of research and development (R&D) teams, one frequently asked question is: which works best, patents or know-how protection?

The usual and most direct response is to compare the similarities and differences, or advantages and disadvantages, of these two approaches, such as looking at the protection methods, protection period and means of securing remedy. This article seeks to discuss the understanding and treatment of this question from another angle.

From the technical personnel’s point of view, has the enterprise established a channel for rewarding all technological R&D achievements?

At first glance, this question does not seem to be directly related to the topic of this article. But in fact, it is closely related in practice. When an enterprise employs R&D personnel, what it looks for is economic benefit from R&D, not how many patents are awarded. However, when it comes to performance evaluation of R&D personnel, patents are typically selected as a key parameter. How many patents an R&D department or person has applied for this year, and how many of them are patents for inventions, for example, are important parameters.

If patents are used as the basis for evaluation and reward, it will create invisible distortions in R&D and patent affairs. For example, in patent mining, if the patent department or the external patent agent proposes that a technology is best guarded through know-how protection methods, this will create a conflict with the R&D department. From the R&D department’s perspective, this proposal threatens to deny or wipe away its performance/achievement. This will lead to friction between the R&D and patent departments and disrupt normal working communication.

To avoid this, companies need to set up evaluation and reward channels for all technological R&D achievements. For R&D achievements deemed unsuitable for patent protection, know-how protection methods can be evaluated. Besides assessing several characteristics of the trade secret (secrecy, practicability, value and confidentiality), the scope of implementation and commercial value directly related to the enterprise can also be considered.

If know-how protection methods are adopted, the R&D department or personnel should be rewarded in the same way as for patents. For example, the reward for a first-level trade secret can be the same as that for an invention, while the reward for a second-level trade secret would be the same as that for a utility model. Having resolved the concerns of the R&D department or personnel, the communication between the R&D and patent departments concerning the protection methods of technological achievements will not be disturbed by invisible factors, especially the question-and-answer process in the two steps described below.

R&D personnel are the best respondents to the factors to be considered in the selection of the protection method. When selecting the protection method, the key lies in whether others can detect and collect evidence if the technology is applied in the market.

One method would be to ask an R&D engineer, preferably the inventor of the technology, “If you are given a competing product, can you judge whether the technology has been applied to the product?” If the answer to that question is no, then know-how protection, rather than patenting, is best suited to safeguard that technology. If the answer is yes, then the follow up questions might include: On what basis do you think so? Can you confirm that competing products have adopted this technology based on the contents? Are there any other possibilities? Through a series of such questions, we can judge whether the technology after application can be detected from the outside.

It should be noted that in the detection step, the R&D personnel are not asked to prove, but to see whether they, based on their subjective judgment, suspect or largely suspect that the competing products have adopted this technology.

The second step is to collect evidence for adoption this by competing products, which requires a joint effort by lawyers and R&D personnel. First of all, ask the R&D personnel: Can you show proof of what you have asserted? They can use instruments and equipment or do experiments to prove it. The answer should be analysed on a case-by-case basis, and with regard to the rules of admission and preservation of evidence to come to a judgment. In the absence of a discovery mechanism in China, the judgment standard in this respect should be stricter. If the application scenario includes the US, the judgment standard can be lowered. However, in China’s judicial practice, litigants often explore evidence preservation. Thus, it is necessary to leave room to cope with any shift in the burden of proof.

From the perspective of establishing evidence, there are two main factors – the ways of collecting evidence and the means of proof (mainly relying on technical means). If it cannot be proved at all or if it is difficult to prove, in most cases the know-how protection method should be adopted.

In the use of the above two-step process, we should consider the position and character of the specific R&D personnel and the circumstances in which the questioning will take place when designing the questions.

In addition to the two steps discussed, there are other factors that need to be considered in making a judgment, such as specific industry areas and practices. For example, you can see if competitors apply for similar patented technologies. If they do, then this enterprise may also consider applying for patent. Otherwise, it will find itself in a weak position by risking disclosing its know-how without patent protection.

Dang Xiaolin is a general manager and associate, and patent agent at Sanyou Intellectual Property Agency