Trade secrets encourage US innovation while also preventing China IP theft – they don’t go through the process of disclosure

Firms are keenly aware of trade secrets’ importance. According to survey evidence from the United States and other developed countries, large and small firms in a wide variety of industry sectors are more likely to rate trade secrets as “very important” than all other types of IP protection. In practice, trade secrets have several identified advantages over other types of IP protection. First, they are broad in scope, covering virtually any type of commercially valuable information that has been subject to reasonable measures to protect secrecy. They are also a “do- it-yourself” IP right; firms can use internal measures (such as contracts and security procedures) to maintain protections from inception rather than waiting for the government review and approval required for patents and trademarks. Trade secret protections are flexible as well—for example, firms need not file a new application to cover modifications to a trade secret, they simply incorporate them into their existing protections.

From a societal standpoint, trade secrets also can be considered “innovation friendly.” They can be shared with employees and commercial partners, so long as firms protect their trade secrets with contracts or other reasonable measures. Moreover, U.S. trade secret laws generally permit independent discovery, reverse engineering, and other fair practices considered critical to innovation. Liability for trade secret misappropriation is generally limited to cases of wrongful conduct or violation of honest commercial practices. For these reasons and others, a large portion of U.S. IP exports consist of trade-secret-reliant industrial processes and software licensed to affiliates and third parties abroad.