When most people think about licensing intellectual property, they often jump straight to patents, trademarks, or copyrights. But there’s another powerful form of IP that often flies under the radar—trade secrets. These behind-the-scenes formulas, manufacturing methods, and operational know-how can be just as valuable—if not more so—than a patent. And when strategically licensed, they can become a powerful growth engine for both licensors and licensees.
One of the latest examples of how trade secret licensing is transforming industries comes from a recent deal between Honeywell and Entek, announced in April 2025. This agreement highlights the growing importance of trade secrets, especially in high-tech manufacturing sectors like battery technology.
Honeywell & Entek: Licensing in Action
In this groundbreaking deal, Honeywell licensed its proprietary electrolyte formulations and separator manufacturing processes to Entek. These technologies are vital components in next-generation lithium-ion batteries—especially those used in electric vehicles (EVs) and grid energy storage.
Rather than building everything from the ground up, Entek is tapping into Honeywell’s deep bench of research, development, and engineering expertise to accelerate production of safer, high-capacity batteries. The agreement includes multi-year licensing rights, milestone payments, and royalties on any commercialized products resulting from the use of Honeywell’s proprietary technologies.
This type of arrangement creates a win-win scenario:
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- Honeywell monetizes its proprietary knowledge without the time, expense, and risk of building its own manufacturing and distribution operations.
- Entek gains immediate access to advanced production know-how and formulas, enabling them to scale up more rapidly and compete more effectively in a booming industry.
Why Trade Secrets Matter
Unlike patents, which are publicly disclosed and have a limited lifespan, trade secrets can provide a lasting competitive advantage as long as they remain confidential. For businesses working on specialized formulations (such as chemicals, cosmetics, food additives, or pharmaceuticals) or proprietary production processes (like unique manufacturing methods, techniques, or automation workflows), these trade secrets can be the crown jewels of your operation.
When properly protected and strategically licensed, trade secrets can:
- Generate recurring revenue through licensing deals.
- Open new markets by partnering with manufacturers or distributors in other regions or sectors.
- Shorten the time to market for your licensees.
- Reduce capital risks by leveraging partners to scale the technology.
Licensing Formulations: A Growing Opportunity
Formulations—particularly in high-tech and chemical sectors—are ideal candidates for licensing. These can include battery electrolytes (as seen in the Honeywell deal), drug compounds, nutritional supplements, coatings, adhesives, and more. The formulation itself may not be patentable or may be too costly or time-consuming to patent. However, when held as a trade secret, it can still be licensed and protected through well-structured agreements.
Companies that specialize in niche formulations often find that licensing is a smarter path to market than building out full-scale manufacturing capabilities. By working with a licensing partner, they can leverage an established infrastructure and sales channel, allowing them to focus on what they do best—innovation and R&D.
Process Improvements: Turning Operational Know-How into Revenue
Many businesses don’t realize the untapped value hidden within their production floor. If your company has developed a more efficient, safer, or cleaner way to produce a product, that know-how has licensing potential.
Whether it’s a custom-built process for battery separators, a proprietary method for reducing waste during manufacturing, or an automated quality control system—these innovations can be packaged as a trade secret license.
In the Honeywell-Entek deal, it wasn’t just the formulation that was valuable—it was also the separator manufacturing process. This highlights how licensing production know-how, alongside formulas or product designs, can make a deal more attractive and comprehensive.
Structuring a Trade Secret Licensing Deal
Licensing trade secrets is different from licensing patents because you’re not dealing with published inventions. Confidentiality and contract enforcement are key. Here are a few things to consider:
– Confidentiality Agreements: Ironclad NDAs and confidentiality clauses are essential to protect your trade secrets.
– Clear Definitions: Precisely define what is being licensed—formulas, processes, training materials, or proprietary databases.
– Milestone Payments: Tie payments to development or production benchmarks to ensure both sides are aligned.
– Royalties: Include royalties on commercialized products to generate ongoing revenue.
A well-structured deal not only safeguards your intellectual capital but also provides a steady stream of income while your licensee scales the technology.
Ready to Explore the Licensing Potential of Your Trade Secrets?
If you’ve developed unique formulations or production processes—whether in energy, biotech, food, or any other industry—you may be sitting on valuable IP that’s ripe for licensing.
Let’s talk about how to unlock that value.
Schedule a short consulting call to explore your trade secrets and potential licensing opportunities.
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Trade secrets are more than just “company secrets”—they’re untapped opportunities waiting to power your next growth breakthrough.
Rand Brenner is an IP professional whose passion is helping inventors, startups, and businesses use licensing to turn their IP into income-producing products, services, and technologies. His decades of experience run the gamut from medical devices to food technology to consumer products. He’s licensed some of the biggest Hollywood entertainment blockbusters, including the Batman Movies (1 and 2) and the number one kid’s action TV show, the Mighty Morphin Power Rangers. Rand speaks about licensing and is a featured speaker at investment conferences, trade shows, colleges, and startup events. His first book, Hidden Wealth: The Money-Making Power of Licensing, was released in 2019 and is available on Amazon.com. He’s also a published writer, and his articles have appeared in several prestigious trade magazines, including The Licensing Journal, Intellectual Property Magazine, and License India.
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