*1 v. BICRON CORP. OIL CO. KEWANEE et al. May Argued January 1974 Decided No. 73-187. *2 in; J., opinion Court,
Burger, C. delivered the of the JJ., joined. Stewart, White, Blackmun, Rehnquist, Mar- J., opinion concurring shall, result, posf,..p. filed an in the 493. Douglas, J., dissenting opinion, joined, J., filed a in which Brennan, post, p. J., part took no Powell, in the decision of the case. Erwin-N. Griswold argued petitioner.. for the cause Hoerner, L. Barry on the brief were Robert J. him With Springel, Edward P. Troxell, 'Mooney, Robert P. (cid:127) James A. Lucas.
William McCoy; Jr., C. argued the cause and filed respondents.* brief for urging
*Briefs of amici curiae reversal were? Solicitor' filed General Bork States; by and Edmund W. Kitch for the United Don Banner, McWilliams, ald W. Thomas F. Dorfman, John C. Burger opinion of delivered
Mr. Chief Justice the Court. question on which to resolve a granted certiorari
We appeals: whether state courts of in the there is a conflict operation of the pre-empted by Secret In case the Court law.1 instant federal pre- was held there Appeals for Circuit the Sixth Fourth, Second, Appeals for the emption.2 The Courts of opposite reached and ..Ninth Circuits have Fifth, conclusion.3 Can- Assn.; Austin F. Smith for American Bar Chesterfield Browne, R. Dun-
field, Jr.,
Klitzman,
Donald
Maurice H.
Francis C.
ner,
District of
T. Roberts
Bar
and John
for the
Association
Columbia; by
the Ohio State
Walter Á. Porter and Bruce Tittel-for
Douglas B.
Assn.; by
Smith,
Finnegan,
Bar
Milton A.
Marcus B.
Henderson,
Payne
the Chamber of Commerce
and Kenneth E.
*3
by
George
States;
E. Frost for the
of
John T. Kelton and
the United
by
Bradley,
P.
Assn.;
Thomas
American Patent Law
Charles W.
Dowling,
Sprowls
Halle,
York
Edward
and Willard R.
for the New
by
Gomory
Assn.;
Patent Law
Karl W. Flocks and Paul L.
for
Innovation; by
Association for the Advancement of Invention &
Licensing,
Society;
Arnold
Bill
Tom
and
Durkee for the
Executives
by Jeremiah D. Lambert and Robert J. DeGiacomo for the.Elec-
Assn.;
Lloyd Symington,
Leva,
tronic
John
Industries
bMarx
and
Manufacturing
Assn.; by
S.
for the
Herman Foster
Chemists
Hoff
Clabault,
Co:; by
and Edward Ikf.' Farrell
Budd
James M.
for
Fiorito,
Langs
Burroughs Corp.;
Edward G.
and
F.
Edward
for
’
Coating
C.
Harold
Hohbach and
J. Brezner
Optical
for
David.-
Laboratory, Inc.; by Irving
Myers
ikf. Tillar and Grover M.
for
Reynolds
Inc.; by
Industries,
Schlesinger
R. J.
J.
Patrick
for Rohr
Industries, Inc.;-
and
Van C. Wilks for Southwire Co.
urging
Briefs
amici
of
curiae
affirmance were filed
Eric P. Schel
Council,
lin
Inc.;
al.,
by Mary
for National Patent
et
and
Helen
Sears and
Corp.
Edward S. Irons for SCM
(1973).
1
I unincorporated Chemical division Harshaw type of a leading manufacturer petitioner, is a ioniz- in the detection of crystal which is useful synthetic into research In 1949 commenced ing radiation. Harshaw produce was able to type crystal of this and growth By 1966, inches in one less than two diameter. as million, Harshaw $1 in excess of expenditures result of something no one else grow crystal, a 17-inch was able to many developed hád previously. had done Harshaw procedures, manufacturing techniques processes, growth and purification of raw materials and the encapsulation crystals of the which enabled to accom- con- plish processes of these Harshaw feat. Some this siders to be trade secrets. ape employees of respondents
The individual former respondent Bicron. joined Harshaw who formed or later executed, respondents While at Harshaw individual agreement as a condition of one employment, at least each, them not informa- requiring to disclose confidential tion or employees trade secrets obtained as Harshaw. Har- August compete Bicron was formed in 1969 to production crystals; by April 1970, shaw in the grown 17-inch crystal. had brought
Petitioner
diversity
action United States
seeking
District Court for the Northern District of Ohio
injunctive
misappropriation
relief
damages
Court, applying
trade secrets. The District
Ohio
law, granted
permanent
injunction against
*4
respondents
disclosure or use
of 20 of the 40
claimed
trade secrets until such time
as
trade secrets had
Chemicals, Inc.,
(CA5 1969);
Corp.
been released to public, or had been obtained come available to right having legal respondents from sources convey the information. for Circuit held that Appeals
The Court of the Sixth clearly findings fact District Court were not evident the record that erroneous, and that was from respondents appropriated to the benefit the individual obtained while processes of Bicron information on secret Further, the Court of they employees were at Harshaw. Appeals properly applied held that the District Court relating Nevertheless, Ohio law to trade secrets. Appeals Court, finding Court reversed District Ohio’s trade secret law to be in conflict with the Appeals (cid:127)laws of the United States. The Court of grant reasoned that could monopoly protection Ohio processes manufacturing techniques that were appropriate subjects for consideration under 35 U. C.S. § 101 for a federal which but had been in com- year mercial use for over one longer and so were no eligible patent protection under 35 U. 102 (b). S. C.
holdWe Ohio’s of trade pre- secrets is not empted by laws of the States, and, United accordingly, we reverse. n adopted
Ohio has the widely relied-upon definition of a trade secret found at Restatement of 757, Torts § comment b B. Goodrich Wohlgemuth, F. Co. v. App. Ohio 493, N. E. 2d 99, 104 (1963); W. R. Grace & Hargadine, (CA6 Co. v. 2d F. 1968). According to the Restatement,
“ [a] consist of any formula, pattern, device or compilation of information which is used in one’s business, and gives him an opportunity to obtain advantage competitors over who do not
475 chemical know or use it. ft be a formula for a process manufacturing, treating or compound, preserving materials, pattern for a- machine or device, other or a list of customers.” secret, and subject of a trade secret must be public knowledge general must not or knowl be of a edge in the trade or B. F. Co. v. business. Goodrich Wohlgemuth, supra, 499, 104; 192 N. E. Na 2d, at tional Co. Tube v. Eastern Tube 3 Ohio C. R. C. (n. s.) 462 (1902), 69 70 N. E. aff’d, Ohio St. 1127 secrecy This not necessary is element lost, however, if the holder of the trade secret reveals the trade secret to another “in under confidence, and implied obligation not use or disclose Cincinnati .to it.” Foundry Dodds, Bell Co. v. Reprint 154, 156, Ohio Dec. Weekly 1887). Bull. 84 (Super. L. Ct. These others may include those of “employees the holder’s whom necessary is it, confide in order apply toit the uses for which it is intended.” National Tube Co. v. Co., supra, Eastern Tube recipient at 462. Often the confidential knowledge subject of a trade is a secret licensee of Lear, its holder. Adkins, See Inc. v. 395 U. S. (1969)
The protection accorded the trade secret holder is against the .disclosure or unauthorized use of the trade secret those to whom' the secret has been confided under express or implied restriction of nondisclosure or nonuse.4 The law protects also the holder of a trade (C) Ohio Code (Supp. 1973) Rev. Ann. 1333.51 provides: § person, having “No possession obtained of an representing article a trade secret or access consent, thereto with the owner’s shall con- vert such article own use his or"that person, of another or there- after without consent owner’s make or cause copy to be made a article, su,ch such or exhibit article to another.” Ohio Rev. Code (E) Ann. (Supp. 1333.99 provides: 1973) § “Whoever violates section sTia.ll 1333.51 of the RevisedXode knowledge use against disclosure .when some “im- volition, but owner’s
gained, (a),, Restatement of Torts proper means,” *6 even recon- theft, wiretapping, or aerial may include not offer law, however, A trade secret does naissance.5 means, protection against discovery by fair and honest disclosure, by independent invention, such as accidental starting by' engineering, or so-called reverse is product working backward divine and known development or process' which in its .aided manufacture.6 patent
Novelty, in the
is not
for a
sense,
required
secret,
Hargadine,
R.
&
v.
F.
W.
Grace
392
Co.
t
2d,
“Quite
clearly discovery
a
less
something
is
than
Iron
Corp.
invention.” A.
Smith
v.
O.
Petroleum
Co.,
Works
(CA6
The patent matter of a is “process, limited to a machine, manufacture, or composition matter,, . or ... improvement thereof,” 35 U. "S. 101, §C. which fulfills the three conditions novelty and utility as articulated and defined in 35 U. S. §§C. 101 102, and and nonobvi- fined not more than five dollars, imprisoned thousand not less than one years, nor more than ten or both.” 5 E. I. deNemours & Christopher, Co. duPont 2d F. 431 (CA5 1970), denied, 400 (1971). cert. U. S. 1024 generally See 1012 Comment, Theft of Trade Secrets: The Need for Statutory a Solution,120 U. (1971). L. Pa. Rev. 378 6National Tube v. Co. Eastern Tube (n. s.) 3 Ohio C.C. R. 459, (1902), aff’d, 462 69 (1903). Ohio St. 70 N. E. Comment, See el Secrets, Doctrine Law of Trade Stiff 62 Nw. U. L. Rev. If an invention in 35 S. C. 103.8 ousness, as set out statutory tests for the issuance of a rigorous xueets period patent granted, for patent, a patentable 101. Inventions “§ any process, new useful “Whoever invents or discovers machine, matter, any manufacture, composition or new and or subject improvement thereof, may therefor, useful a obtain requirements to the conditions and of this title. patentability; novelty right to 102. Conditions loss “§ for person a “A shall be entitled to unless— “(a) country, or invention was known used others in foreign patented publication or printed or in a 'described this or patent, country, applicant or the invention thereof for before “(b) patented printed publi- in a invention was or described country foreign cation in this or sale in this or use on country, year prior application more than one date' of the *7 States, in the United or “(c) invention, he has or abandoned the “(d) patented, the patented invention was first or to caused be subject or certificate, by was the of applicant an the or inventor’s legal representatives. assigns his foreign country prior or to in a application the country date of the applica- for in this on an tion for or inventor’s more than- certificate filed twelve filing months before the of application States, the or in the United “(e) the patent granted invention was described on application patent by for another filed in the United States before the invention thereof the applicant patent, for or “(f) he did not subject sought himself invent the be matter to patented, or “(g) applicant’s before the invention thereof the invention was country by made in this another abandoned, sup- who had not pressed, or concealed it. In determining priority of invention there only shall be considered respective not conception the of dates practice reduction to of the invention, but also the reasonable diligence of who one was first to conceive and last to to reduce practice, from prior a time conception by to the other. patentability; Conditions “§ non-obvious-subjebt matter patent may “A be though not obtained the invention is not identically disclosed described as set forth in section 102 of this 478' “right ex as the of
years, giving what been described has Ellis, Assignments 4, § and Licenses clusion,” R. Patent not to p. (2d 1943).9 goes only protection ed. This under the subject is forbidden copying matter, which S, Act, seq., but to Copyright § 17 U. C. et also independent creation.
Ill are first issue we deal with whether the States forbidden act at all the area of up kinds intellectual make property subject matter secrets. ' I, 8, cl. grants the Constitution Article n power Congress the promote Progress of Science useful
“[t]o Arts, by for limited securing Times to Authors and Right respective Inventors the exclusive to their Writings and Discoveries . . . .” In 1972 Term, California, Goldstein 412 U. S. (1973), held grant power we Congress cl. 8 that, was exclusive writings, least in the case prohibited the States were not from encouraging and protecting the efforts of those within their borders title, if the subject differences sought between the matter patented prior and the subject art are such that matter as a whole have been obvious at .would time made invention was person- having ordinary to a subject skill in-the art said to.which pertains. Patentability matter negatived by shall not be the manner *8 in which the invention was made.” 35 provides: 9 Title U. S. C. “Every patent shall contain a short title of the invention and grant patentee,. to the or assigns, his heirs for the term of seven- years, subject payment teen .to the provided issue fees as in for title, right of the making, using, selling exclude others
..this or from throughout the invention States, the United referring specifi- to the cation for particulars thereof. A copy specification drawings annexed to shall and.be part thereof.” legislation. could, pro- The appropriate therefore, States rerecording sa,le against per- the unauthorized for tect though even tapes, formances fixed on records those in performances “writings” as the constitutional qualified empowered legislate regarding Congress sense and was if performances pre-empt such and could the area it chose great on premised to do so. This determination was diversity essentially of interests in .our non- Nation —the appreciation uniform character of the. of intellectual in the Evidence achievements various States. from patents granted by
came the States the 18th century. 412 S.,U. at 557.
Just as may regulatory power the States exercise over writings may so regulate respect to dis- States coveries. States viewpoints hold diverse in protect- ing property intellectual relating they to invention as in protecting do the intellectual property relating to the subject copyright. only matter of The on limitation States is that regulating the area of patents copy- rights they do not conflict operation with the of the laws passed this area by Congress, and it is to that more question, difficult we now turn.
IV .-question of whether the trade secret law of Ohio is void under the Supremacy Clause involves a consideration whether law “stands as an obstacle to the ac complishment and execution of the full purposes and objectives of Congress. Davidowitz, ”Hines v. 312 U. S. 52, (1941). See Florida Avocado Paul, Growers v. 373 U. S. Sears, stated in We Roebuck Co. v. el Co., S. Stiff &.
(1964), that when state law touches upon'the area of federal pursuant statutes enacted to constitutional au thority, “it is-'familiar doctrine’ that policy federal *9 denied’ the benefits its naught, set at
‘may not be Co., U. S. Elec. v. Elec. Co. Sola law. state Jefferson even, if the state course, true, of This 173, undoubted of otherwise exercise in the is enacted law power.” state in case this of Appeals the laws
The .Court conflict, secrets law.of.trade Ohio with the in to be held un the Congress passed the patent laws were the I, §8, Art. power clear its exercise'of under challenged, not ex does patent The the Constitution. 8, of cl. of trade operation the forbid endorse or plicitly pro if scheme noted, the have However, as we law. secrets developed by respecting Ohio tection patent laws,” objectives the federal the “clashes with Co., supra, el & Co. v. Sears, Roebuck Stiff To determine whether the state law must-fall. then helpful the federal law it is Ohio' law “clashes” with the secret, objectives and trade of both examine laws».
. objective granting stated Constitution legislate power Congress area intellec- “promote Progress property to, tual Science and. is. promote progress Arts.”. The laws useful right by offering period of 'exclusion for limited as an to inventors risk the often enormous costs incentive* time, research, development. pro- in'-terms of .The thereby ductive positive effort fostered will have a effect on products, of new introduction societyithrough (the processes of into economy, and the manufacture by why employment emanations of increased and better return, In lives for our citizens. right for the of ex'- for inventions,” clusion —this “reward Oil Co. Universal Globe (1944) S. laws —the impose upon requirement inventor a of disclosure. adequate To insure and full disclosure so upon knowledge “the 17-year period expiration *10 en are thus people, the who of invention enures to the by its profit it practice abled without restriction , Corp. 289 Condenser United States v. Dubilier use,” the require10' that 178, (1933), the laws S. descrip clear application include a full and shall process tion of “of manner and the invention and the the skilled in making using any person it” so that art make invention. 35 U. C. and use the S. a patent granted
When is and the information contained general especially public circulated the and those is skilled in the óf trade, general the store such additions to knowledge importance are of public such to the weal willing high the Government pay that Federal is price of 17 years disclosure, of exclusive use its which' disclosure, it is assumed, will stimulate ideas and the eventual development.of significant further advances in the art. The Court has also policy articulated another law: is in that which domain cannot be removed therefrom action the States. requires general that all
“[FJederal ideas in circulation be to the good common dedicated unless they protected are Lear, patent.” valid Inc. v. Adkins, S., 395 U. at 668. See also California, Goldstein v at S.,U. 570- Sears, 571; Roebuck Co., & Co. v. supra; el Compco Stiff Corp. Day-Brite Inc., v. Lighting, 376 U. 234, S. 237-238 (1964); International News Service Associated Press. v.
248 U. 215, S. (1918) (Brandéis, J., dissenting). maintenance standards of commercial ethics and the encouragement of invention broadly are the policies stated behind trade secret law. necessity “The of good faith and honest, fair dealing, very life
1035 U. S. C. §111. Tube National world.” of the commercial spirit Co., (n. s.), 3 Ohio C. C. R. Eastern Tube
Co. at. Iron Works Corp. v. Petroleum A. O. In Smith 462.11 that emphasized the Court 2d, 73 F. discovery may patentable, though even does not one who
“destroy discovery value competitor bywho unfair it, advantage or makes beneficiary of obtains faith, a broken means, as paying the knowledge thé desired without himself price expended or machines lábor, money, discoverer.”
In 2d Greenberg, 578-579, Wexler v. 399 Pa. A. *11 Supreme Court Pennsylvania (1960), 430, 434-435 importance, to the protection noted of trade secret in subsidization of. development research and- and companies efficiency large creased economic within through dispersion responsibilities of for creative developments.12
Having objectives now in mind the of both the law, we turn to an examination interaction of systems protection these of intellec property-one tual Congress' established and the , other a State —to determine whether and under7what might circumstances the great latter “too constitute patept encroachment on system the federal to be toler Sears, Co., 376 ated.” & Co. S., v. Roebuck Stiffel 232. ,we
As noted earlier,, trade secret protects items subjects which would proper for consideration for patent protection under 35 U. S. dn §101. C. As the' Corp. Mining Mfg. See also Winston Research Minnesota & 8 2d, at F. 13 Services, Inc. 2d, See Water v. Tesco Chemicals, Inc., 410 F. also at 171. California, Goldstein v. case of the Con- recordings respect nonpatentable subject gress, matter, “has balance; drawn no it rather, unattended, has left area why and no reason exists the State should not be free California, supra, (footnote Goldstein v. act.” at 570 omitted). no patent
Since however discovery, is available novel, and useful, nonobvious, it one unless falls within express patentable categories subject matter 35 U. discovery § S. C. the holder of such a would have apply no reason to for a whether trade secret' pro- existed not. Abolition of trade secret tection would, therefore, not result in increased disclosure public of discoveries in the of nonpatentable area subject Also, matter. hard to see how the would be benefited disclosure of customer lists or advertising campaigns; fact, keeping such items secret encourages businesses to initiate new and individualized plans of operation, and competition constructive results. This, leads to a turn, greater variety of business methods than would otherwise be the if privately case developed marketing other data passed illicitly were firms among involved in the same enterprise.
Congress spoken has in the area of those discoveries which fall within one of the categories patentable sub- ject matter of 35 U. S. C. 101 therefore, are, of a *12 would subject nature that be to consideration for a patent. Processes, machines, composi- manufactures, tions of matter, improvements thereof, which meet utility, the tests of novelty, and are nonobviousness entitled to be patented, but those not, which do not. are question The remains whether those items which are proper subjects for consideration for may also alternative, have available the protection accorded by trade secret law.
(cid:127)484 encouraging invention policy of
Certainly form of another by the existence disturbed is not two; systems respect In this to invention. incentive Similarly, be in conflict. never would not and are must public domain once in- the policy that matter incompatible with is not public domain in the- remain By definition protection. of trade secret existence public in placed been domain.13 has not secret trade law to recon objective of the more difficult quid disclosure, law that of trade secret is cile with Co. v. quo Universal Oil pro right of the to exclude. Co., helped 484. are S., Globe 322 U. at We' analysis by Henry Friendly’s Judge stage Inc., Bourns, 442 F. opinion in Painton & Co. v. (CA2 Appeals 1971). 2d 216 There the Court thought determining whether inventors will useful, refrain because the existence of trade law from secret applying patents, depriving public from thereby learning of the invention, distinguish between three ' categories of trade secrets:
“(1) the trade believed by secret its owner con validly patentable stitute a invention; (2) the trade secret known to owner its not to so patentable; be (3) patentability whose valid Id., dubious.” . considered5 Trade of these would categories each .secret run against employee of confidence —the breaches licensee situations —and theft and other forms of indus- espionage. trial
As to. the trade secret known not to meet "the standards placed An “in use or on invention sale” within meaning (b) losing 35 U. S. C. without its secret v. Bourns, Inc., 2d, 6; Painton & Co. 442 F. at 224 n. .character. Metallizing. Engineering Kenyon Bearing Co. v. & Auto Parts (GA2), denied, F. 2d cert. U. S. *13 way disclosure would very of little patentability, of protection. by abolishing trade secret' accomplished matter, subject nonpatentable of With trade secrets reasonably be available would not alternative public interest “There be no inventor. can know- [unpatentable] stimulating- developers of such appli- Office with to flood an overburdened Patent how patentable.” they cations what do consider npt [for] Ibid. to be filing applications The- mere of doomed no turned down will forth new bring the Patent Office public federal knowledge enlightenment, since under regulation patent applications statute and and aban- patent applications doned are held Patent Office open in confidence public inspection. and are not § 122; (b). S. C. CFR 1.14 Even as the of protection extension trade secret patentable subject matter that the owner knows will not meet the patentability standards of will conflict with patent policy disclosure, of decidedly will Rave society. beneficial on effect Trade secret law will encour- age invention in areas where reach, law does not prompt and will independent proceed innovator to discovery exploitation of his invention. Competition is fostered and the deprived is not the use if quite valuable, not patentable, invention.14
Even if trade secret against the faithless employee were abolished, inventive exploitive effort in the patentable subject .area matter that did iiot meet standards patentability would continue, although aat reduced level. Alternatively with the effort that remained, however, would come an increase in the amount self-help that companies innovative 14 Doerfer, The Limits on Trade Secret Imposed Law Federal Patent Supremacy, and Antitrust Harv. L. Rev. *14 widely dispersed would be employ. Knowledge
would in research. of still active those the among employees and necessarily increased, would be Security precautions officers or of few benefits those fringe and salaries whole of the secret had to know the employees who thought sufficient fixed in an amount would be invention would be companies loyalty.15 their to assure Smaller the since placed disadvantage, a economic at distinct great, could be and self-help kind of costs of this be public would cost of the use of invention to entrepreneur with limited increased. The innovative ¡Search to his r efforts resources would tend to confine he > without the and few felt he could mst himself those legal protection against of breaches ultimate assurance and organized As a scientific tech- result, confidence. and society, research could nological fragmented, become whole, as would suffer. a problem that arise trade secret
Another would state if protection precluded licensing were is in the area of exploit processes. others to holder óf a trade The likely secret would not his share secret with manufac placed be under binding legal obliga turer who cannot pay tion fee protect license or to The the secret. result would hoard rather than disseminate knowledge. Bourns, Inc., Painton & Co. v. 2d, F. Instead, then,- licensing use others to inven his tion most making and efficient of existing use manu facturing and marketing structures industry, within the the trade secret holder would tend either to limit his thereby utilization invention, depriving of the maximum benefit use, of its or engage in the economically and time-consuming enterprise wasteful generally Wydiek, See Preemption Trade Secrets: Federal Light (Part Conclusion), Goldstein and Kewanee 56 J. Pat. II — Off. Soc. 23-24 marketing manufacturing duplicative constructing invention. exploitation mechanisms economic of resources misallbcation detrimental protec- if place trade secret take waste that would thus respect employees or licensees tion were abolished any policy reference to justified cannot be law seeks to advance. federal Nothing requires in the that States refrain law. prevent espionage. In from action to industrial addition wire- burglary, the increased costs for from bribery, misappro- other used to tapping, means priate secrets, there is the inevitable cost to *15 from society when firm decency basic one steals A that of right, another. most fundamental human con-, privacy, is threatened is when industrial espionage profitable^16 is made state doned interest denying profit illegal to such ventures unchallengeable. category patentable subject
The next matter with is legitimate invention Whose holder has a deal theG patentability. doubt as to its The risk of eventual patent invalidity by the courts -and the costs associated with that well impel risk some with good-faith as to patentability doubt not to take the trouble to seek to obtain and patent protection defend for their dis- coveries, regardless of the existence of trade secret pro- tection. protection Trade secret would assist those inventors in the exploitation more efficient óf their dis- coveries and not with the conflict patent In most l$w. genuine patent cases of doubt as'to validity potential patent rewards of protection are so superior far to those accruing to holders trade secrets, that the holders of 16Note, Preemption Patent of Trade Secret Protection of Inven Méeting tions Judicial Standards of Patentability, 87 Harv. L. Rev.
such patent protection, ignoring inventions will seek trade secret route. For those inventors “on the line” as patent to whether to protection, seek the abolition of might secret encourage apply some to. for a who otherwise would have done so. For some of encouraged, those so granted no will be result
“will unnecessary have been postponement divulging persons, willing of the trade pay If for it. does issue], may [the be invalid, yet many prefer pay will a modest well royalty than it, though to contest even Lear allows accept them to a license and pursue the contest with- paying out royalties while the.fight goes on. The. result in such a case unjustified would be royalty payments many from prefer who would pay not to them rather agreed than fees from one or a few who entirely are willing to do so.” Painton & Co. v. Bourns, Inc., 442 2d, F. at 225. point is that those who might be encouraged to
file
patents
by the absence of trade secret law
in
will
clude inventors possessing the chaff as well as the wheat.'
Some of the
nonpatentablfe
chaff—the
discoveries—will be
thrown out by the Patent Office,
but
the meantime
society will have been deprived of use of those discoveries
*16
through trade secret-protected licensing. Some of the.
chaff may not be thrown out. This Court has noted the
difference between the standards used by the Patent Office
and the courts to determine patentability. Graham v.
Co.,
John Deere
383 U.
1,S.
18 (1966).17
Lear,
In
Inc. v.
Adkins,
The final matter category invention, e., with is clearly patentable deal i.
invention which the owner believes to meet the standards of patentability. It is here that the federal interest in disclosure is at peak;- inventions, its these novel, useful “ which, non obvious, things are ‘the worth are to the ” public .the patent.’ embarrassment an exclusive Graham v. John supra, 9at (quoting. Deere Thomas Jefferson). The interest of the is that bargain of 17 years of exclusive use in return for disclosure be If a accepted. through State, a system protection, were to cause a substantial risk that holders patentable inventions would seek .patents, but rather -rely would on the state protection, we would be compelled hold that such a system could not constitutionally In exist. cbntinue case of trade secret law no reasonable of déterrence from risk patent application by' those who can reasonably expect' be granted patents exists. n Trade provides Secret law far weaker
(cid:127)490. patent
many'.respects While than law.18 trade secret law discovery does forbid the of the trade secret means, g., fair independent and honest e. or creation engineering, patent operates “against reverse- law world,” forbidding any use of the invention -for whatever significant length purpose for a of time. The holder of a secret a also takes substantial risk the secret trade that passed will be on his competitors, by or theft a breach of relationship, confidential a manner not susceptible easily discovery proof. Painton & Co. v. Bourns, Inc., 442 2d, F. Where law acts barrier, as a relatively functions aas ' sieve. The possibility that inventor who believes his invention meets the standards of patentability will sit back, rely on law, trade secret and after one year use forfeit any right protection, 35 U. S. C. 102 (b), is rémote indeed.
Nor does society face much risk that scientific Or tech nological progress impeded will be by the rare inventor a patentable invention who chooses trade secret over protection. ripeness-of-time The concept of invention, developed from the study -many independent multiple, discoveries in history, pre if particular individual had dicts. not made a particular discovery others would.have, and in probably ' relatively short period of time. If something is to be discovered at all- very likely it will be discovered by person. more one than Singletons and Multiples in Sci (1961), ence in Merton, R. The Sociology of Science 343 (1973); Cole, Cole & J. Social S. Stratification in Science 12-13, 229-230 (1973); Ogburn & Thomas, Are Inven tions Inevitable?, Pol. Q. Sci. 83 (1922).19 Even Services, Water Inc. v. Chemicals, Inc., Jesco 2d, 410 F. at 172. Watson, See J. Double Helix If Watson and Crick had,, not discovered the structure likely DNA it Linús that. *18 to completely discovery keep his to inventor were an se- nor trade neither something himself, that be it will that probability high is a forbid, there cret laws invention, If the developed. though independently soon competition use, into secret, put is a trade still to the solution inventor’s of the the existence alerted to effort an extra to make encouraged be may problem and pos- to be thus known the solution find independently to only private from not pressures faces sible. The inventor in our work who from the skilled scientists industry, but cen- publicly supported great our other universities and learning ters of and research. protec- of trade secret conclude that the extension
We not conflict patentable inventions does clearly tion to Perhaps because patent policy of disclosure. with the in produce any positive law does not effects trade secret patentable inventions, opposed as clearly the. area of protection resulting the beneficial effects from trade secret doubtfully patentable clearly the areas of the and the unpatentable suggested par- inventions, has been that pre-emption tial appropriate, and courts that apply should refuse trade secret to inven- tions which patented, the holder should have and which would been, thereby, have disclosed.20 However, since' there is no real possibility that secret law con- trade will flict favoring with the policy federal disclosure of clearly patentable partial inventions pre-emption is inapprbpri- Pauling discovery would have made the examples Other soon. multiple discovery length Ogbum- are listed at in the and Thomas article. Note, Preemption, See Patent of Trade Secret Protection of In Meeting ventions Patentability, Judicial Standards of 87 Harv. L. (1974); Brief Curiae, pre Rev. for the United States as Amicus senting favoring the view the Government pre-emption limited witfrin (which view is United-States, which believes that not.that pre-empt law does not law). state trade secret
ate. pre-emption, furthermore, could well create Partial problems serious state courts administration preliminary law. secret As matter trade secret trade obliged actions, distinguish courts would be state be tween what a reasonable inventor would and would not <correctly patentable, consider be clearly with the trade arguing holder of the secret the invention misappropriator was patentable of. its árguing novelty, undoubted -non- utility, and enough
obviousness. Federal courts have difficult time trying to determine whether invention, narrowed patent application procedure21 and fixed in the speci *19 fications describe invention which for which the the patent patentable/22 has been granted,, Although is state join in courts some circumstances must in federal courts Lear, judging an Inc. v. valid, whether issued is n Adkins, supra, it would be undesirable to. impose the impossible almost burden on state courts to the determine fact and in the mind of a' patentability reasonable —in discovery inventor —of a has patented not been entirely and uncircumscribed by expert analysis remains process. in complete the administrative Neither nor partial pre-emption secret,law of state justified. trade patent,
Our conclusion that does not pre-empt law trade in secret accord prior law is cases this Court. Co., Universal Co. Oil v. Globe 322 United S., 484; U. States v. Dubilier Corp., Condenser 289 S., 86—187; at 1 Laboratories, Becher Contoure v. 279 U. 391 388, S. (1929); Du Pont Masland, Powder Co. v. 100, U. S. 102 (1917); Dr. Miles Co., Medical Co. Park & Sons Board 373, U. S. 402-403 Trade v. Christie (1911); Areeda, Analysis See P. p. Antitrust ¶ King Judge.L. 22 See v. Air Products Hand’s lament Harries Co., (CA2 1950). 183 F. 2d (1905).23 236, 250-251 Grain 198 U. S. & Stock law have co-existed law and Trade secret has its years. Each country over one hundred does not particular, play, operation to of one role and the secret law away other. Trade take from need for the of those exploitation encourages development might be ac- items or different invention than of lesser ‘ items patent laws, under but which corded technological important part play still have to (cid:127)and secret scientific advancement of Nation. Trade promotes sharing knowledge, efficient and the operation permits the individual inventor industry; contracting reap the rewards labor with a of his it. Con- company large'enough develop exploit gress, by silence seen the many its over has years, these allowing pro- wisdom of enforce the States Congress tection.. Until takes affirmative action to contrary, grant protection States should be free to trade secrets. pre-
Since we-hold that Ohio trade secret law is empted by law, of the judgment federal Court Appeals reversed,, for the Circuit is Sixth the case is remanded Appeals to the Court of with direc- tions to judgment reinstate the Court. District
It 'is-so ordered. *20 Mr. Justice Powell part no took decision of in-the this case.
Mr. Justice
Marshall,
concurring
result.
the
Unlike
I
Court,
the
do
believe
possibility
that the
that an
patentable
inventor
a
rely
will
invention
Appeals
relied,
of
part,
Court
below
iñ
on Kendall v.
Winsor, 21
(1859),
years
How. 322
a case decided nine
before trade
imported
secret law
country
was
England by
into this
f-om
means
Peabody
of the
Norfolk,
landmark case of
on state trade Ante, secret law at 490. trade State indeed.” is “remote who protection to the inventor provides substantial than rather to or sell the invention intends use himself in its unlimited others,, protection it license to monopoly clearly superior 17-year duration is the I patent laws.' no that afforded have doubt some protection provides in of existence trade secret into the to entrance instances a substantial disincentive deprives society of the benefits patent and thus system, policy of disclosure invention which of well be encourage. laws case This such an instance. my policy
But does not view sound in this area dispose of' case. presented this Rather, question case this is whether Congress, enacting laws, merely intended monop- to offer inventors limited oly in exchange for of their disclosure invention, instead pressure to exert on inventors to into enter this exchange withdrawing any possibility alternative legal protection for their I persuaded inventions. am former is the case. State trade laws and secret federal have many laws many, co-existed for years. During time, Congress repeatedly has demonstrated its' full existence of the awareness trade system, secret any without indication dis- approval. Indeed, Congress has in a number of instances given explicit federal informa- provided tion agencies. federal g., e. 5 U. See, S. C. (b) § 552 (4); S. C. 1905; generally see Appendix to Brief for Petitioner. Because I this, conclude that there is “neither such actual conflict between the two. schemes of regulation that both cannot stand in the same area, nor evidence of a congressional design to pre- empt the' field.” Florida Avocado Paul, Growers v.
495 in the concur I therefore 132, 373 U. S. majority of the Court. by. the reached result n Mr. Justice Douglas, with whom Mr. Justice Bren- dissenting.' concurs, nan Sears, philosophy war with the decision is at
Today’s Compco. 225, and 376 U. S. & Co. v. Roebuck Stiffel Inc., 234 Those Lighting, U. S. Day-Brite Corp. v. lamp and one pole patents a involved cases —one declared of which was fixtures each lighting fluorescent though that however, held, The lower courts invalid. identical confus the patents were invalid sale patentees of the products products similar ingly - held competition laws. We unfair violated state .that may unprotected by patent, a state law an article is when every article not copy it, not forbid others because in domain.' Con patent a. is covered valid patent no in "the laws decided that where gress patent free that where a competition prevail; should existed, issued, right to exclude others patent rightfully longer years, obtain for no and that should than law, "under such as that for not some other States kind competition, give’ protection bidding unfair objectives that clashes with-the of the-federal laws,"1 S., product syn- suit, involved sodium iodide product patented but crystals,
thetic was that could be apparently was not. Harshaw inventor contributed greatly technology to the field developing that and’ processes, procedures, techniques produced Lear, Adkins, Here as in Inc. v. 395 U. which held S. precluded that a licensee of a is a contract from- challenging patent, were, poliey for if he defeat that would “enforcing provision .laws: contractual -would .this strong policy favoring- undermine federal the full and use of free the.public ideas domain.” *22 any competitor. proc- These crystals than larger
much patentable; were also esses, techniques and procedures, to sought Harshaw patent sought. but no was Rather employees. contracts with its protect trade secrets its that, Court found as a result those And the District secrecy occurred precautions, “not sufficient disclosure public trade secrets in the place so as to the claimed findings and were sustained domain”; those Appeals.- Court of permanent injunction
The District issued a Court ex-employees, restraining them from against respondents, By patent a using the used Harshaw. processes full could require which would disclosure Harshaw ’ 17-year a have obtained world. monopoly against By the District injunction, Court’s which the Court approves and a reinstates, gets permanent Harshaw injunction running perpetuity against into respondents. Sears, present In injunction as an case, against competitor unfair issued. We said: “To a allow State by use of its competition prevent unfair to an copying represents article which slight too an patented advance be to permit would be to to the State block off from the something which federal law said has belongs public. to The result would while grants only federal law 14 or years’ protection to genuine inventions, see U. C. 154, 173, S. §§ States perpetual could allow lacking articles too novelty any patent merit at all under federal con- stitutional standards. This would be great too encroachment on the system federal to be tolerated.” 376 S.,U. at 231-232. conflict with the laws is obvious. The
decision of Congress adopt system was based on the idea that there will be much more innovation if are discoveries disclosed patented than .there will be everyone when works in secret. Society thus fosters information at cost exchange technological free 17-year monopoly.2. of a limited secret,3 patent, property
A unlike a has no Appeals, dimension. That was the view of the Court 1074,1081; 478 F. 2d what supported by its decision is Powder Mas said in Du Pont Co. Mr. Justice Holmes land, 102: U. S. property applied
“The word as trade-marks unanalyzed trade secrets is an expression of certain *23 holding “The Appeals] the Court of in Kewanee seems [of permissible correct. If it is unfair for inventor to use the law of competition patenting, categories as a substitute for of certain tha,t privileged protection inventions would receive under. law. Thus laser, set, airplane a new protected television or could not' be put because inventions which their nature be into com cannot disclosure, eligible mercial use without are not for trade secret they put' after are can be on the market. Tho-:e that eligible. maintained are But as the basic economic function of the patent system encourage making is to the and commercialization inventions, justification providing there seems to be incentives no for beyond provided by those the law to discriminate betweén categories inherently inventions, e., may different i. those that kept may Moreover, secret and those that rules which not. state grant would such incentives seem economic to conflict quid pro quo underlying patent e., monopoly protection; i. a limited time, in return for full disclosure of the invention. Thus federal law has struck a balance between incentives for inventors and the public’s right competitive economy. sense, to a In this Adelman, integral part law competitive policy.” is an of federal Secrecy Patenting: Proposals Resolving Conflict, Some for Quarterly APLA Journal 298-299 .unpatentable. Trhde secrets often are In is that event there policy injunction no federal which is contravened when an to bar foreign Moreover, disclosure of a trade secret is issued. insofar as patents obviously patent policy are involved our federal is irrelevant. Oppenheim, (2d 1965). S. As Unfair Trade Practices 264-265 ed. respects patents further contrasts between and trade see secrets Milgrim, Secret Licensing, Protection and Trade 4 Pat. L. Rev. 375(1972). primary fact that
secondary consequences the. rudimentary good requirements some makes any valuable plaintiffs have faith. Whether facts, what- or knows the defendant they are, that he through special ever confidence but accepted. property be denied point starting confidence cannot be. Therefore the present property process matter is not or due law, but that the stood in defendant confidential .of relations with plaintiffs, These one them. place have given and the first hostility, thing to be made sure of is that the defendant shall not fraudulently abuse the reposed trust in him. It is the usual incident If confidential relations. there any disadvantage in the fact that he knew the plaintiffs’ he secrets must take with the burden .the good.”4
A suit to redress theft of grounded secret is in tort damages for breach of a contract —a historic Cataphote remedy, Corp. Hudson, v. F. 2d Damages for breach of a confidential relation are not pre-empted by law, injunction but an California, Goldstein As ruling U. S. *24 of Mr. Brad’ey concerning Justice- patents distinction between and copyright is relevant: “The difference things, between the letters-patent two copy- and right, may by be. subjects illustrated just reference to the enumer- ated. the case of medicines-. Take Certain mixtures are found to. gteat be of healing value in art. If the the. discoverer writes and publishes subject a book (as regular on the physicians.generally do), gains he right no exclusive to the manufacture sale of. medicine; gives public. he that to the acquire .If he desires such right, exclusive he must obtain a for the mixture as a new art, manufacture, composition may copyright of matter. He book, his pleases; if he only but that secures to hitíi the exclusive right publishing his book. So all inventions printing other or discoveries.” Selden, Baker 101 U. S. 102-103. law states because the pre-empted use is against enforceable secrets that is over trade only monopoly as a monopoly exacts that performance; and specific protected can A full disclosure. price of a for breach Damages kept secret. only being disclosure injunction barring thing; are one contract patents valid protection accorded for the does service pre-empted. is therefore courts, process findings fact of the lower From the dis- great a was such litigation unique, involved certainty. virtual patentability as to make its covery vigorous reflects a activist anti- opinion Court’s Yet the objection is not because it is philosophy. My problem no neutral This is involves activist. expresses principle. I, 8, The Constitution Art. cl. policy which has enforced stat- .Congress the activist policy constitutional we should It is that utes. public good. not our individual notions of enforce, judgment I affirm would below.