Document: 416 U.S. 470 94 S.Ct. 1879 40 L.Ed.2d 315 KEWANEE OIL COMPANY, Petitioner,v.BICRON CORPORATION et al. No. 73—187. Argued Jan. 9, 1974. Decided May 13, Syllabus Harshaw Chemical Co., an unincorporated division of petitioner, over a period years developed certain processes in the growth and encapsulation synthetic crystals purification raw materials, some which were considered to be trade secrets; it eventually succeeded for first time growing 17-inch crystal type useful detection ionizing radiation. The individual respondents, former employees who while working there had signed agreements not disclose secrets obtained as employees, formed or later joined respondent Bicron Corp., competed with producing crystals; Bicron, soon after its formation, also grew crystal. Petitioner brought this diversity action seeking injunctive relief damages misappropriation secrets. District Court, applying Ohio secret law, granted permanent injunction. Court Appeals reversed on ground that Ohio's law conflicted federal patent laws. Held: is pre-empted by Pp. 474—493. (a) States are forbidden protect kinds intellectual property may make up subject matter just exercise regulatory power writings, Goldstein v. California, 412 546, 93 2303, 37 163, so they regulate respect discoveries, only limitation being regulation area patents copyrights must conflict operation laws area. 478—479. (b) Abolition protection would result increased disclosure public discoveries nonpatentable matter, benefited such discoveries. 482—483. (c) policy encouraging invention disturbed existence another form incentive protection, two system conflict. P. 484. (d) Nor once domain remain incompatible protection. (e) any between whether concerning patentable category discovery (1) clearly unpatentable, (2) doubtfully patentable, (3) patentable. As category, alternative available will encourage prompt innovator proceed exploitation his invention, license others exploit processes. second risk cost eventual invalidity impel inventor seek regardless encouragement elimination applications inventions likely have deleterious effect society policy. third affords weaker than laws, presents no reasonable deterrence from application. 484—491. (f) There real possibility policy, partial pre-emption appropriate could well unnecessarily burden administration States. 491—492. 478 F.2d 1074, remanded reinstatement Judgment. Erwin N. Griswold, Washington, D.C., petitioner. William C. McCoy, Jr., Cleveland, Ohio, respondents. Mr. Chief Justice BURGER delivered opinion Court. 1 We certiorari resolve question courts appeals: state law.1 In instant case Sixth Circuit held was pre-emption.2 Courts Second, Fourth, Fifth Ninth Circuits reached opposite conclusion.3 2 * leading manufacturer 1949 commenced research into able produce one less inches diameter. By 1966, expenditures excess $1 million, grow crystal, something else done previously. many processes, procedures, manufacturing techniques materials enabled accomplish feat. Some these considers 3 respondents Bicron. While at executed, condition employment, least agreement each, requiring them confidential information Harshaw. August 1969 compete production crystals, April 1970, grown 4 United Northern injunction against use 20 claimed until been released public, otherwise generally become sources having legal right convey information. 5 findings fact erroneous, evident record Respondents appropriated benefit Further, properly applied relating Nevertheless, finding reasoned grant monopoly subjects consideration under 35 U.S.C. § 101 but commercial year longer eligible 102(b). 6 hold preempted States, and, accordingly, we reverse. II 7 has adopted widely relied-upon definition found Restatement Torts 757, comment b (1939). B. F. Goodrich Co. Wohlgemuth, 117 App. 493, 498, 192 N.E.2d 99, 104 (1963); W. R. Grace & Hargadine, 392 14 (C.A.6 1968). According Restatement, 8 '(a) consist formula, pattern, device compilation used one's business, gives him opportunity obtain advantage competitors do know it. It formula chemical compound, process manufacturing, treating preserving pattern machine other device, list customers.' 9 secret, knowledge general business. supra, App., 499, N.E.2d, 104; National Tube Eastern Cir.Ct.R., N.S., 459, 462 (1902), aff'd, 69 St. 560, 70 N.E. 1127 (1903). This necessary element secrecy lost, however, if holder reveals 'in confidence, implied obligation it.' Cincinnati Bell Foundry Dodds, 10 Dec.Reprint 154, 156, 19 Weekly Law Bull. 84 (Super.Ct.1887). These include those holder's 'employes whom confide it, order apply uses intended.' Co, 462. Often recipient licensee holder. See Lear, Inc. Adkins, 395 653, 89 1902, 23 610 (1969). accorded unauthorized confided express restriction nondisclosure nonuse.4 protects when gained, owner's volition, 'improper means,' 757(a), theft, wiretapping, even aerial reconnaissance.5 A does offer fair honest means, independent accidental disclosure, so-called reverse engineering, starting known product backward divine aided development manufacture.6 11 Novelty, sense, required F.2d, 14. 'Quite invention.' A. O. Smith Corp. Petroleum Iron Works 73 531, 538 (CA6 1934), modified increase scope injunction, 74 934 (1935). However, novelty merely because possess usually known; secrecy, context secrets, thus implies minimal novelty.7 12 limited 'process, machine, manufacture, composition . improvement thereof,' 101, fulfills three conditions utility articulated defined §§ 102, nonobviousness, set out 103.8 If meets rigorous statutory tests issuance patent, granted, 17 years, giving what described 'right exclusion,' Ellis, Patent Assignments Licenses 4, p. (2d ed. 1943).9 goes copying Copyright Act, seq., creation. III 13 issue deal act all Article I, 8, cl. Constitution grants Congress 15 '(t)o promote Progress Science Arts, securing Times Authors Inventors exclusive Right their respective Writings Discoveries .' 16 1972 Term, 163 (1973), that, prohibited protecting efforts within borders legislation. could, therefore, rerecording sale performances fixed records tapes, though qualified 'writings' constitutional sense empowered legislate regarding pre-empt chose so. determination premised great interests our Nation—the essentially non-uniform character appreciation achievements various Evidence came 18th century. U.S., 557, S.Ct., 2310. Just writings diverse viewpoints copyright. regulating passed Congress, more difficult now turn. IV 18 void Supremacy Clause involves 'stands obstacle accomplishment execution full purposes objectives Congress.' Hines Davidowitz, 312 52, 67, 61 399, 404, 85 L.Ed. 581 (1941). Florida Lime Avocado Growers, Paul, 373 132, 141, 83 1210, 1216, 248 (1963). stated Sears, Roebuck Stiffel 376 225, 229, 784, 661 (1964), touches upon statutes enacted pursuant authority, 'it 'familiar doctrine' 'may naught, benefits denied' law. Sola Elec. Jefferson 317 172, 173, 176, 63 87 165 (1942). true, course, undoubted power.' unchallenged clear Art. Constitution. explicitly endorse forbid noted, scheme respecting 'clashes laws,' 231, 789, then fall. To determine 'clashes' helpful examine both objective granting 'promote Arts.' progress offering exclusion inventors often enormous costs terms time, research, development. productive effort thereby fostered positive through introduction new products manufacture economy, emanations way employment better lives citizens. return exclusion—this 'reward inventions,' Universal Oil Globe 322 471, 484, 64 1110, 1116, 88 1399 (1944)—the impose requirement disclosure. insure adequate expiration 17-year 'the enures people, without practice profit use,' Dubilier Condenser 289 178, 187, 53 554, 77 1114 (1933), require10 application shall description 'of manner making using it' person skilled art invention. 112. When contained circulated especially trade, additions store importance weal Federal Government willing pay high price assumed, stimulate ideas further significant advances art. law: cannot removed therefrom 21 '(F)ederal requires circulation dedicated common good unless protected valid patent.' 668, 1910. 22 570—571, 2316—2317; supra; Compco Day-Brite Lighting, Inc., 234, 237—238, 779, 781—782, 669 (1964); International News Service Associated Press, 215, 250, 39 68, 76, 211 (1918) (Brandeis, J., dissenting). maintenance standards ethics broadly policies behind 'The necessity faith honest, dealing, very life spirit world.' Cir.Cr.R., N.S. 462.11 539, emphasized 24 'destroy value makes competitor unfair beneficiary broken faith, obtains desired himself paying labor, money, machines expended discover.' 25 Wexler Greenberg, 399 Pa. 569, 578—579, 160 A.2d 430, 434—435 (1960), Pennsylvania Supreme noted subsidization economic efficiency large companies dispersion responsibilities creative developments.12 26 Having mind turn examination interaction systems property—one established State—to circumstances latter might constitute 'too encroachment tolerated.' 232, 789. 27 earlier, items proper 101. recordings 'has drawn balance; rather, left unattended, reason exists why State should free act.' 570, 2316 (footnote omitted). 28 Since discovery, however useful, novel, nonobvious, falls categories existed not. would, matter. Also, hard see how customer lists advertising campaigns; fact, keeping encourages businesses initiate individualized plans operation, constructive competition results. This, turn, leads greater variety business methods privately marketing data illicitly among firms involved same enterprise. 29 spoken fall are, nature patent. Processes, machines, manufactures, compositions improvements thereof, meet utility, novelty, nonobviousness entitled patented, not, remains 30 Certainly never Similarly, placed domain.13 31 reconcile quid pro quo exclude. 1116. helped stage analysis Judge Henry Friendly's Painton Bourns, 442 216 (CA2 1971). thought determining refrain patents, depriving learning distinguish secrets: 32 '(1) believed owner validly invention; patentable; whose patentability dubious.' Id., 224. 33 Trade each run breaches confidence—the employee situations—and theft forms industrial espionage. 34 patentability, little accomplished abolishing With reasonably inventor. 'There can interest stimulating developers (unpatentable) knowhow flood overburdened Office (for) consider patentable.' Ibid. mere filing doomed turned down bring forth enlightenment, since statute abandoned confidence open inspection. 122; CFR 1.14(b). Even extension knows decidedly beneficial society. areas where reach, Competition deprived valuable, quite invention.14 36 faithless abolished, inventive exploitive did continue, although reduced level. Alternatively remained, come amount self-help innovative employ. Knowledge dispersed still active research. Security precautions necessarily increased, salaries fringe few officers whole sufficient assure loyalty.15 Smaller distinct disadvantage, kind great, increased. entrepreneur resources tend confine he felt trust ultimate assurance confidence. result, organized scientific technological fragmented, society, whole, suffer. Another problem arise precluded licensing share binding fee secret. hoard rather disseminate knowledge. 223. Instead, then, most efficient existing structures industry, either limit utilization maximum use, engage time-consuming economically wasteful enterprise constructing duplicative mechanisms detrimental misallocation waste take place abolished licensees justified reference seeks advance. 38 Nothing prevent addition burglary, wire-tapping, bribery, means misappropriate inevitable basic decency firm steals another. fundamental human right, privacy, threatened espionage condoned made profitable;16 denying illegal ventures unchallengeable. next legitimate doubt patentability. associated good-faith trouble defend assist cases genuine validity potential rewards far superior accruing holders ignoring route. For 'on line' abolition encouraged, 'will unnecessary postponement divulging persons (the issue), invalid, yet prefer modest royalty contest Lear allows accept pursue royalties fight on. unjustified payments agreed fees entirely so.' 225. 41 point encouraged file absence possessing chaff wheat. chaff—the discoveries—will thrown Office, meantime secret-protected licensing. out. difference Graham John Deere 383 1, 18, 86 684, 694, 545 (1966).17 (1969), invalid serious threat already permitted challenge Better issued. More abolished. Eliminating effects say balanced speculative gain deserve forward patents. conflict, insofar concerned. 42 final i.e., believes here peak; inventions, "the things worth embarrassment patent." 689 (quoting Thomas Jefferson). bargain accepted. State, cause substantial rely compelled constitutionally continue exist. expect exists. 43 provides respects law.18 e.g., creation operates 'against world,' forbidding whatever purpose length time. takes competitors, breach relationship, easily susceptible proof. Where acts barrier, functions relatively sieve. sit back, forfeit 102(b), remote indeed. 44 face much impeded rare chooses ripeness-of-time concept study multiple history, predicts particular have, probably short discovered person. Singletons Multiples (1961), Merton, Sociology 343 (1973); J. Cole S. Cole, Social Stratification 12—13, 229—230 Ogburn Thomas, Are Inventions Inevitable?, Pol.Sci.Q. (1922).19 keep completely himself, neither nor forbid, probability independently developed. put alerted inventor's solution extra find possible. faces pressures private scientists work universities publicly supported centers 45 conclude Perhaps opposed resulting unpatentable suggested appropriate, refuse been, thereby, disclosed.20 favoring inappropriate. Partial pre-emption, furthermore, create problems preliminary actions, obliged correctly arguing misappropriator nonobviousness. enough trying narrowed procedure21 specifications describe patentable.22 Although join judging issued valid, undesirable almost impossible patentability—in inventor—of patented uncircumscribed expert administrative process. Neither complete justified. 46 Our conclusion accord prior 1116; 186—187, 557; Becher Contoure Laboratories, 279 388, 391, 49 356, 357, 752 (1929); E. I. DuPont de Nemours Powder Masland, 244 100, 575, 1016 (1917); Dr. Miles Medical D. Park Sons 220 373, 402—403, 376, 382—383, 55 502 (1911); Board Christie Grain Stock 198 236, 250—251, 637, 639—640, 1031 (1905).23 co-existed country hundred years. Each role play, away need other. lesser different important part play advancement Nation. promotes sharing knowledge, industry; permits reap labor contracting company develop silence seen wisdom allowing enforce Until affirmative contrary, 47 judgment reversed, directions reinstate 48 ordered. Reversed judgment. 50 POWELL took decision case. 51 MARSHALL, concurring result. 52 Unlike I believe 'remote indeed.' Ante, 490. intends sell others, unlimited duration afforded instances disincentive entrance system, deprives encourage. instance. But my view sound dispose Rather, presented enacting intended exchange instead exert pressure enter withdrawing inventions. am persuaded many, During repeatedly demonstrated awareness indication disapproval. Indeed, number given explicit provided agencies. See, 552(b)(4); 1905; Appendix Brief Petitioner. Because this, 'neither actual schemes stand area, evidence congressional design field.' Growers 1217, therefore concur majority 54 DOUGLAS, BRENNAN concurs, dissenting. Today's war philosophy 669. Those pole lamp fluorescent lighting fixtures declared invalid. lower held, identical confusingly similar patentees violated article unprotected copy every covered domain. decided existed, prevail; rightfully issued, exclude 'under competition, give clashes laws,'1 56 suit, sodium iodide apparently contributed greatly technology field developing produced larger competitor. sought. Rather sought contracts employees. And precautions, 'not occurred domain'; sustained Appeals. 57 ex-employees, restraining require world. Court's approves reinstates, gets running perpetuity present case, said: 'To allow represents too slight advance permit block off said belongs public. years' perpetual articles lacking merit standards. 231—232, 58 obvious. adopt based idea innovation disclosed everyone works Society fosters monopoly.2 59 secret,3 unlike dimension. That Appeals, 1081; Holmes 576, 1016: 60 word trade-marks unanalyzed expression secondary consequences primary rudimentary requirements faith. Whether plaintiffs valuable defendant facts, special denied be. Therefore due stood relations plaintiffs, them. hostility, thing sure fraudulently abuse reposed him. usual incident relations. disadvantage knew plaintiffs' good.'4 suit redress grounded tort contract—a historic remedy, Cataphote Hudson, Cir., 422 1290. Damages relation states enforceable specific performance; exacts kept contract thing; barring service pre-empted. 62 From courts, litigation unique, virtual certainty. Yet reflects vigorous activist antipatent philosophy. My objection activist. neutral principle. expresses enforced statutes. enforce, notions good. affirm below. 414 818, 70, (1973). 1074 1971); Servo America General Electric 337 716 (CA4 1964), cert. denied, 934, 1061, 851 (1966); Water Services, Tesco Chemicals, 410 (CA5 1969); Winston Research Minnesota Mining Mfg. 350 134 (CA9 1965); Dekar Industries, Bissett-Berman 434 1304 1970), 402 945, 91 1621, 113 (1971). Rev.Code Ann. 1333.51(C) (Supp.1973) provides: 'No person, possession representing access thereto consent, convert own thereafter consent article, exhibit another.' 1333.99(E) 'Whoever violates section 1333.51 Revised Code fined five thousand dollars, imprisoned ten both.' duPont deNemours Christopher, 431 1012 400 1024, 581, 637 Comment, Theft Secrets: Need Statutory Solution, 120 U.Pa.L.Rev. 378 Doctrine Secrets, Nw.U.L.Rev. 956, 969 (1968). '§ invents discovers process, therefor, title. 102. Conditions patentability; loss 'A unless— country, printed publication foreign before thereof '(b) date '(c) '(d) caused certificate, applicant representatives assigns certificate filed twelve months '(e) '(f) invent '(g) applicant's abandoned, suppressed, concealed priority dates conception reduction diligence conceive last reduce practice, 103. nonobvious identically 102 title, differences obvious ordinary skill pertains. Patentability negatived made.' Title 154 'Every contain title patentee, heirs assigns, term seventeen payment making, using, selling throughout referring specification particulars thereof. drawings annexed thereof.' 111. 138. 171. An sale' meaning 102(b) losing character. 224 n. 6; Metallizing Engineering Kenyon Bearing Auto Parts 153 516, 520 (CA2), 328 840, 66 1016, 90 1615 (1946). Doerfer, Limits Street Imposed Antitrust Supremacy, 80 Harv.L.Rev. 1432, 1454 (1967). Wydick, Preemption Light Kewanee (Part II—Conclusion), J.Pat.Off.Soc. 23—24 (1974). Note, Secret Protection Meeting Judicial Standards Patentability, 807, 828 possible explanation Areeda, Analysis 406(d), pp. 327—328 172. Watson, Double Helix Watson Crick structure DNA Linus Pauling soon. Other examples listed article. 807 (1974); Amicus Curiae, presenting preemption (which law.) 407, 329 L. Hand's lament Harries Air King Products 183 158, 162 1950). below relied, part, Kendall Winsor, How. 322, (1859), nine imported England landmark Peabody Norfolk, 98 Mass. 452 (1868). Here 674, 1913, 610, challenging were, defeat laws: 'enforcing contractual provision undermine strong domain.' holding (of Appeals) seems correct. permissible substitute patenting, receive privileged Thus laser, television set, airplane market. maintained eligible. function commericalization justification providing incentives beyond discriminate inherently Moreover, rules seem underlying protection; struck balance public's competitive economy. integral policy.' Adelman, Secrecy Patenting: Proposals Resolving Conflict, APLA Quarterly Journal 296, 298—299 unpatentable. event contravened bar obviously irrelevant. Oppenheim, Unfair Practices 264—265 1965). contrasts Milgrim, Licensing, Pat.L.Rev. 375 (1972). ruling Bradley distinction copyright relevant: things, letters-patent copyright, illustrated enumerated. Take medicines. Certain mixtures healing discoverer writes publishes book (as regular physicians do), gains medicine; desires acquire mixture art, He book, pleases; secures printing publishing book. So discoveries.' Baker Selden, 102—103, 95 841.

Category: 7