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KEWANEE OIL CO. V. BICRON CORP., 416 U. S. 470 (1974)

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U.S. Supreme Court

Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470 (1974)

Kewanee Oil Co. v. Bicron Corp.

No. 73-187

Argued January 9, 1974

Decided May 13, 1974

416 U.S. 470

Syllabus

Harshaw Chemical Co., an unincorporated division of petitioner, over a period of years, developed certain processes in the growth and encapsulation of synthetic crystals and purification of raw materials, some of which processes were considered to be trade secrets; it eventually succeeded for the first time in growing a 17-inch crystal of a type useful in the detection of ionizing radiation. The individual respondents, former employees of Harshaw who. while working there. had signed agreements not to disclose trade secrets obtained as employees, formed or later joined respondent Bicron Corp., which competed with Harshaw in producing crystals; Bicron, soon after its formation, also grew a 17-inch crystal. Petitioner brought this diversity action seeking injunctive relief and damages for misappropriation of trade secrets. The District Court, applying Ohio trade secret law, granted a permanent injunction. The Court of Appeals reversed on the ground that Ohio's trade secret law conflicted with the federal patent laws.

Held: Ohio's trade secret law is not preempted by the federal patent laws. Pp. 416 U. S. 474-493.

(a) The States are not forbidden to protect the kinds of intellectual property that may make up the subject matter of trade secrets; just as the States may exercise regulatory power over writings, Goldstein v. California, 412 U. S. 546, so may they regulate with respect to discoveries, the only limitation being that regulation in the area of patents and copyrights must not conflict with the operation of federal laws in this area. Pp. 416 U. S. 478-479.

(b) Abolition of trade secret protection would not result in increased disclosure to the public of discoveries in the area of nonpatentable subject matter, and the public would not be benefited by disclosure of such discoveries. Pp. 416 U. S. 482 483.

(c) The federal patent policy of encouraging invention is not disturbed by the existence of another form of incentive to invention such as trade secret protection, and, in this respect, the two systems are not in conflict. P. 416 U. S. 484.

(d) Nor is the patent policy that matter once in the public domain must remain there incompatible with the existence of trade secret protection. P. 416 U. S. 484. chanroblesvirtualawlibrary

Page 416 U. S. 471

(e) Nor is there any conflict between trade secret law and the patent policy of disclosure whether a trade secret concerning patentable subject matter is in the category of discovery which is (1) clearly unpatentable, (2) doubtfully patentable, or (3) clearly patentable. As to the first category, the patent alternative is not available, and trade secret law will encourage invention and prompt the innovator to proceed with the discovery and exploitation of his invention, and to license others to exploit secret processes. As to the second category, the risk and cost of eventual patent invalidity may impel the inventor not to seek patent protection regardless of the existence of trade secret law, and the encouragement by the elimination of trade secret protection of patent applications by some with doubtfully patentable inventions is likely to have a deleterious effect on society and patent policy. As to the third category, trade secret law, which affords weaker protection than the patent laws, presents no reasonable risk of deterrence from patent application. Pp. 416 U. S. 484-491.

(f) There being no real possibility that trade secret law will conflict with federal patent policy, partial preemption as to clearly patentable inventions would not be appropriate, and could well unnecessarily burden administration of trade secret law by States. Pp. 416 U. S. 491-492.

478 F.2d 1074, reversed and remanded for reinstatement of District Court Judgment.

BURGER, C.J.,delivered the opinion of the Court, in which STEWART, WHITE, BLACKMUN, and REHNQUIST, JJ., joined. MARSHALL, J., filed an opinion concurring in the result, post, p. 416 U. S. 493. DOUGLAS, J., filed a dissenting opinion, in which BRENNAN, .J., joined, post, p. 416 U. S. 495. POWELL, J., took no part in the decision of the case. chanroblesvirtualawlibrary

Page 416 U. S. 472





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