Friday, April 14, 2006, 4/14/2006 01:05:00 PM

Where is the Intersection of Patent Law and Trade Secrets Law?

Many of the cases we review assert patent claims and trade secrets claims. The natural question arises, where do those two laws intersect?

At the most fundamental level, state trade secrets laws may not protect unpatented design specifications of products sold in commerce. In Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 94 S.Ct. 1879 (1974), the United States Supreme Court, for the first time, considered the issue of whether state trade secrets laws were preempted by federal patent law. The Court held such laws were not preempted with respect to subjects which were secret and not "of public knowledge or of general knowledge in the trade or business." Id. at 475, 94 S.Ct. 1883. The Court made it clear, however, that trade secrets laws may not "offer protection against discovery by fair and honest means, such as by independent invention, accidental disclosure, or by so-called reverse engineering, that is by starting with a known product and working backward to divine the process which aided in its development or manufacture." Id. at 476, 94 S.Ct. 1883. Therefore, "[b]y definition, a trade secret has not been placed in the public domain," id. at 484, 94 S.Ct. 1887, and a "matter once in the public domain must remain in the public domain." Id., 94 S.Ct. 1887.

The Supreme Court confronted the issue head-on in 1989 in a case concerning a Florida statute that purported to give protection from duplication by others of unpatented boat hull designs. Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 109 S.Ct. 971 (1989). The Court held that state trade secrets laws cannot be used to prohibit reverse engineering. Id. at 160, 109 S.Ct. at 982 ("this is clearly one of the rights vested in the federal patent holder, but has never been a part of state protection under the law of unfair competition or trade secrets") (emphasis added).

Basic rule: patents and trade secrets are mutually exclusive.

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