Kewanee Oil Co. v. Bicron Corp

Brief Fact Summary. Kewanee Oil Co. (Plaintiff) successfully sought an injunction against Bicron Corp. (Defendant) under state trade secret law but was reversed on appeal.

Synopsis of Rule of Law. Federal patent law does not preempt state trade secret protection.

Facts. Kewanee Oil Co. (Plaintiff) brought a diversity action seeking injunctive relief and damages for the misappropriation of trade secrets.  The district court applied Ohio state law and granted a permanent injunction against the disclosure of twenty of the claimed forty trade secrets until such time as the trade secrets had been released to the public.  The Court of Appeals for the Sixth Circuit reversed, holding that state trade secret protection was preempted by operation of the federal patent law.  The United States Supreme Court granted certiorari.

Issue. Does federal patent law preempt state trade secret protection?

Held. (Burger, C.J.)  No.  Federal patent law does not preempt state trade secret protection.  States may not conflict with the operation of laws, in this area passed by congress, when regulating the area of patents and copyrights.  However, trade secret law protects items that would not be appropriate subjects for patent protection.  As Congress has not attended to the area of nonpatentable subject matter, no reason exists that would prevent the state’s freedom to act.  Reversed.

Dissent. (Douglas, J.)  Today’s holding conflicts with the earlier rulings of the Court that state law may not prohibit others from copying articles unprotected by a patent because every article not covered by a valid patent is in the public domain.

Discussion. The Court’s interest in keeping the patent law’s goal of promoting invention is reflected in this ruling.  This case did not overrule earlier rulings limiting state laws preventing copying.  Generally trade secret laws allow reverse engineering of products in the public domain.