I

II

"[a] trade secret may consist of any formula, pattern, device or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not [*475] know or use it.  It may be a formula for a chemical compound, a process of manufacturing, treating or preserving materials, a pattern for a machine or other device, or a list of customers."

* * *

III

"to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries . . . ."

IV

The question of whether the trade secret law of Ohio is void under the Supremacy Clause involves a consideration of whether that law "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress."  Hines v. Davidowitz, 312 U.S. 52, 67 (1941).  * * * [*480] * * *

The laws which the Court of Appeals in this case held to be in conflict with the Ohio law of trade secrets were the patent laws passed by the Congress in the unchallenged exercise of its clear power under Art. I, § 8, cl. 8, of the Constitution.  The patent law does not explicitly endorse or forbid the operation of trade secret law.  However, . . . if the scheme of protection developed by Ohio respecting trade secrets "clashes with the objectives of the federal patent laws," Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. [225], 231 [(1964)], then the state law must fall.  To determine whether the Ohio law "clashes" with the federal law it is helpful to examine the objectives of both the patent and trade secret laws.

The stated objective of the Constitution in granting the power to Congress to legislate in the area of intellectual property is to "promote the Progress of Science and useful Arts."  The patent laws promote this progress by offering a right of exclusion for a limited period as an incentive to inventors to risk the often enormous costs in terms of time, research, and development.  The productive effort thereby fostered will have a positive effect on society through the introduction of new products and processes of manufacture into the economy, and the emanations by way of increased employment and better lives for our citizens.  In return for the right of exclusion—this "reward for inventions"—the patent laws impose upon the inventor a requirement of disclosure.  To insure adequate and full disclosure so that upon the [*481] expiration of the 17-year period "the knowledge of the invention enures to the people, who are thus enabled without restriction to practice it and profit by its use," United States v. Dubilier Condenser Corp., 289 U.S. 178, 187 (1933), the patent laws require that the patent application shall include a full and clear description of the invention and "of the manner and process of making and using it" so that any person skilled in the art may make and use the invention.  35 U.S.C. § 112.  When a patent is granted and the information contained in it is circulated to the general public and those especially skilled in the trade, such additions to the general store of knowledge are of such importance to the public weal that the Federal Government is willing to pay the high price of 17 years of exclusive use for its disclosure, which disclosure, it is assumed, will stimulate ideas and the eventual development of further significant advances in the art.  The Court has also articulated another policy of the patent law: that which is in the public domain cannot be removed therefrom by action of the States.  "Federal law requires that all ideas in general circulation be dedicated to the common good unless they are protected by a valid patent."  Lear, Inc. v. Adkins, 395 U.S. [653], 668 [(1969)].  See also Goldstein v. California, 412 U.S., at 570-571; Sears, Roebuck & Co. v. Stiffel Co., supra; Compco Corp. v. Day-Brite Lighting, Inc., 376 U.S. 234, 237-238 (1964); International News Service v. Associated Press, 248 U.S. 215, 250 (1918) (Brandeis, J., dissenting).

The maintenance of standards of commercial ethics and the encouragement of invention are the broadly stated policies behind trade secret law.  "The necessity of good faith and honest, fair dealing, is the very life [*482] and spirit of the commercial world."  National Tube Co. v. Eastern Tube Co., 3 Ohio C. C. R. (n. s.) [459], 462 [(1902), aff'd, 69 Ohio St. 560, 70 N. E. 1127 (1903)].  * * *  In Wexler v. Greenberg, 399 Pa. 569, 578-579, 160 A.2d 430, 434-435 (1960), the Pennsylvania Supreme Court noted the importance of trade secret protection to the subsidization of research and development and to increased economic efficiency within large companies through the dispersion of responsibilities for creative developments.

Having now in mind the objectives of both the patent and trade secret law, we turn to an examination of the interaction of these systems of protection of intellectual property—one established by the Congress and the other by a State—to determine whether and under what circumstances the latter might constitute too great an encroachment on the federal patent system to be tolerated. * * *

* * *  [T]rade secret law protects items which would not be proper subjects for consideration for patent protection under 35 U. S. C. § 101.  As in the [*483] case of the recordings in Goldstein v. California, Congress, with respect to nonpatentable subject matter, "has drawn no balance; rather, it has left the area unattended, and no reason exists why the State should not be free to act."   Goldstein v. California, supra, at 570 (footnote omitted).

Since no patent is available for a discovery, however useful, novel, and nonobvious, unless it falls within one of the express categories of patentable subject matter of 35 U.S.C. § 101, the holder of such a discovery would have no reason to apply for a patent whether trade secret protection existed or not.  Abolition of trade secret protection would, therefore, not result in increased disclosure to the public of discoveries in the area of nonpatentable subject matter.  Also, it is hard to see how the public would be benefited by disclosure of customer lists or advertising campaigns; in fact, keeping such items secret encourages businesses to initiate new and individualized plans of operation, and constructive competition results.  This, in turn, leads to a greater variety of business methods than would otherwise be the case if privately developed marketing and other data were passed illicitly among firms involved in the same enterprise.

* * * The question remains whether those items which are proper subjects for consideration for a patent may also have available the alternative protection accorded by trade secret law.

[*484] Certainly the patent policy of encouraging invention is not disturbed by the existence of another form of incentive to invention.  In this respect the two systems are not and never would be in conflict.  Similarly, the policy that matter once in the public domain must remain in the public domain is not incompatible with the existence of trade secret protection.  By definition a trade secret has not been placed in the public domain.(3)

The more difficult objective of the patent law to reconcile with trade secret law is that of disclosure, the quid pro quo of the right to exclude.  We are helped in this stage of the analysis by Judge Henry Friendly's opinion in Painton & Co. v. Bourns, Inc., 442 F.2d 216 [,224] (2d Cir.  1971).  There the Court of Appeals thought it useful, in determining whether inventors will refrain because of the existence of trade secret law from applying for patents, thereby depriving the public from learning of the invention, to distinguish between three categories of trade secrets:

"(1) the trade secret believed by its owner to constitute a validly patentable invention; (2) the trade secret known to its owner not to be so patentable; and (3) the trade secret whose valid patentability is considered dubious."

Trade secret protection in each of these categories would run against breaches of confidence—the employee and licensee situations—and theft and other forms of industrial espionage.  As to the trade secret known not to meet the standards [*485] of patentability, very little in the way of disclosure would be accomplished by abolishing trade secret protection.  With trade secrets of nonpatentable subject matter, the patent alternative would not reasonably be available to the inventor.  "There can be no public interest in stimulating developers of such [unpatentable] knowhow to flood an overburdened Patent Office with applications [for] what they do not consider patentable."  Ibid.  The mere filing of applications doomed to be turned down by the Patent Office will bring forth no new public knowledge or enlightenment, since under federal statute and regulation patent applications and abandoned patent applications are held by the Patent Office in confidence and are not open to public inspection.  35 U.S.C. § 122; 37 C.F.R. § 1.14 (b).

Even as the extension of trade secret protection to patentable subject matter that the owner knows will not meet the standards of patentability will not conflict with the patent policy of disclosure, it will have a decidedly beneficial effect on society.  Trade secret law will encourage invention in areas where patent law does not reach, and will prompt the independent innovator to proceed with the discovery and exploitation of his invention.  Competition is fostered and the public is not deprived of the use of valuable, if not quite patentable, invention.

Even if trade secret protection against the faithless employee were abolished, inventive and exploitive effort in the area of patentable subject matter that did not meet the standards of patentability would continue, although at a reduced level.  Alternatively with the effort that remained, however, would come an increase in the amount of self-help that innovative companies [*486] would employ.  Knowledge would be widely dispersed among the employees of those still active in research.  Security precautions necessarily would be increased, and salaries and fringe benefits of those few officers or employees who had to know the whole of the secret invention would be fixed in an amount thought sufficient to assure their loyalty.  Smaller companies would be placed at a distinct economic disadvantage, since the costs of this kind of self-help could be great, and the cost to the public of the use of this invention would be increased.  The innovative entrepreneur with limited resources would tend to confine his research efforts to himself and those few he felt he could trust without the ultimate assurance of legal protection against breaches of confidence.  As a result, organized scientific and technological research could become fragmented, and society, as a whole, would suffer.

Another problem that would arise if state trade secret protection were precluded is in the area of licensing others to exploit secret processes.  The holder of a trade secret would not likely share his secret with a manufacturer who cannot be placed under binding legal obligation to pay a license fee or to protect the secret.  The result would be to hoard rather than disseminate knowledge.  Instead, then, of licensing others to use his invention and making the most efficient use of existing manufacturing and marketing structures within the industry, the trade secret holder would tend either to limit his utilization of the invention, thereby depriving the public of the maximum benefit of its use, or engage in the time-consuming and economically wasteful enterprise of [*487] constructing duplicative manufacturing and marketing mechanisms for the exploitation of the invention.  The detrimental misallocation of resources and economic waste that would thus take place if trade secret protection were abolished with respect to employees or licensees cannot be justified by reference to any policy that the federal patent law seeks to advance.

Nothing in the patent law requires that States refrain from action to prevent industrial espionage.  In addition to the increased costs for protection from burglary, wiretapping, bribery, and the other means used to misappropriate trade secrets, there is the inevitable cost to the basic decency of society when one firm steals from another.  A most fundamental human right, that of privacy, is threatened when industrial espionage is condoned or is made profitable; the state interest in denying profit to such illegal ventures is unchallengeable.

The next category of patentable subject matter to deal with is the invention whose holder has a legitimate doubt as to its patentability.  The risk of eventual patent invalidity by the courts and the costs associated with that risk may well impel some with a good-faith doubt as to patentability not to take the trouble to seek to obtain and defend patent protection for their discoveries, regardless of the existence of trade secret protection.  Trade secret protection would assist those inventors in the more efficient exploitation of their discoveries and not conflict with the patent law.  In most cases of genuine doubt as to patent validity the potential rewards of patent protection are so far superior to those accruing to holders of trade secrets, that the holders of [*488] such inventions will seek patent protection, ignoring the trade secret route.  For those inventors "on the line" as to whether to seek patent protection, the abolition of trade secret protection might encourage some to apply for a patent who otherwise would not have done so.   For some of those so encouraged, no patent will be granted and the result

"will have been an unnecessary postponement in the divulging of the trade secret to persons willing to pay for it.  If [the patent does issue], it may well be invalid, yet many will prefer to pay a modest royalty than to contest it, even though Lear allows them to accept a license and pursue the contest without paying royalties while the fight goes on.  The result in such a case would be unjustified royalty payments from many who would prefer not to pay them rather than agreed fees from one or a few who are entirely willing to do so."

Painton & Co. v. Bourns, Inc., 442 F.2d, at 225.  The point is that those who might be encouraged to file for patents by the absence of trade secret law will include inventors possessing the chaff as well as the wheat.  Some of the chaff—the nonpatentable discoveries—will be thrown out by the Patent Office, but in the meantime society will have been deprived of use of those discoveries 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.  In Lear, Inc. v. Adkins, 395 U.S. 653 (1969), the Court thought that an invalid patent was so serious a threat to the free use of [*489] ideas already in the public domain that the Court permitted licensees of the patent holder to challenge the validity of the patent.  Better had the invalid patent never been issued.  More of those patents would likely issue if trade secret law were abolished.  Eliminating trade secret law for the doubtfully patentable invention is thus likely to have deleterious effects on society and patent policy which we cannot say are balanced out by the speculative gain which might result from the encouragement of some inventors with doubtfully patentable inventions which deserve patent protection to come forward and apply for patents. There is no conflict, then, between trade secret law and the patent law policy of disclosure, at least insofar as the first two categories of patentable subject matter are concerned.

The final category of patentable subject matter to deal with is the clearly patentable invention, i. e., that invention which the owner believes to meet the standards of patentability.  It is here that the federal interest in disclosure is at its peak; these inventions, novel, useful and nonobvious, are "‘the things which are worth to the public the embarrassment of an exclusive patent.'"  Graham v. John Deere Co., [383 U.S. 1,] 9 [(1966)] (quoting Thomas Jefferson).  The interest of the public is that the bargain of 17 years of exclusive use in return for disclosure be accepted.  If a State, through a system of protection, were to cause a substantial risk that holders of patentable inventions would not seek patents, but rather would rely on the state protection, we would be compelled to hold that such a system could not constitutionally continue to exist.  In the case of trade secret law no reasonable risk of deterrence from patent application by those who can reasonably expect to be granted patents exists.

Trade secret law provides far weaker protection in [*490] many respects than the patent law.  While trade secret law does not forbid the discovery of the trade secret by fair and honest means, e. g., independent creation or reverse engineering, patent law operates "against the world," forbidding any use of the invention for whatever purpose for a significant length of time.  The holder of a trade secret also takes a substantial risk that the secret will be passed on to his competitors, by theft or by breach of a confidential relationship, in a manner not easily susceptible of discovery or proof.  Where patent law acts as a barrier, trade secret law functions relatively as a sieve.  The possibility that an inventor who believes his invention meets the standards of patentability will sit back, rely on trade secret law, and after one year of use forfeit any right to patent protection, 35 U.S.C. § 102 (b), is remote indeed.

Nor does society face much risk that scientific or technological progress will be impeded by the rare inventor with a patentable invention who chooses trade secret protection over patent protection.  The ripeness-of-time concept of invention, developed from the study of the many independent multiple discoveries in history, predicts that if a particular individual had not made a particular discovery others would have, and in probably a relatively short period of time.  If something is to be discovered at all very likely it will be discovered by more than one person.  Singletons and Multiples in Science (1961), in R. Merton, The Sociology of Science 343 (1973); J. Cole & S. Cole, Social Stratification in Science 12-13, 229-230 (1973); Ogburn & Thomas, Are Inventions Inevitable?, 37 Pol. Sci. Q. 83 (1922).  Even [*491] were an inventor to keep his discovery completely to himself, something that neither the patent nor trade secret laws forbid, there is a high probability that it will be soon independently developed.  If the invention, though still a trade secret, is put into public use, the competition is alerted to the existence of the inventor's solution to the problem and may be encouraged to make an extra effort to independently find the solution thus known to be possible.  The inventor faces pressures not only from private industry, but from the skilled scientists who work in our universities and our other great publicly supported centers of learning and research.

We conclude that the extension of trade secret protection to clearly patentable inventions does not conflict with the patent policy of disclosure.  Perhaps because trade secret law does not produce any positive effects in the area of clearly patentable inventions, as opposed to the beneficial effects resulting from trade secret protection in the areas of the doubtfully patentable and the clearly unpatentable inventions, it has been suggested that partial pre-emption may be appropriate, and that courts should refuse to apply trade secret protection to inventions which the holder should have patented, and which would have been, thereby, disclosed.  However, since there is no real possibility that trade secret law will conflict with the federal policy favoring disclosure of clearly patentable inventions partial pre-emption is inappropriate. [*492]

Partial pre-emption, furthermore, could well create serious problems for state courts in the administration of trade secret law.  As a preliminary matter in trade secret actions, state courts would be obliged to distinguish between what a reasonable inventor would and would not correctly consider to be clearly patentable, with the holder of the trade secret arguing that the invention was not patentable and the misappropriator of the trade secret arguing its undoubted novelty, utility, and nonobviousness.  Federal courts have a difficult enough time trying to determine whether an invention, narrowed by the patent application procedure and fixed in the specifications which describe the invention for which the patent has been granted, is patentable.   Although state courts in some circumstances must join federal courts in judging whether an issued patent is valid, it would be undesirable to impose the almost impossible burden on state courts to determine the patentability—in fact and in the mind of a reasonable inventor—of a discovery which has not been patented and remains entirely uncircumscribed by expert analysis in the administrative process.  Neither complete nor partial pre-emption of state trade secret law is justified.

* * *  [*493]  * * *  Trade secret law and patent law have co-existed in this country for over one hundred years.  Each has its particular role to play, and the operation of one does not take away from the need for the other.  Trade secret law encourages the development and exploitation of those items of lesser or different invention than might be accorded protection under the patent laws, but which items still have an important part to play in the technological and scientific advancement of the Nation. Trade secret law promotes the sharing of knowledge, and the efficient operation of industry; it permits the individual inventor to reap the rewards of his labor by contracting with a company large enough to develop and exploit it.  Congress, by its silence over these many years, has seen the wisdom of allowing the States to enforce trade secret protection.   Until Congress takes affirmative action to the contrary, States should be free to grant protection to trade secrets.

Since we hold that Ohio trade secret law is not preempted by the federal patent law, the judgment of the Court of Appeals for the Sixth Circuit is reversed, and the case is remanded to the Court of Appeals with directions to reinstate the judgment of the District Court.

It is so ordered.



Mr. Justice Powell took no part in the decision of this case.

Mr. Justice Marshall, concurring:

Unlike the Court, I do not believe that the possibility that an inventor with a patentable invention will rely [*494] on state trade secret law rather than apply for a patent is "remote indeed."  State trade secret law provides substantial protection to the inventor who intends to use or sell the invention himself rather than license it to others, protection which in its unlimited duration is clearly superior to the 17-year monopoly afforded by the patent laws.  I have no doubt that the existence of trade secret protection provides in some instances a substantial disincentive to entrance into the patent system, and thus deprives society of the benefits of public disclosure of the invention which it is the policy of the patent laws to encourage.  This case may well be such an instance.  But my view of sound policy in this area does not dispose of this case.  Rather, the question presented in this case is whether Congress, in enacting the patent laws, intended merely to offer inventors a limited monopoly in exchange for disclosure of their invention, or instead to exert pressure on inventors to enter into this exchange by withdrawing any alternative possibility of legal protection for their inventions. I am persuaded that the former is the case.  * * *

Mr. Justice Douglas, dissenting:

Today's decision is at war with the philosophy of Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, and Compco Corp. v. Day-Brite Lighting, Inc., 376 U.S. 234.

* * *

* * *

1.   [Court's footnote 8]

"§ 101. Inventions patentable

"Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

"(a) the invention was known or used by others in this country, or patented or described in a printed publication in this or a foreign country, before the invention thereof by the applicant for patent, or

"(b) the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application for patent in the United States, or

"(c) he has abandoned the invention, or

* * *

"(f) he did not himself invent the subject matter sought to be patented, or

"(g) before the applicant's invention thereof the invention was made in this country by another who had not abandoned, suppressed, or concealed it.  In determining priority of invention there shall be considered not only the respective dates of conception and reduction to practice of the invention, but also the reasonable diligence of one who was first to conceive and last to reduce to practice, from a time prior to conception by the other.

"A patent may not be obtained though the invention is not identically disclosed or described as set forth in section 102 of this title, if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains.  Patentability shall not be negatived by the manner in which the invention was made."

2.   [Court's footnote 9] Title 35 U.S.C. § 154 provides:

"Every patent shall contain a short title of the invention and a grant to the patentee, his heirs or assigns, for the term of seventeen years, subject to the payment of issue fees as provided for in this title, of the right to exclude others from making, using, or selling the invention throughout the United States, referring to the specification for the particulars thereof.  A copy of the specification and drawings shall be annexed to the patent and be a part thereof."

3.   [Court's footnote 13] An invention may be placed "in public use or on sale" within the meaning of 35 U.S.C. § 102 (b) without losing its secret character.  Painton & Co. v. Bourns, Inc., 442 F.2d, at 224 n. 6; Metallizing Engineering Co. v. Kenyon Bearing & Auto Parts Co., 153 F.2d 516, 520 (2d Cir.), cert. denied, 328 U.S. 840 (1946).