# Amicus Curiae Brief — Kewanee Oil Co. v. Bicron Corp. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386414_0273%3A03 ## Record - **Collection:** Supreme Court brief - **Document type:** Amicus Curiae Brief - **Published:** January 1, 1974 - **Citation:** 416 U.S. 470 ## Text LIBRARY SUPREME COURT, U. Ss. U Is/2 ) wu No. ¢ 3 ~*~ ia MOTION FILED IN THE Supreme Court of the United States ‘KEWANEE OIL COMPANY, Petitioner, Vv. BICRON CORPORATION et al., tan a “ON PETITION | FOR ‘WRIT OF > CERTIORARI TO THE UNITED STATES COURT OF APPEALS SIXTH CIRCUIT MOTION FOR LEAVE TO FILE BRIEF AMICUS CURIAE and ° BRIEF AMICUS CURIAE OF THE PATENT LAW ASSOCIATION OF CHICAGO SUPPORTING PETITION FOR CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT The Patent Law Association of Chicago Patrick H. Hume, President One First National Plaza Chicago, Illinois 60670 Ciype F. WiLLIAN Raymonnp P. Niro One First National Plaza Chicago, Tlinois 60670 July 30, 1973 Counsel to the Association eee TWENTIETH CENTURY PRESS, CHICAGO 60606 ~~ a | ; CONTENTS MOTION FOR LEAVE TO FILE BRIEF Ree CUMIAS ce ck. 1 BRIEF AMICUS CURIAE OF THE PATENT LAW ASSOCIATION OF CHICAGO SUPPORT- ING PETITION FOR CERTIORARI ........... 3 I. QUESTIONS PRESENTED ............... 3 II. INTEREST IN AMICUS CURIAE ........ 3 III. REASONS FOR GRANTING WRIT OF ER RGR any Bi ae RS “ae ly See 4 Dc EE WEE TG CARIES nono ois c's cap han edad 5 me See GR CNIS 6 in cis esta iyi 6 3. Conflict with Congress and this Court ......... 7 oe er ery ey er ere eer 9 ii TABLE OF AUTHORITIES CasrEs Dekar Industries, Inc. v. Bissett-Berman Corp., 434 F.2d 1304 (9th Cir, 1970) 2.0... cece ee eee eee eee Dr. Miles Medical Co. v. Park & Sons Co., 220 U.S. 373 BIER hs cbate betis as unser eee E. I. du Pont de paar Powder Co. v. Masland, 244 SE a ee er ree eee re E. I. du Pont de Nemours & Co. v. United States, 288 F.2d 904 (Ct. CL. 1961) 2... cece eee eee eines Fowle v. Park, 131 U.S. 88 (1889) ...........0.e eee ee Goldstein v. California, .... U.S. .... (19738); 178 Up Re | Be rer rrr Cee ote Lear v. Adkins, 395 U.S. 658 (1969) ......:. ee Painton & Co. v. Boyrns, Inc., 442 F.2d 216 (2d Cir. WT Si es etree st ay Patterson v. Kentucky, 97 U.S. 501 (1878) ........--- Pickren v. United States, 378 F.2d 595 (5th Cir. 1967). Servo Corp. of America v. General Electric Co., 337 F.2d 716 (4th Cir. 1964) .........ccececcewebonees Water Services, Inc. v. Tesco Chemicals, Inc., 410 F.2d 168 (Sth Cir, 1068). ieee ried cee wereenceectetys SraTuTEs AND REGULATIONS Wy, &. Comat, Ave 0s 6G icone oi avds Pe taee The Freedom of Information Act, 5 U.S.C. § 552(b) (4) (Supp. TV, 1969) .......scceccevecceescccevebers The Federal Trade Commission Act, 15 U.S.C. § 46(f ) i renee e rr peer ek ea The Securities and Exchange Act of 1934, 15 ei C. § 78x(a) CUE i os vc ks ou oats se Fwiklaeca sean ds wahias The Flammable Fabrics - BRIEF AMICUS CURIAE OF THE PATENT LAW ASSOCIATION OF CHICAGO SUPPORTING PETITION FOR CERTIORARI I. QUESTIONS PRESENTED 1. Whether this Court should exercise its supervisory jurisdiction to resolve the conflict between the decision of the Sixth Circuit Court of Appeals and the prior decisions both of this Court and various other Cireuit Courts regard- ing the continued viability of trade secrets and state trade secret laws in the United States? 29. Whether state trade secret laws are in conflict with Article I, Section 8 (Clause 8) of the Constitution of the United States, and the Patent Laws of the United States (Title 35, United States Code), so as to be preempted thereby? II. INTEREST OF AMICUS CURIAE The Patent Law Association of Chicago was organized and has been in existence since November, 1884. Its active membership comprises some 700 attorneys engaged in the 4 practice of patent, trademark, copyright and unfair compe- tition law who reside within 100 miles of the United States Courthouse in Chicago. These attorneys represent clients throughout the United States, including those residing and doing business in the judicial districts embodied within the Sixth Cireuit. The affairs of the Association are governed by its Board of Managers, which is responsible for this brief. Because of the impact of the Sixth Circuit’s decision on both foreign and domestic industrial and intellectual property rights, the Board voted to authorize the filing of this amicus brief. The conflict presented by the decision of the Sixth Cireuit striking down the trade secret law of the State of Ohio (and by implication the trade secret laws of other states within the Sixth Cireuit) will make it difficult for organizations utilizing trade secrets in the conduct of their business to make future decisions with any degree of certainty. The conflict here is particularly critical because of the inherent nature of trade secret rights, the disclosure .of which, in consequence of the Sixth Circuit Law announced in the Kewanee decision, will operate to destroy such rights every- where. Without clarifi¢ation from this Court, trade secret rights viable in circuits other than the Sixth Circuit can be- come void in all circuits. The Patent Law Association of Chicago believes that it ean demonstrate and emphasize areas of importance and conflict with respect to the question of law decided by the Sixth Circuit that might well be beyond the experience of the parties alone. III. REASONS FOR GRANTING WRIT OF CERTIORARI The granting of the writ is urged for a number of com- pelling reasons: 1. The decision is in direct conflict with the law of the other circuits. 5 2. The decision will have widespread practical ramifica- tions in both domestic and international trade and could materially affect the balance of payments. 3. The decision is in direct conflict with the body of law that has developed and exists with specific recognition by Congress and this Court as to the viability of trade secrets. 1. Conflict With The Circuits In its decision the Sixth Circuit specifically recognizes the conflict with the ‘other circuits. (Slip Opinion at p. 7; ... F.2d ..., 178 U.S.P.Q. at 12, citing Servo Corp. of America v.-General Electric Co., 337 F.2d 716 (4th Cir. 1964); Dekar Industries, Inc. v. Bissett-Berman Corp., 434 F.2d 1304 (9th Cir. 1970); Water Services, Inc. v. Tesco Chemicals, Inc., 410 F.2d 163 (5th Cir. 1969) ; Painton € Co. v. Bourns, Inc., 442 F.2d 216 (2d Cir. 1971).) It would seem that such express recognition is tantamount to an invitation to this Court to grant certiorari to resolve the conflict. Perhaps the conflict is most clearly focused by compari- son with the recent Second Circuit decision in Painton, supra. In that case, the Court had to resolve the issues of preemption of state trade secret laws by the federal patent laws, and the matter of federal patent policy. In reversing the district court by rejecting preemption, the Second Circuit held that: “We therefore do not find, either in general consid- erations of public policy or in emanations from the federal patent law, a sufficient basis for declining to enforce even the royalty provisions of trade secret agreements, at least with respect to cases where no patent application has been filed.” (442 F.2d at 225) The practical consequences of this conflict if allowed to stand are far-reaching in scope. Obviously, any public dis- closure of a trade secret destroys the secrecy and the prop- er ote 6 erty right that is premised on that secrecy. Thus, any trade secret holder doing business in the Sixth Circuit will find his trade secret information no longer secure from public disclosure. That, of course, would not only lead to the destruction of the property right in the Sixth Circuit, but in all other circuits as well. The probability of interference with interstate commerce is apparent. Even if the Kewanee holding is totally rejected outside the Sixth Circuit, its effect will be felt throughout the nation. 2. Impact on Commerce The Second Circuit in the Painton decision fully recog- nized that the abrogation of state trade secret laws would have a severe impact on both domestic and foreign com- merce. Judge Friéndly observed (442 F.2d at 225): “In thousands of contracts businessmen have divulged such secrets to competitors, dealing at arms’ length and well able to protect themselves, on the faith that mutually acceptable provisions for payment, for the preservation of confidentiality, and for the return of the secret information on termination or default will be enforced by the courts. * * * The district judge cited no data to prove that licensing of trade secrets had worked adversely to the public interest. To the con- trary, such facts as have been brought to our notice indicate that the sharing of technological know-how on the basis of proper agreements has been [p. 226] bene- ficial not only within this country but in its relations with others.” (Emphasis added.) _ In refusing to overturn trade secret laws “save on the clear showing” of inconsistency with other rules of “higher sanc- tion” the Second Cireuit took judicial notice that the loss in “foreign dollar payments might run as high as $1 billion annually.” (422 F.2d at 226 n. 7). We suggest that amount would prove to be a substantial understatement. 7 The reasoning in Painton is completely consistent with Mr. Justice Harlan’s admonition in Lear v. Adkins, 395 U.S. 653,675 (1969). There the Court refused to “define in even a limited way the extent, if any, to which the states may prop- erly act to enforce the contractual rights of inventors of un- patented secret ideas.” Lear specifically recognized the “difficulty and importance” of that task and held it should be undertaken only after a “fully focused inquiry” by the state courts to determine the extent to which they will respect the contractual rights of inventors of such un- patented secret ideas. The Court in the Kewanee case was able to point to neither a “clear showing of inconsistency” nor a “fully focused inquiry.” 3. Conflict With Congress and This Court .The conflict generated by the Kewanee decision is not limited to the decisions of other circuits, but extends to the entire body of law developed from the beginnings of our American jurisprudence. This Court has consistently ree- ognized the common law concept of trade secrets. Patterson v. Kentucky, 97 U.S. 501 (1878); Fowle v. Park, 131 US. 88 (1889); Dr. Miles Medical Co. v. Park & Sons Co., 220 U.S. 373 (1911); E. I. du Pont de Nemours Powder Co. v. Masland, 244 U.S. 100 (1917). But of equal importance is the fact that Congress has repeatedly recognized trade secrets, rights, and their coex- istence with the patent laws.’ Since the enactment of the 15 USC. §552(b)(4) (Supp. IV, 1969); 15 U.S.C. § 78x(a) (1964) : 15 U.S.C. § 46(f) (1964); 21 U.S.C. § 331(j) (1964) ; 50 US.C. § 131 (1964); 42 U.S.C. § 263i(e) (Supp. IV, 1969); 21 U.S.C. § 458(a)(5) (Supp. IV, 1969); 42 U.S.C. § 1857d(e) (5) (Supp. IV, 1969) and § 1857 £-6(b) (Supp. IV, 1969); 15 U.S.C. § 1193(e), (Supp. IV, 1969); 33 U.S.C. § 1160(e)(7) (Supp. TV, 1969) ; 15 U.S.C. § 1401(e) (Supp. TV, 1969). ‘ 8 first patent act in 1790, and its fifteen subsequent revisions before the last revision of 1952, Congress has enacted no less than eleven acts that expressly recognize trade secret rights. Congress has made it a federal crime for a govern- ment employee to disclose the trade secrets, 18 US.C. § 1905 (1964). It has enacted tax legislation that recognizes trade secrets as property subject to capital gains treat- ment, 26 U.S.C. §¢ 1221-1223 (1964). See FE. I. du Pont de Nemours & Co. v. United States, 288 F.2d 904 (Ct. Cl. 1961) and Pickren v. United States, 378 F.2d 595 (5th Cir. 1967). It has even empowered the executive branch to ac- quire, purchase, license or lease trade secrets, 42 U.S.C. § 1857b-1(b)(4) (Supp. IV, 1969); 16 U.S.C. § 778e(e) (Supp. IV, 1969); 30 U.S.C. §322(b) (1964). Besides the clear expression of Congress concerning the viability of trade secrets, the executive branch of the federal govern- ment,? together with a host of foreign governments as sig- natories to existing treaties,® recognize both the existence of, and the necessity for, trade secrets. The magnitude of the problem is reflected by the massive body of state law affected by the Kewanee decision. At least nineteen state legislatures have passed laws making it a 2 The procurement regulations of the Department of Defense and the National Aeronautics and Space Agency recognize and provide for the use, acquisition and protection of trade secrets. Armed Services Procurement Regulations §§ 9-200 et seq. and NASA Procurement Regulations §§ 9-200 et seq. 3 These treaties recognize that a trade secret owner should be compensated for the use or disclosure of his trade secret. See, for example, Agreements To Facilitate The Interchange Of Patent Rights And Technical Information For Defense Purposes, Belgium, 5 US.T. 2318 (1954); Denmark, 11 U.S.T. 148 (1960) ; France, 8 U.S.T. 353 (1957) ; Germany, 7 U.S.T. 45 (1956) ; Greece, 6 U.S.T. 2173 (1955); Italy, 12 U.S.T. 189 (1960); Japan, 7 U.S.T. 1021 (1956) ; Netherlands, 6 U.S.T. 2187 (1955) ; Norway, 6 U.S.T. 799 (1955) ; United Kingdom, 4 U.S.T. 150 (1953). 9 crime to misappropriate trade secrets, while the common law of every state recognizes the right of its citizens to own trade secrets. Milgrim, Trade Secrets §1.01[2] and § 1.10 (1968); Sutton, Trade Secret Legislation, 9 IDEA 587 (1966). Moreover, in Goldstein ¥. California, — U.S. —, 178 USPQ 129, decided June 18, 1973, this Caurt considered the doctrine of preemption in connection with the copy- right clause, Article I, § 8 (Clause 8), of the Constitution, and interpreted the federal copyright laws of the United States in a manner that is wholly inconsistent with the holding of the Sixth Circuit. This Court found in Goldstein that neither Article I, §8, nor the federal copyright laws (Title 17, United States Code) precluded state legislation in the copyright field. In Goldstein the rationale of pre- emption was rejected. The inconsistency between the Ke- wanee and Goldstein decisions is apparent. : CONCLUSION For these reasons the issuance of a writ of certiorari is urged by The Patent Law Association of Chicago. Respectfully submitted, THE PATENT LAW ASSOCIATION OF CHICAGO Patrick H. Hume, President \ One First National Plaza Chicago, Illinois 60670 Crype F. WiLuian Raymonp P. Niro One First National Plaza Chicago, Illinois 60670 Counsel to the Association 10 CERTIFICATE OF SERVICE I, Clyde F. Willian, a member of the bar of the Supreme Court of the United States, representing The Patent Law Association of Chicago, amicus curiae, certify that a copy of the within brief has been served by United States mail. on counsel for each of the parties, with adequate air mail postage affixed thereto, addressed as follows: Edward P. Troxell, Esquire William C. McCoy, Jr., Jones, Day, Cockley & Reavis Esquire 1750 Union Commerce McCoy, Greene & Howell Building 1300 Investment Plaza Cleveland, Ohio 44115 1801 East Ninth Street Cleveland, Ohio 44114 Attorneys for Petitioner Attorneys for Respondents. Done at Chicago on 30th July, 1973. Clyde F. Willian --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386414_0273%3A03. Public record. Not legal advice.