Amicus Curiae Brief — Kewanee Oil Co. v. Bicron Corp.
Supreme Court brief1974
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Text
Brief Amicus Curiae
Authority to File
Opinions Below
TABLE OF CONTENTS
Constitutional and Statutory Provisions —_.__________.
Question Presented
Interest of the Amicus ___.. =
Summary of Argument
Argument
A.
B.
C.
E.
Conclusion
Introduction _-.-------- oe
Irrelevant Issues Advanced in This Court _..
The Indeterminate Origin of and Basis for
Trade Secret Law
The Constitution and Federal Law Preclude
the Permanent Injunction Sought —...._.
i.
Preemption by the Patent Clause and
Statutes
a. Patent Policies
b. Reasons for Preemption —........_-_.__.
Considerations Affecting Preemption Aris-
ing Solely Under the Commerce Clause __
Considerations Affecting Preemption Aris-
ing Solely Under the Fifth and Four-
teenth Amendments
Trade Secret “Property” In Technology—A
Necessary Incentive to Conduct Research? __
47
51
ae a a a ka
II
APPENDIX
Page
The Constitutional Provisions la
Article I, Section 8, Clauses 3 and 8 __............. la
Article VI, Clause 2 la
“Amendment Vo n-ne la
Amendment IX 2a
Amendment X : 2a
Amendment XIV, Sections 1 and 5 2a
35 U.S.C. §§ 101 and 102(b) : 3a
Article—“ The Constitutional Standard of Invention
—The Touchstone for Patent Reform” soon to be
published in the University of Utah Law Review by
E. S. Irons and M. H. Sears _ 4a
OE ALERT SS A UREA EERO PRE SEIS AN OMS ELLE EOI SL TBS OE IORI OILY LLG IT IIE HPN
—— Sen seg ES
pee - -
Ill
TABLE OF AUTHORITIES
Cases: Page
Aligeyer Vv. Louisiana, 165 U.S, 578 (1886) -.... 42, 45
Atlantic Works v. Brady, 107 U.S. 192 (1883) -.. 11
Bates V. Coe, 96:U.8. 31. (1878)... 38
Becher v. Contoure Laboratories, Inc., 279 U.S. .
888 (1929) 38
Bliss, E. W., Co. v. Struthers-Dunn, Inc., 408 F.
2d 1108 (8 Cir. 1969) - ro 46
Blonder-Tongue Laboratories, “Ine. Vv. University
of Illinois Foundation, 402 U.S. 313 (1971) -. 42
Brown Vv. Duchesne, 60 U.S. 183 (1857) —---.. 26, 44
Brulotte v. Thys Co., 379 U.S. 29 (1964) -—....... 15, 39
Compco Corp. Vv. Day-Brite Lighting, Inc., 376
U.S. 34 01964) ....._._ 39, 41
Consolidated Fruit Jar Co. v. Wright, 94 U.S. 92
Me (| i 5 epee enneened omen ereeiry one’s err erh ata tte on nea aemeeT 36, 37
Continental Car-Na-Var Corp. Vv. Moseley, 148 P.
2d 9 (Sup. Ct. Cal. 1944) — 46
Corona Cord Tire Co. v. Dovan Chemical Corp.,
_ 276 U.S. 610 (1927) 37
Darcy Vv. Allin, Noy, Rep. 173, 74 Eng. Rep. 1131
CTE cece 20
Deepsouth Packing Co. v. Laitram Corp., 406 U.S.
518 (1972) 20, 21, 25, 44
Dr. Miles Medical Co. v. John D. Park & Sons
Co., 220 U.S. 373 (1911) 38
Egbert v. Lippmann, 104 U.S. 333 (1881) — 37
Gayler Vv. Wilder, 51 U.S. 477 (1850) —--_. 26, 36, 37
Gibbons Vv. Ogden, 22 U.S. 1 (1824) —- 42
Goldstein v. California, 412 U.S. 546 (1973)... 40, 41
Graham V. John Deere Co., 383 U.S. 1 (1966) -.6, 9, 27, 32
Greene V. McElroy, 360 U.S. 474 (1959) _..._. 42,45
Hall v. Macneale, 107 U.S. 90 (1882) _..- 37
Hammer v. Barnes, 26 How. Pr. (N.Y.S. Ct.
1863) 19
Huszar V. Cincinnati Chemical Works, 172 F.2d
6 (6 Cir. 1949) 37
International News Service v. Associated Press,
248 U.S. 215 (1918) 28, 29
Neg? it natty Seer ete Se Ne Yat PAIR
SEALS ATA ILL LED EN LIGETI ME EE ILLES SON EIT i
Iv
TABLE OF AUTHORITIES—Continued
Page
Jarvis v. Peck, 10 Paige 118 (N.Y. Ct. 1843). 19
Kendall v. Winsor, 62 U.S. 322 (1858) —--.— 36
Lear, Inc. v. Adkins, 395 U.S. 653 (1969) 11, 39
Levine v. E. A. Johnson & Co., 237 P.2d 309 (Ct.
Bem, Ce, DO re 46
Macbeth-Evans Glass Co. v. General Electric Co.,
246 F. 695 (6 Cir. 1917) - seco 37, 38
Maloney Vv. E. I. du Pont de Nemours & Co., 352
F.2d 986 (D.C. Cir. 1965) - aoe 46
Marsh Vv. Nichols, 127 U.S. 605. (1888) - aeons 27
Mercoid Corp. v. Mid-Continent Investment Co., -
$20 U.S. 661 (1944) 11
Metallizing Engineering Co. v. Kenyon Bearing &
Auto Parts Co., 158 F.2d 516 (2 Cir. 1946) 35, 37, 38
Mine Safety Appliances Co. v. Electric Storage
Battery Co., 405 F.2d 901 (CCPA 1969) _.. 37
Newbery V. James, 35 Eng. Rep. 1011 (Ch. 1817) 19
Painton & Co. v. Bourns, Inc., 442 F.2d 216 (2
Gr Wi)... 7
Paraco, Inc. Vv. Owens, 333 P.2d 360 (Ct. App.
a TI) aes 46
Peabody v. Norfolk, 98 Mass. 1952 (Sup. Jud. Ct.
Mem. 1000) 6 eee 19
Pennock v. Dialogue, 27 U.S. 1 (1829) —.- 25, 35
Scott Paper Co. v. Marcalus Mfg. Co., 326 WS.
249 (1946) 39
Sears Vv. Gottschalk, 357 F. Supp. 1327 (E.D. ‘Va.
OL | eee 16
Sears, Roebuck & Co. v. Stiffel Co., 8376 U.S. 225
(1964) - : . $9, 41
Shaw V. Cooper, 32 US. 390 (1888) ......... 25
Smith & Griggs Mfg. Co. v. Sprague, 123 US.
Oy CNN eee 37
United States Vv. Dubilier Condenser Corp., 289
U.S. 178 (1933) - . 31,38
United States v. Greenwald, 479 F.2d 320 (6 Cir.
1978)
13
Vv
TABLE OF AUTHORITIES—Continued
Page
Williams v. Williams, 36 Eng. Rep. 61 (Cr. 1817) _ 19
Wilson v. Clarke, 470 F.2d 1218 (1 Cir. 1972) __ 46
Winston Research Corp. Vv. Minnesota Mining &
Mfg. Co., 350 F.2d 134 (9 Cir. 1965) __. 47
Woodbridge v. United States, 263 U.S. 50 (1923) 10,11
Yovatt v. Winyard, 1 Jac. & W. 394, 37 Eng. Rep.
425 (Ch. 1820) 19
Constitutional Provisions:
Article I, Section 8, Clause 3 _... == 2, 43, 44
Article I, Section 8, Clause 8 _... = 2, 32, 39
Article VI, Clause 2... 2, 44
Fifth Amendment _...._-=-= ==> 2, 5, 32, 42, 43,
44, 45, 46, 47
Ninth Amendment a i 2, 31
Tenth Amendment ______- ionianaianaanenanas 2, 31
Fourteenth Amendment __. etesteniecenteceiesae 2, 5, 32, 42, 43,
44, 45, 46, 47
Statutes and Related Materials:
Patent Act of 7790 34, 39
Patent Act of 1793 _. 34, 41
1 Stat. 318 §7 41
1 Stat. 318 §1 20 41
' Patent Act of 1836 34
' —R. S. 4886 38 |
35 U.S.C. 101 2, 4, 5, 18, 18, 40, 41, 42, 48 ,44
Revisor’s Note ____. 41
aR, NR icici . 2,18
35 U.S.C. 102(b) —-- 4, 5, 18, 19, 38
35 U.S.C. 108 9,18
35 U.S.C. 112 34
35 U.S.C. 122 16
35 U.S.C. 282 34
84 Stat. 1558 § 131 (1971) 50
eR ARATE ANN ig PME ANSE ee wave
VI
-
TABLE OF AUTHORITIES—Continued
Page
Proposed Statute S. 2504 § 301 18
Ohio Revised Code 1333.51(C) 14
Ohio Revised Code 1333.99 (E) 14
House Report No. 1494, 52nd Cong., ist Sess.
(1894) 2 27, 28
House Report No. 2222, 60th Cong., 2nd Sess.
(1909) 28
Hearings Before the Subcommittee on Patents,
Trademarks and Copyrights, Committee on the
Judiciary, United States Senate:
90th Cong., Ist Sess. (1967) 6, 48
92nd Cong., Ist Sess. (1971) 6, 47, 48
93rd Cong., lst Sess. (1973) 6
Rules:
Supreme Court Rule 42(2) 1
\ Other Authorities:
\ Adelman, “Seerecy and Patenting: Some Pro-
posals for Resolving the Conflict”, 1 APLA
Quarterly Journal 296 (1973) 32, 35
American Magazine, February 1788 _.._-____ 22
Blackstone’s Commentaries - 20
Blake, “Employer Agreements Not To Compete”,
73 Harvard L. R. 265 (1960) _ 46
Bugbee, “Genesis of American Patent and Copy-
right Law”, Washington Public Affairs Press
(1967) . 34
Chemical and Engineering News, October 15,
DOT ikcessecteteeen aweaeeddeiacqesseesaeiearadeneeos 8
Coke, “Institutes of the Laws of England’, III
(London 1797); III (1669 ed.) - 10
Doerfer, “The Limits of Trade Secret Law Im-
posed by Federal Patent and Antitrust Suprem-
acy”, 80 Harvard L.R. 1432 (1967) -................ 34
Oe NRE SERENE ETN ES NEESER DR TEERET SPY AESE Sh AERTS RNP ROE PE RE REPS ERM ETE
LLL LLL
VII
TABLE OF AUTHORITIES—Continued
Page
Farrand, “The Records of the Federal Conven-
tion Of VTST coon cece eee eee 25
Federico, “Origin and Early History of Patents”,
11 J. Pat. Off. Soc’y 292 (1927) -22....000n.. 33
Fox, “Monopolies and Patents” (Toronto 1947)... 40, 41
House Document No. 398, 69th Cong., Ist Sess. .... 25
Jefferson, Letter to Isaac McPherson, VI Writings
of Thomas Jefferson (Washington ed. 1814) _... 23
Jefferson, Letter to Madison, July 31, 1788, “The
Papers of Thomas Jefferson, Vol. XII —.............. 24
Kane, “Limitations on the Law of Trade Secrets”,
53 J. Pat. Off. Soc’y 162 (1971) —...0..-----....... 21, 22, 24
Machlup and Penrose, “The Patent Controversy
in the 19th Century”, 10 Journal of Economics
History 1 (1950) 22 een eee 22, 23
Madison, Letter to Jefferson, October 17, 1788,
“Letters and Other Writings—Madison” Vol.
| ae Sy) eee eC 24
Madison, The Federalist Papers, No. 48 (1788) -... 41
Melman “The Impact of the Patent System on
Research”, Study No. 11, Subcommittee on Pat-
ents, Trademarks and Copyrights, Committee on
the Judiciary, United States Senate, 85th Cong.,
BG Peek. CLOGS D ccceccectceieieenennncan 48, 49
Michel, A. J., “Historical Development of Principal
Patent Systems”—Thesis available in Library of ~~
Congress (Card No, T215M48) Ke 88
Milgrim, “Trade Secrets”, Matthew Bender & Co.
New York 1967) —....--.---..-.----.-..----s.-e-eeeeeeeeneeeeeeee 7
National Science Foundation Study: “Barriers to
Innovation in Industry: Opportunities for Public
Policy: CRanget” C1GTG) asics 49, 50
Patent, Trademark and Copyright Journal (BNA)
—September 15, 1978 ......................-.2...--...-.-.--. 11
Prager, “A History of Intellectual Property from
1545 to 1787” 26 J. Pat. Off. Soc’y 711 (1944) _.. 20
set AEE OSE CORSETS NNO REA RENT PT IER A SE MRE I AN TT a
VIII
TABLE OF AUTHORITIES—Continued
Prager, “Standards of Patentable Invention from
1474 to 1952”, 20 University of Chicago L.R. 69
(1952)
Schiller, “Trade Secrets and the Roman Law; The
Actio, Servi Corrupte’, 30 Colum. L.R. 837
(1980)
Shapiro, “The Supreme Court and Administrative
Agencies”, The Free Press (New York 1968)....
Wall Street Journal—November 27, 1973 -.............
Weissman, “Testimony Before the Senate Judiciary
Committee ... ”, 55 J. Pat. Off. Soc’y 604
(1973)
Page
30
19
32
12
33
PIO TIE ELIMI HE
mo cams ne meme anetenr
IN THE
Supreme Court of the United States
OCTOBER TERM, 1973
No. 73-187
: KEWANEE OIL COMPANY,
7. Petitioner,
BICRON CORPORATION, et al.,
Respondents.
BRIBF AMICUS CURIAE
AUTHORITY TO FILE
This brief is filed on behalf of SCM Corporation under
Rule 42(2) of this Court with the written consent of
both parties, the originals of the consent letters being
filed herewith.
OPINIONS BELOW
The opinion of the United States District Court for the
Northern District of Ohio is not reported, though it is
understood that its findings of fact and conclusions of
law, with information as to the nature of the alleged
trade secrets excised," appears in the Appendix at 51
1 Based upon correspondence with petitioner’s counsel, it is fur-
ther understood that the material contained in the Appendix con-
stitutes the totality of the allegedly “secret” proceedings in the
District Court which have been made available to any of the amici
a pga a te 08 A ELE EER DETTE IIIT ELIE LONE EL ITLL IEE LI LO LEI LE
2
et seg. The opinion of the Court of Appeals is reported
at 478 F.2d 1074.
CONSTITUTIONAL AND STATUTORY PROVISIONS
The involved constitutional provisions are the Com-
merce and Patent clauses contained in Article 1, Section
8, clauses 3 and 8, the Supremacy clause contained in
Article VI, clause 2, the Fifth, Ninth and Tenth Amend-
ments and Sections 1 and 5 of the Fourteenth Amend-
ment. In addition, the case involves the proper interpreta-
tion of 35 U.S.C. 101 and 102. These provisions are all
reproduced infra, la to 3a.
QUESTION PRESENTED
The sole question properly raised by the record below is:
May a state perpetually enjoin use, by one who has
lawfully acquired it, of technical information within the
subject matter scope of 35 U.S.C. 101 on which the right
to a patent has been forfeited by failure to file a timely
patent application and by commercial use for more than
one year?
No other question, including the broader one suggested
in the petition, was decided below or finds sufficient evi-
dentiary support in the deliberations of the courts below
to warrant entertainment by this Court in this case at
this time.
INTEREST OF THE AMICUS
SCM is a worldwide diversified business enterprise en-
gaged in a variety of research, development and manu-
facturing pursuits which include every aspect of the
acquisition, development, protection and dissemination of
technical information.
appearing in this case before this Court including the United States
Department of Justice.
3
SCM has a broad based interest in the outcome of this
case which is essentially the same as that of many of
petitioner’s amici who are either corporations or associa-
tions comprising a plurality of corporate members.°
While SCM does not subscribe to the arguments advanced
by these parties or the conclusionary non-evidentiary
“facts” which are alleged to show that the decision be-
low, if affirmed, would discourage expenditure of money
on research and development activities to the detriment
of society, SCM does stand to be affected in precisely
the same way by the outcome of the Court’s decision in
this case as any of these corporate and corporate-cen-
tered amici.
In addition to its broad interest, SCM has a particular
interest in this case in that the central issue posed is
closely related to, though different from, the central issue
in SCM’s own litigation against Mobil Oil Corporation
pending in the District Court for the Northern District
of Ohio.‘
SUMMARY OF ARGUMENT
Trade secrets are often utilized to perpetually monopo-
lize technical information, whether or not it meets the
exacting criteria for validly patentable invention. Con-
ventionally the monopoly is created by first requiring
employees to sign agreements preserving as permanently
“confidential” all of the proprietor’s unidentified trade
2? These amici include at least Optical Coating Laboratories, Inc.,
Rohr Industries, Inc., Electronic Industries Association, R.J.
Reynolds Industries, Inc., Southwire Company, Burroughs Corpo-
ration, The Budd Company, the Chamber of Commerce of the United
States of America and the Manufacturing Chemists Association.
3 Specifically, Civil Action C-73-751 filed July 18, 1973. Further
details concerning the relationship of that litigation to this case
are set out under the heading “Interest of the Amicus Curiae” at
pages 1-4 of SCM’s amicus brief opposing the grant of certiorari
in this case, the cited portion of which is incorporated herein by
reference.
4
secrets and then licensing competitors on a “confidential”
basis in exchange for a running “use” royalty. The only
attribute of patents lacking under such arrangements is
a legally enforceable right to exclude independent dis-
coverers of the “secret” from using it—and if the “secret”
is widely licensed in the pertinent industry, there will
be no need for that right because few, if any, interested
persons will remain who are outside the “confidence”.
Meanwhile the public suffers because the safeguards which
carefully limit the patent right to a statutorily authorized
sphere are inapplicable to trade secrets.
The decision below holds that “trade secrets” in in-
formation responsive to the subject matter definition con-
tained in 35 U.S.C. 101 are, under 35 U.S.C. 102(b),
dedicated to the public if used commercially for more than
one year, absent the timely filing of a patent application—
and that in view of this public dedication an injunction
may not issue to prevent use of the “secret” by a former
employee who learned it lawfully in the course of his
employment. The decision does not revoke the law of
trade secrets nor interfere with criminal penalties for
fraud, theft and the like. It does not contravene any
existing treaties, statutes or rules, nor does it disrupt
legitimate existing business relationships. Nor does it
deal with conflicts between patents and trade secrets aris-
ing under other sections of the patent law, or conflicts
with any aspect of antitrust law or the law of interna-
tional commerce. Trade secret “property” in technology
does not promote “investment” in research and develop-
ment, which is stimulated mainly by competitive pressures
and secondarily by direct subsidies—e.g. depreciation and
other tax advantages.
There is no natural law or preconstitutional common
law property right in technical information and property
is not an inevitable or legally required result of the ex-
penditure of time, money or labor.
5
The dedication policy of the patent system is based on
common law which predates the Constitution, when com-
mercial use was synonymous with making an invention
public regardless of whether precise details of the in-
vention were revealed by the commercially used or sold
article, and on the paramount public interest protected
by the Constitutional patent clause and the laws enacted
thereunder. That policy has been consistently recognized
and implemented in many decisions of this Court.
The federal patent law preempts state trade secret law
as to subject matter within the scope of 35 U.S.C. 101
and inexorably subjects an alleged “secret” if used com-
mercially for more than one year without the timely
filing of a patent application, to the bar of 35 U.S.C.
102(b). Federal preemption by the patent laws is further
required because patent policy must not compromise other
constitutional objectives. In particular, patent policy af-
fects interstate commerce and may not conflict with Con-
gressional policy adopted pursuant to constitutionally
exclusive federal power. Likewise, patent policy may not
derogate the rights of all citizens under the Fifth and
: Fourteenth Amendments. Moreover, these latter rights
are themselves paramount to and preemptive of state law
policies favoring corporate financial interests and they
per se preclude the permanent injunction petitioner seeks
against respondents.
ARGUMENT
A. INTRODUCTION
The decision below enunciates no new or novel proposi-
tion of law, nor does it suggest that the whole gamut
of state trade secret law is preempted by federal patent
law. It simply holds that where the right to federal
patent property in particular technical information has
been deliberately forfeited, no state may, on the pretext
of recognizing an adverse “natural” or contractual prop-
ne one a
. Se. aon - ee ps ES ACRE EER TT ES ITE EL TIA OES APTN IS ODT TEE IT TT LL TE FITS
wes EEE ta MP AID — Trae :
6
erty right, enjoin any person in lawful possession of that
same information from utilizing it.
At the heart of the numerous amicus briefs favoring
petitioner which the case has generated * is the fact that
the decision below is a significant obstacle to an ever
mounting campaign to circumvent, weaken, and ultimately
destroy the exacting criteria for patentable invention con-
tained in the federal patent laws as enacted pursuant to
4Some fourteen amici have filed briefs in support of the peti-
tioner. These amici include five individual corporations, i.e. Bur-
roughs Corporation, R.J. Reynolds Industries, Southwire Co., The
Budd Co., Rohr Industries, Inc., and Optical Coating Laboratory,
Inc.; three trade associations composed mainly of corporations, to
wit, the Chamber of Commerce of the United States, the Manu-
facturing Chemists Association, and Electronic Industries Associ-
ation; and six groups wholly or partially comprised of and led by
patent lawyer members, namely the American Bar Association, the
New York Patent Law Association, the American Patent Law
Association, the Bar Association of the District of Columbia, the
Association for Advancement of Invention and Innovation and
the Licensing Executives Society.
Most of these briefs are signed by one or more patent lawyers
and many of the signatory patent lawyers have personally been
active for some years in attempting to obtain a relaxation in the
federal statutory criteria for patentable invention either by judicial
fiat or through lobbying Congress for statutory changes. See,
e.g., the various amicus briefs filed by bar associations in the peti-
tioner’s behalf in Graham v. John Deere Co., 383 U.S. 1 (1966),
and the statements made on behalf of various bar associations at
hearings on proposed patent legislation during the past seven years,
exemplary of which are those made before the Subcommittee on
Patents, Trademarks and Copyrights of the Committee on the
Judiciary, United States Senate, 90th Cong., Ist Sess. (1967) con-
cerning S. 2, S. 1042, S. 1877 and S. 1691 and 92nd Cong., 1st Sess.
(1971), regarding S. 643, S. 1253, and S. 1255 held May 11, 12 and
13, 1971. Similar views were expressed on behalf of bar associations
and in particular on behalf of the American Patent Law Association
in a then proposed bill (now H.R. 11868) submitted at the soon-to-be
published hearings of the same subcommittee held in September
1973 in regard to S. 1321 (93rd Cong., 1st Sess.).
The socio-economic arguments now advanced to support liberalized
trade secret protection are the same ones which have been unsuc-
cessfully advanced to induce judicial or legislative relaxation in
the strict criteria for patentable invention. See infra, p. 47.
eee
7
the Constitution.» This campaign embraces a plurality
of modes of attack, only one of which is concerned with
an enlarged “property” scope for trade secrets.‘
The degree of enlargement in the scope of trade secret
“property” rights today is evidenced to some extent by
the. facts of record concerning the confidentiality agree-
ments which petitioner in this case imposed upon the
various individual respondents.‘ According to Fact Find-
ing 104 (App. 83) petitioner “regularly requires its em-
ployees to execute .. .” blanket confidentiality agreements
which in no way adumbrate the scope of confidentiality
the employer will claim if the employee wants to leave
the company.‘
Such agreements convey no flavor of good faith arm’s-
length bargaining between equals; rather there is an
aura of duress or coercion, with the economically strong
5 For a detailed discussion of historical and constitutional con-
siderations surrounding some of these criteria see “The Constitu-
tional Standard of Invention—The Touchstone for Patent Reform”,
by Irons and Sears, written pursuant to invitation of and soon to
be published in the University of Utah Law Review, and reproduced
in its entirety infra, 4a to 50a.
6 Some commentators and text-writers have urged strongly that
trade secret protection is a viable alternative to patents. See e.g.
the articles cited by the amicus New York Patent Law Association
at p. 11 and Milgrim, ‘Trade Secrets”, Matthew Bender & Co. (New
York 1967; revised and supplemented yearly). The latter—a virtual
polemic for “competition” between patents and trade secrets inci-
dent protection of technical information—was heavily relied on to
support the decision in Painton & Co. v. Bourns, Inc., 442 F.2d
216 (2 Cir. 1971) said by petitioner, its amici and the Sixth Cir-
cuit to be “in confict” with the decision below.
7 See for example fact findings 48, 52, 54, 57 and 62 (App. 67-74).
8It is not at all unusual for employees to be kept in ignorance
that any technical information is claimed to be a trade secret until
such time as the employee’s resignation takes effect. Sometimes, if
an employee knew in advance that particular information was
deemed a “trade secret’, he might prefer not to be encumbered
with it—but employers rarely consider such matters.
8
employer imposing its will upon the economically far
weaker technically trained employee. When the employer
has successfully imposed “confidentiality agreements” up-
on all of its technically trained employees, then it has
the option of declaring all internally developed un-
patented and unpublished technical information to be
“secret”, thus effectively binding knowledgeable employees
to that company for life by ensuring that they have no
special skills marketable elsewhere.’
The briefs amicus of the Licensing Executives Society
(pp. 19-25), Rohr Industries, Inc. (pp. 9-15) and Optical
Coating Laboratories, Inc. (pp. 4-12) further give some
indication of the wide-spread degree to which allegedly
“secret” information is “confidentially” circulated through-
® Amicus Electronic Industries Association suggests that affirm-
ance of the decision below will “destroy employer-employee trust”
(Br. 3-5) inter alia because employees will “have little incen-.
tive to innovate on behalf of their employer or to share their discov-
eries with their employer” (Br. 4) if the well-nigh medieval shackles
of existing confidentiality agreements be so modified that unpatented
and unpatentable technical information in public use or on sale for
more than one year becomes per se nonconfidential. But history
shows and psychology confirms that \free men are better motivated
to innovate and make discoveries than bondservants and the sug-
gestion appears to be ill-conceived.
If anything, affirmance of the decjsion below will enhance em-
ployee trust, which is at a low ebb. See e.g. Chemical & Engineering
News for October 15, 1973 (p. 4) reporting a lawsuit against
E.I. duPont de Nemours & Co. for damages based on dismissal of
a chemical engineer having 16 years service who wrote a book
“critical of large chemical and petroleum corporations.” The article
points out inter alia:
“... that in most states professional employees enjoy essential-
ly no legal protection against arbitrary dismissal from their
jobs. Most professional employees are not members of unions.
Hence, they do not have the protection of a union contract.
In many cases protection under federal equal employment
opportunities legislation against discrimination on grounds, of
sex, race, religion, and the like is not pertinent. And most
employment contracts signed by scientific personnel on joining
a corporation are largely concerned with protecting the corpo-
ration.”
BMA POR Le NNR ps EAE NLM Hh MNF AMS LORE BE ELIE NT DLL EK LOD TALON AE LEI PL GG IE ES LLY SRS LEN PEO SFE
9
out industry as “property” under circumstances akin to
those which attend patent licensing—i.e. in exchange for
running royalty payments keyed in amount to the li-
censee’s commercial use of them.
When trade secrets are protected as “property” and
disclosed “confidentially” to all or most of the competitors
in a field in exchange for running “use” royalties, the
monopoly power of the trade secret “owner” is not signifi-
cantly different from that of a legitimate patentee inso-
far as its exclusionary impact is concerned. In such
cases, there is very little chance that the “secret” will be
discovered independently and published,” notwithstanding
the inconsistent arguments of petitioner and its amici
since essentially all interested people are already within
the penumbra of the “confidentiality”, and few, if any,
potential independent discoverers are left.
Moreover, in such cases, the trade secret “property
owner” really enjoys a more favored position than a
legitimate patentee. First of all, he is able to select the
subject matter limits of his trade secret himself and is
not bound by claim limitations imposed by the Patent
Office as a condition of the grant. Secondly, he is able to
select the term of his trade secret “property right” him-
self, just like petitioner in this case, and hence, is not
limited to the seventeen years afforded by the patent
laws.’' Furthermore, he can select any “license” terms
10 Tt is of course “public” whether or not published because used
in commerce. See Section D la, infra, p. 32. It is also “public”
because known to all or most of those persons most intimately
concerned with its.details and as such, it becomes a part of the
knowledge which goes to make up the ordinary level of skill in the
art. See 35 U.S.C. 103 and Graham v.eJohn Deere Co., 383 U.S. 1
(1966).
11The Court below noted that “Counsel for Kewanee frankly
stated in the course of the arguments before this Court that one of
the principal purposes of maintaining the secrecy of inventions,
including those here involved, as opposed to seeking patents under
the Patent Laws, would be to extend the commercial monopoly of
deepen RE TELLIN LILI CS GILLI. DEL ISIE SPO EPL TAG OE BE NI MEARE PMO EIS IAP HE
10
he wishes since there is no law of “misuse” applicable
to trade secrets, and hence, no need to fear that the trade
secret may be rendered unenforceable by inequitable licens-
ing conduct. Finally, there are no statutory and con-
stitutional criteria. for validity of trade secrets, and hence
the risk of loss is slight.
Tn short, to be able to hold technical information
“secret” while exploiting it just like a patent is to have
your cake and eat it too. No wonder that petitioner and
its amici are anxious to preserve this halcyon condition
and remain free to extend its benefits still further at their
own options, —
It is readily apparent that the trade secxet system as
it is now progressing and as it would flourish in the
event of ‘a decision for the petitioner in this case, is a
strong deterrent to “the Progress of Science and useful
Arts” which the patent system, pursuant to constitutional
mandate, must “promote”. By fostering non-publication
and controlled use of technical information, trade secret
law effectively precludes the use of knowledge as a stimu-
lant for the production of more knowledge, thus retarding
the progress of society. As said by this Court in Wood-
bridge v. United States, 263 U.S. 50, 61 (1923) the trade
secret owner “comes not within the policy or objects of
the invention beyond the seventeen years granted by the Patent
Laws.”
While Kewanee seeks to repudiate this admission (P.Br. 35, n.
11) and argues (P.Br. 26-28) that the injunction granted by the
district court was not “the common law equivalent of a patent
monopoly”, whatever that may mean, it does not deny that the in-
junction did afford a “monopoly”, as indeed it cannot. The classic
English definition of monopoly, enunciated by Sir. Edward Coke,
infra, p. 17a, note 27 contemplated that a monopoly exists
if “any person or persons .. . are sought to be restrained of any
freedom or liberty that they had before or hindered in their lawful
trade”—and respondents would certainly be restrained of the free-
dom to use all their knowledge and skill, and hindered in their
lawful trade if the injunction were reinstated.
ll
the Constitution or acts of Congress. He does not promote,
and, if aided in his design, would impede, the progress
of science and the useful arts. And with a very bad
grace could he appeal for favor or protection to that
society which, if he had not injured, he certainly had
neither benefitted nor intended to benefit.”
This trade secret system is not really “secret” at all,
but rather a system of private monopoly wherein a group
of conspirators all privy to the “secret” hold and use un-
published information within their own industry for their
own mutual benefit. Because this tends to discourage
competitive research, it also tends to “stabilize” each in-
dividual industry. It precludes cross-ferflization with
knowledge available in other technical disciplines, to the
ultimate detriment of the public. Realistically viewed,
these systems are conspirsties in restraint of trade where-
in each trade secret proprietor is able to “function as its
own patent office and impose its own law upon its li-
censees,”’ '*
Ease of availability of “property” protection for trival
technology, “trade secret” or otherwise, obviously dis-
courages research and development ' in more daring and
12 Mercoid Corp. Vv. Mid Continent Investment Co., 320 U.S. 661,
667 (1944). To the same effect is the separate, partially concurring
opinion of Mr. Justice Black joined by Mr. Chief Justice Warren
and Mr. Justice Douglas in Lear v. Adkins, 395 U.S. 653, 677
(1969).
%3As said in Atlantic Works v. Brady, 107 U.S. 192, 199-200
(1883)
“To grant to a single party a monopoly of every slight ad-
vance made, except where the exercise of invention, somewhat
above ordinary mechanical or engineering skill, is distinctly
- shown, is unjust in principle and injurious in its consequences.”
Statistics published by the Bureau of National Affairs in its
Patent, Trademark and Copyright Journal on September 13, 1973
show that West Germany and Japan—two countries whose re-
search and development efficiency is reckoned to be very high
at present—have much higher standards of invention than our
12
revolutionary technology, where the risk of not develop-
ing useful information is higher—a factor which un-
doubtedly has a significant bearing on the much talked
about deterioration of United States research and de-
velopment in recent years.“
B. IRRELEVANT ISSUES ADVANCED IN THIS COURT
Because the briefs of petitioner and its amici have ad-
vanced numerous “strawmen” issues not decided below
or raised by the record in this case and not even relevant
here, clarification is appropriate. °
Pointedly, the decision below did not disivey trade
secret law generally and did not even foreclose recogni-
tion of trade secrets in technical information. Because
Patent Office does, with about 30% and 40%, respectively, of patent
applications ‘filed maturing into patents compared to a figure of
75-80% in this country.
When the deterrent effects of trade secret monopolies on routine
subject matter are taken into account conjunctively with the
similar effects of the many trivial patents daily issued, it is not
at all surprising that the deterioration of United States research
and development efforts is rapidly becoming a matter for serious
concern.
14 Some evidence of the stagnating condition of American indus-
try may be found in the fact that revolutionary technology is not
being industrially applied. An article appearing in the Wall Street
Journal for November 27, 1973 headlined “Remember the Rolamite?
History’s 27th, and Newest ‘Elementary Mechanism’ Still Works,
but It Hasn’t Revolutionized Technology” states, inter alia:
“In all of history, by one count, only 27 elementary mechan-
isms—like the lever, the pulley, the ball joint, the hinge and
the clutch—have been invented. The 27th was the rolamite,
the only one to appear in this century. Invented in 1967, it’s
a cheap, practically indestructible gadget that theoretically
could replace the working parts of hundreds of more compli-
cated and costly mechanical devices. . . .
“But nobody saluted. Manufacturers admire the rolamite
but are unwilling to revamp their operations to make things
with it. Engineers say older mechanisms work well enough. . . .”
ow — * See SET digmmieaaies” “isk Siaeiiciniie — aires
13
it did not, petitioner’s question directed to whether the
Constitution and the patent laws preempt the state law
of trade secrets insofar as it applies to “confidential”
relationships is far too sweeping in scope. That question
as posed is not susceptible of answer in this case where
there is a vacuum of evidence relating to alleged “secrets”
other than those constituting information cognizable un-
der 35 U.S.C. 101 but forfeited to the public by com-
mercial use in excess of one year, coupled with failure
to file a timely patent application. The framing of such
an amorphous question has, however, permitted petitioner
and its amici to advance arguments in terms of “trade
secrets” broadly so as to suggest that existing law has
been disrupted to the point of upheaval. When put in
context with what was decided, these “horribles” are
illusory.
To amplify:
(1) The court below made no pronouncements on that
phase of trade secret law relating to criminal remedies
for “espionage”, burglary, theft, fraud, bribery, assault
and the like. As is apparent from the same court’s later
decision in United States v. Greenwald, 479 F.2d 320
(6 Cir. 1973), the decision below did not disrupt the
criminal law and was not intended to do so.
This is, of course, only logical. Remedies for unlawful
taking or copying of drawings, blueprints, manuscripts,
reports and other tangible items containing information
do not turn upon whether or not the information is
“secret” but rather are dependent upon that policy of law
’ which preserves the sanctity of a man’s person, home and
place of business against unauthorized invasion and gives
rise to the authorized police power of the states.’
15 See the briefs amici of Burroughs (p. 18 and p. 24, n. 41), the
Manufacturing Chemists Association (p. 15, esp. n. 24) and South-
wire Co. (p. 2) and Petitioner’s Brief at 46.
16 Police power does not, as suggested by some of petitioner’s
a ET 22S a SRY ET RATE HEE. AAT! RAAT
14
A similar policy governs the elicitation of a “trade
secret” from a man’s mind by threat of violence. Again,
the remedy is based on the unauthorized violation of the
sanctity of the persen and not upon alleged secrecy of the
information—the same remedy being available even if
the information elicited were old.
State law affording criminal remedies for embezzle-
ment of bona fide “trade secret” information such as e.g.
Ohio Revised Code §§ 1333.51(C) and 1833.99(E) repro-
duced at P.Br. 3, is likewise left undisturbed by the de-
cision below,*’ which simply holds that technical informa-
tion forfeited to the public by operation of the patent
laws cannot be a bona fide trade secret.
(2) The decision below does not deal at all with the
question of whether money payments may appropriately
be exchanged for disclosure of “trade secrets”, nor is
the matter in any way raised by the record in this case.
But exercise of the most ordinary common sense leads
to immediate recognition that the law authorizes, en-
courages and enforces payment of money in exchange for
communication of information that is neither “secret”
nor new in many legitimate relationships. For example,
people quite customarily take lessons in any number of
subjects that are in no serise secret, ranging from cook-
ing, sewing and flower arranging, to games such as golf,
bridge, tennis and the like to arts such as music and
painting. People also take lessons in how to speak foreign
languages, how to write and how to practice a useful
trade—e.g. carpentry or television repair. Attendance
amici, provide any basis or pretext for the creation of private
monopolies in the guise of “trade secrets”.
17 Note that criminal remedies for embezzlement of documents, in-
cluding blueprints, drawings, reports, models and other tangible
things do not rest upon whether the information embodied in the
embezzled item is “secret” or “public” but rather, upon unauthor-
ized taking of tangible property.
—
15
at schools and colleges, including those where tuition is
paid in exchange for instruction in a wide spectrum of
public record knowledge is regularly at a high level. In
the circumstances the suggestion ** that at least the pay-
ment provisions of existing and perhaps all contracts for
disclosure of alleged “trade secret” information already
forfeited to the public will be nullified by affirmance of
the decision below, seems impractical.”
The related argument of many amici * that no further
contracts for teaching secret “know-how” to competitors
will ever be consummated because it will be cheaper for
a competitor to hire an alleged “disloyal” employee at a
high salary than to enter into a contract for full in-
struction in the subject matter seems obviously invalid.
The amicus brief of the Licensing Executives Society
points out that, in the case of jet engines alone, secret
know-how may encompass “details of dimension of a
thousand parts, temperatures of operation, choice of
metallurgy, speed of rotation and centrifugal force on
18 The amicus Licensing Executives Society lists seven types of
contracts (Br. 19-26) that it says this case will “invalidate”;
amicus R. J. Reynolds Industries, Inc. laments that “existing con-
tracts . . . will be so frustrated that agreements for the exchange
of know-how .. . will be a thing of the past.” (Br. 11). See also
e.g. the briefs of amicus Optical Coating Laboratory, Inc., 8-9;
amicus Burroughs Corp. 12-14 and 16-17.
19 What will be nullified in such cases is the continuing “con-
fidentiality” of the information conveyed, not the obligation to pay
for services rendered incident proper instruction of a competitor in
all details of the subject matter of the purported “secret”, includ-
ing how to use it. Whether those provisions of such contracts that
require running “use” royalty payments subsequent to forfeiture
will also be nullified, analogously to the treatment of a contract
requiring similar “use” royalties under an expired patent in
Brulotte v. Thys Co., 379 U.S. 29 (1964) is for another case in
which the issue is properly raised.
20 See e.g.. the Optical Coatings Laboratory Brief 7-8, the R. J.
Reynolds Industries Brief 10, the Southwire Co. Brief 4, the
Burroughs Corp. Brief 15.
ee aa GEERT ERE RAE ORT INE z ae tal —_— o— — : —
16
blades, pressure on gas and air to burn how fast—the
distillation of a million ‘obvious’ details” (p. 39). Mani-
festly, one or two “disloyal” employees will not carry
such a complex mass of detail in their heads—and if it
is desired to acquire the “know-how”, a competitor will
need to pay for access to plans, engineering blueprints,
technical data and reports and instruction by a whole
team of company specialists and hence will have to ap-
proach the corporate proprietor of the “know-how”
directly.
(3) The decision below did not affect the validity of
any law passed by Congress, any court rule or any
treaty." Indeed, there is no evidence anywhere, including
in the briefs of the various parties who raise this point,
that the expression “trade secret” as utilized in any of
the cited statutes, rules and treaties was intended to
21 See Pet. Br. App. A. Petitioner and many amici seem to con-
sider a broad reference to “trade secrets”, without more, in a
statute, rule or treaty as antithetical to the decision below. See,
e.g., the briefs of the Association for the Advancement of Invention
and Innovation p. 8; Manufacturing Chemists Association pp. 38-
39; American Patent Law Association p. 4; Burroughs Corp. p.
7; R. J. Reynolds Industries p. 9; New York Patent Law Associa-
tion pp. 23-25; American Bar Association p. 3, n. 2; pp. 7-8; Bar
Association of the District of Columbia pp. 13-14; Licensing Execu-
tives Society pp. 57-58.
Amici Manufacturing Chemists Association (“MCA”) (p. 38)
and Rohr Industries (p. 4, n. 2) also endeavor to bootstrap the pro-
visions of 35 U.S.C. 122 into a recognition of a “patent applicant’s
option to retain his invention as a trade secret if no patent is ob-
tained” (MCA Br. 28). This interpretation of 35 U.S.C. 122 which
does not itself mention “trade secrets” was enunciated, without
support from precedent or legislative history in Sears v. Gottschalk,
357 F. Supp. 1327 (E.D. Va. 1973), a Freedom of Information Act
case, now on appeal (No. 73-1699) before the Court of Appeals for
the Fourth Circuit.
In that case, the Patent Office stipulated that it “has no right
under any statutory or constitutional provision or on any other
basis to recognize any sort of property right in subject matter
which it has adjudged unpatentable.” (Quoted from p. 48 of the
printed Appendix filed in No. 73-1699).
8 OTE ARE NE YO EIB eg ONT S ORCA ET
17
apply in any way to technical information, the right to
a patent for which had -been previously forfeited to the
people of the United States through commercial use for
more than one year. Absent very clear evidence that
“trade secret” as utilized in any one or more of those
authorities actually encompassed the type of alleged trade
secrets to which the decision below applies, these argu-
ments are simply irrelevant and should be disregarded.”
4. The decision below did not in any way deal with
the question of whether trade secret protection is con-
sistent or inconsistent with federal antitrust policy and
statutes (P. Br. 45-47), nor is the question in any way
raised by any part of the record. The cases cited by
petitioner to support the alleged consistency in no way
establish that federal antitrust policy would be served by
protecting as a “trade secret’? through a perpetual in-
junction, information already deliberately forfeited to the
public by failure to apply for a patent plus commercial
use for more than one year.
Nor is there any authority anywhere that would in-
dicate that the de facto monopolies created by disclosing
alleged “trade secrets” to a plurality of prospective (i.e.
employee) and actual competitors on a “confidential”
basis, thereby establishing a conspiracy to withhold the
“secret” information from outsiders and to prevent pub-
22 Moreover, as to those authorities which have to do with non-
disclosure by federal government agencies of alleged “trade secrets”
communicated to them, it seems evident from a practical viewpoint
that the intent of Congress was simply to encourage voluntary and
nonlitigious submissions, inter alia, for investigational and infor-
mational purposes. In other words, the government, to gain cooper-
ation in the submission of information needed or desired for gov-
ernmental studies, surveys and the like, found it desirable as a
matter of policy to accept as “trade secrets” any information so
labeled and to maintain it on that basis, leaving parties adverse to
the claimant including the government itself, to challenge the
bona fides of the trade secret claim in actual controversies where
the issue might arise.
a m2 SL PR IN EY NS RS
18
lication, are or could be consistent with antitrust policy.
And since a group of present and potential competitors
banded together for the purpose of exploiting and holding
“secret” from public view information forfeited to the
public under the patent laws has a marked resemblance
to the flagrantly monopolistic medieval guilds and their
equally monopolistic exclusive corporation successors in
Engiand, escape from which was once a major motivation
for coming to this country, antitrust policy would appear
to be mocked rather than served by these conspiratorial
groups.
5. Because the May 10, 1973 decision below obviously
could not touch upon proposed Section 301 of S. 2504,
the present administration’s proposed patent bill first
unveiled on September 27, 1973, petitioner’s effort to
influence this Court by what it might portend if it were
passed is presumptuous, to say the least. Whatever “the
Administration’s view” (P. Br. 52) of what the law
should be, this Court must deal with what it is.
6. The court below was properly not at all concerned
with fine points of whether the alleged “trade secret’
information involved in this case would have satisfied
either or both of U.S.C. 102 and 103 if one or more patent
applications had been filed.** Dedication to the public
by operation of 35 U.S.C. 102(b) occurs regardless of
whether technical information is both new (35 U.S.C.
101 and 102 generally) and unobvious (35 U.S.C. 103)
or new but obvious and hence not patentable.*' To put
23 See generally the briefs amicus of the Chamber of Commerce
(pp. 12-18) and the American Patent Law Association (p. 6).
24There is compelling authority from this Court and elsewhere
that technical information within 35 U.S.C. 101 which does not
meet the exacting standard of 35 U.S.C. 103 is “dedicated” to the
public as soon as it is first commercially used by operation of the
Constitution itself. See infra 28a et seq.
The Sixth Circuit had no need to reach that question in the
circumstance that all of the information in issue before it had been
. . ee
ESP PAA MLN FE PTE I ERNE ATRESIA I ER LE ES SS
tes
19
it another way, this case is controlled not by what might
have transpired if there had been a timely patent ap-
plication, but by what did necessarily transpire by reason
of petitioner’s deliberate forfeiture to the public of the
technical information on which the perpetual injunction
is sought. See Section D 1a, infra, p. 32.
C. THE INDETERMINATE ORIGIN OF AND BASIS
FOR TRADE SECRET LAW
Trade secret law is of relatively late day origin, hav-
ing apparently been recognized in England around 1820 *
and in the United States somewhat later about 1845.”
The heyday of trade secret law did not begin in this
country until sometime subsequent to the 1868 decision
of the Supreme Judicial Court of Massachusetts in Pea-
body v. Norfolk, 98 Mass. 1952.”
The Bar Association of the District of Columbia as
amicus curiae alleges that “the-right of an inventor...
commercially used for more than one year and no patent applica-
tions were filed—with the result that dedication had necessarily
occurred at the latest on the expiration of the year of grace afford-
ed by § 102(b) and well before the respondents’ interest in com-
peting with petitioner arose. See Section D la, infra, p. 32.
25 Yovatt v. Winyard, 1 Jac. & W. 394, 37 Eng. Rep. 425 (Ch.
1820) cited in the decision below; see also Newbery v. James, 35
Eng. Rep. 1011 (Ch. 1817) and Williams v. Williams, 36 Eng. Rep.
61 (Ch. 1817).
26 See Jarvis v. Peck, 10 Paige 118 (N.Y. Ch. 1843) ; Hammer v.
Barnes, 26 How. Pr. 174 (N.Y.S.Ct. 1863).
27 Amicus Curiae Manufacturing Chemists Association suggests
(p. 11) that trade secrets were recognized by the Romans, citing
Schiller, “Trade Secrets and the Roman Law; The Actio Servi
Corrupti”, 30 Colum. L.R. 837 (1930). Examination of the article
in question, however, reveals that this alleged “trade secret” pro-
tection consisted of certain police power type sanctions available
against third parties for corrupting a slave by bribery and the like.
; : : SERGIO EME TTR TR ra es
mone a See LASALLE OI ae BEN
TIES
20
is a right of natural law” (p. 7) and cites the 1602
decision in Darcy v. Allin*® as giving recognition to the
common law right of an inventor to practice his invention
secretly. Careful examination of that case and of the
section of Blackstone’s Commentaries cited (p. 7, n. 4)
to support the allegation reveal that these authorities,
viewed most favorably to the Association, recognized an
inventor’s common law right to maintain his invention in
secret rather than a right to practice in secret. The
distinction is material.
European, including English technology was for cen-
turies dominated by guilds and their “exclusive corpora-
tion” successors, each of which had absolute monopoly
power over an assigned segment of technology within a
given geographic area. If an inventor who was not a
member of a guild wished to practice his own invention,
he needed a patent—a license, as well as a temporary
monopoly, from the king—in order to do so.” Any secret
practice of an invention by a person not a guild member
would, absent a patent, infringe an existing guild monop-
oly and the result would have been fines and imprison-
ment for the secret practitioner, plus seizure and destruc-
tion of the involved goods.* As recognized in Deepsouth
28 Noy, Rep. 173; 74 Eng. Rep. 1131 (1602). This is the famous
case concerning the monopoly patent on playing cards, an old com-
mercial product, granted by Elizabeth I.
29 See infra 14a to 21a; see also the authorities therein cited.
One such authority, Prager, “A History of Intellectual Property
from 1545 to 1787”, 26 J. Pat. Off. Soc’y 711 (1944), reproduces
at p. 754 a part of the French edict of February 5, 1776 abolishing
the guilds as follows:
“.. . We want to abrogate those arbitrary institutions which
. .. retard the progress of the arts, by multiple difficulties put
in the way of an inventor; those guilds that dispute his right
to use a discovery never made by themselves. . . .”
30 The eventual nineteenth century implementation in England of
obligations of “confidentiality” in “trade secret’? technical informa-
tion is a bit ironic. England concurrently granted patent rights to
TL ATTEN I Ss BAN thems name
COI OAT ONES ata ES NE CS
21
Packing Co. v. Laitram Corp., 406 U.S. 518, 525-6 (1972)
“Under the [pre-Constitutional] common law the inventor
had no right to exclude others from making and using
his invention.” There was, hence, no “property right”
in an invention at common law in those times.
Consistent with its actual apparent nineteenth century
origin, one commentator has asserted that: *
“. . . The law protecting unpatented or unpat-
entable and uncopyrighted or uncopyrightable in-
tangible industrial property as ‘trade secrets’
evolved in the nineteenth century during the early
growth of industry in this country. The protection
afforded such intangible property was of course at
the expense of competing interests in individual
freedoms to thought and circulation of ideas, the
right to pursue any calling, the mobility of employ-
ees, and free competition, all interests reflected in
the Bill of Rights of our Constitution. The law of
trade secrets was a judicially created subsidy to
emerging industry at the expense of these interests.
This can be understood in the context of other sub-
sidies afforded industry by the law during that pe-
riod including the early sacrifice of the health and
welfare of workers as injuria absque damnum and
the strict limitations placed on tort remedies such as
nuisance against industrial offenders. Industry gen-
erally has been permitted to invade the public trust
without recourse. But, times have changed and they
have changed radically. Industry no longer needs
subsidization at the expense of other previous public
importers who obtained from others outside England by any means,
fair or foul, disclosures of new technology and then introduced them
into the realm. Thus as late as the early 19th century Englishmen
who “stole” so-called “secrets” outside England were rewarded—
yet those who “stole” them in England could be punished or en-
joined.
31 Kane, “Limitations on the Law of Trade Secrets” 53 J.Pat.
Off. Soc’y 162 (1971).
eT NBS ARE IEE NII TIE LCL LED TL TIE LO
22
interests reflected in the Constitution. Rather, it is
the individual freedoms to pursue any calling, of
mobility, of circulation of ideas, of free competition
and regimentation, which today need careful guard-
ing. ...” (Emphasis added).
In short, trade secret law was born of expediency. It
most assuredly was not born of “natural law”.
Indeed, the notion that natural law confers a “property
right” upon the creator or discoverer of any form of
information, irrespective of positive law recognition, finds
no support whatever in natural law ‘pallcoopay as origi-
nally promulgated.**
According to Machlup and Penrose,** who have traced
in detail its history, the “natural property right” concept
as applied to inventors was itself originated in a spirit
of expediency by the French politician De Bouffler™* as
a deliberate ruse to preserve patents from the strong
popular tide against privilege and monopoly and for
liberty and equality which dominated the French Con-
32 St. Thomas Aquinas, who is generally considered to be the
father of natural law philosophy, did not advocate any natural
property right in information. Nor did Aristotle, whose writings
are conceded to have heavily influenced Thomas Aquinas, make any
such suggestion.
33“The Patent Controversy in the 19th Century” 10 Journal
of Economic History 1, especially at 11-17 (1950).
34 Note 2, page 7 of the Brief Amicus of the Bar Association of
the District of Columbia, which suggests by truncated, out of ‘con-
text apparent quotation from an early article by Noah Webster that
he knew and espoused the concept in 1788, three years before De
Bouffler. Resort to American Magazine for February, 1788 reveals
no such statement as the quoted portio nof the note, though it does
show that Webster, who was editor of the magazine, made an im-
passioned editorial plea in quite different words for recognition of a
common law copyright. He said nothing about technical informa-
tion, inventions or patents, however.
ee ee ee ee ee ee gS ee ee ee a.) ee ee ee
ARIAT tANN: a
23
‘ stitutional Assembly in 1791.*° “It happens that those
who started using the word ‘property’ in connection with
inventions had a very definite purpose in mind: they
wanted to substitute a word with a respectable connota-
tion ‘property’ for a word that had an unpleasant ring
‘privilege’.” *°
Modern day adherents of the “natural property right”
of inventors in alleged trade secret technical information
appear, like De Bouffler, to be motivated by considera-
tions of expediency—their purpose being to find some
means by which constitutionally unpatentable technical
information can be protected as “property” so as to
permit exclusion ofothers on one pretext or another
from the use of the information.
35 The ruse was immediately successful. The French patent law
passed that year contained a preamble stating, inter alia, “that every
novel idea whose realization or development can become useful to
society belongs primarily to him who conceived it, and that it would
be a violation of the rights of man in their very essence if an in-
dustrial invention were not regarded as the property of its creator.”
Machlup and Penrose, supra, note 33 at 11.
36 Machlup et al note 33 supra at p. 14. Many proponents of
natural property rights in technical information argue in terms
of John Locke’s thesis that man has a natural right to the fruits
of his labor. The rationale is that the product of one’s labor, even
if an intangible such as technical information, must, therefore, be
recognized as one’s property.
The rationale breaks down because technical information, un-
like a tangible object, cannot be simultaneously exhibited to others
and retained within the sole domination and control of its originator.
Moreover, the nature of technical’ information is such that it may
be originated by a plurality of individuals at different times, with
the necessary result that it cannot be exclusive property of each or
any of them. As observed by Thomas Jefferson in 1813, “If nature
has made any one thing less susceptible than all others of exclu-
sive property, it is the action of the thinking power called an idea,
which an individual may exclusively possess as long as he keeps it
to himself; but the moment it is divulged, it forces itself into the
possession of everyone and the receiver cannot dispossess himself of
it.” Letter to Isaac McPherson, VI Writings of Thomas Jefferson
(Washington ed.) at p. 180 (1814).
24
Our Constitution originated under circumstances totally
inconsistent with the concept of a natural property right
in technical information.*' At least initially, many of the
founders of our nation, including Thomas Jefferson, were
opposed to monopolies of any sort including specifically
patents.** Nevertheless, it was ultimately agreed to au-
thorize a carefully limited patent system for the purpose
of promoting “Progress of Science and useful Arts” and
for no other purpose.” No record exists anywhere that
8? See the detailed discussion infra, p. 22a to 4la; see also
the authorities therein cited.
38 Thus Jefferson, writing to Madison from Paris on July 31, 1788,
observed that “saying there shall be no monopolies lessens the in-
citements to ingenuity, which is spurred on by the hope of a
monopoly for a limited time, as of 14 years; but the benefit even
of limited monopolies is too doubtful to be opposed to that of their
general suppression.” The Papers of Thomas Jefferson, Vol. XII, p.
440.
3° James Madison, one of the most active of the Constitutional
framers, responded to Jefferson, note 38 supra, in a letter of
October 17, 1788 that
“With regard to monopolies, they are justly classed among
the greatest nuisances in Government. But is it clear that, as
encouragements to literary works and ingenieus discoveries,
they are not too valuable to be wholly renounced? Would it not
suffice to reserve in all cases a right to the public to abolish
the privilege, at a price to be specified in the grant of it?
Is there not, also, infinitely less danger of this abuse in our
Governments than in most others? Monopolies are sacrifices of
the many to the few. Where the power is in the few, it is
natural for them to sacrifice the many to their own partialities
and corruptions. Where the power, as with us, is in the many,
not in the few, the danger cannot be very great that the few
will be thus favored. It is much more to be dreaded that the
few will be unnecessarily sacrificed to the many.” Letters
and Other Writings—Madison, Vol. I, 1769-98, p. 427.
In Madison’s parlance, trade secrets, which are “sacrifices of the
many to the few” are monopolies. Moreover, the usurpation in the
“few” of power over technology which trade secrets represent as
new. practiced in modern industry (supra, pp. 7 to 12) repre-
sents a very great danger to many individual liberties. See Kane
quoted supra at 21.
9s
suggests the Founding Fathers were aware of, discussed
or were in any way influenced by any concept of trade
secrets or that they ever recognized such a possibility as
an alternative to patents.“
Consonant with the limited power afforded it, Congress
promulgated a patent system, initially in 1790, and there-
after through a continuous chain of statutes. This Court
first considered and rejected the notion that the patent
system is based upon a natural right of inventors in
Pennock v. Dialogue, 27 U.S. 1, 16-17 (1829) and con-
cluded it to be solely a creature of positive law in which
the public interest, and not that of the inventor, was
paramount.*' The Court was careful to point out that
“the Constitution . . . contemplates . . . that this ex-
clusive right shall exist but for a limited period, and that
the period shall be subject to the discretion of Congress.
The Patent Act of the 21st of February, 1793, ch. 11,
prescribes the terms and conditions and manner of ob-
taining patents for invention; and proof of a strict com-
pliance with them lies at the foundation of the title ac-
quired by the patentee.” * |
Four years later in Shaw v. Cooper, 32 U.S. 390, 318
(1833), the Court again stressed that the exclusive right
*° See generally the voluminous historical documents relating to
the Constitutional Convention, including journals of its participants
included in House Document No. 398, 69th Cong., Ist Sess. and in
Farrand, “The Records of the Federal Convention of 1787.”
«1 This primacy of public interest is a fundamental cornerstone of
federal patent policy under the Constitution, from which this Court
has never departed. It has been reiterated most recently in Deep-
south Packing Co., supra, p. 21, 406 U.S. at 531. Trade secret
monopolies, of ceurse, invert the fundamental order of priorities
and for this additional reason are antagonistic to the patent system.
*2 The Court in Pennock also observed that “[i]t has not been,
and indeed cannot be, denied that an.inventor may abandon his in-
vention and surrender or dedicate it to the public. This inchoate
right, thus once gone cannot afterwards be resumed at his pleasure;
for, where gifts are once made to the public in this way, they
become absolute.” 27 U.S. 1, 16.
26
available under the patent laws, even though perhaps
justly deserved by inventors “can only be secured by a
substantial compliance with every legal requisite. His ex-
clusive right does not rest alone upon his discovery, but
also upon the sanctions which have been given to it and
the forms of law with which it has been clothed.” “
Similarly in Gayler v. Wilder, 51 U.S. 477, 494 (1850),
it was said that
“the discovery of a new useful improvement is vested
by law with an inchoate right to its exclusive use,
which he [the inventor] may perfect and make abso-
lute by proceeding in the manner which the law re-
quires... .
= * a *
Now, the monopoly granted to the patentee is for
one entire thing; it is the exclusive right of making,
using, and vending to others to be used, the im-
provement he has invented, and for which the power
is granted. The monopoly would not exist at com-
mon law and the rights, therefore, under it can not
be regulated by the rules of the common iaw. It is
created by the Act of Congress; and no rights can
be acquired in it unless authorized by statute and in
the manner the statute prescribes.”
To the same effect, the Court in Brown v. Duchesne
stated:
“But the right of property which a patentee has
in his invention, and his right to its exclusive use,
is derived altogether from these statutory provisions;
and this court has always held that an inventor has
no right of property in his invention, upon which he
can maintain a suit, unless he obtains a patent for
it, according to the Acts of Congress; and that his
rights are to be regulated and measured by these
** Unless otherwise stated, emphasis in quotations hereinafter
is added.
ENE LT NTA oC PET REPL NT PNT a ol ee: aa Sl RS Dente
27
laws, and cannot go beyond them.” 60 U.S. 183, 195
(1857).
Again, in Marsh v. Nichols, 127 U.S. 605 (1888 this
Court emphasized that:
| “ . . the patent for an invention conveys nothing
which the Government owns or its predecessors ever
owned. The invention is the product of the inventor's
brain, and if made known would be subject to the
use of any one, if that use were not secured to him.
Such security is afforded by the Act of Congress
when his priority of invention is established before
the officers of the Patent Office, and the patent is
issued. The patent is the evidence of his exclusive
right to the use of the invention; it therefore may
be said to create a property interest in that inven-
tion. Until the patent is issued there is no property
right in it, that is, no such right as the inventor
can enforce. Until then there is no power over its
use, which is one of the elements of a right of prop-
erty in anything capable of ownership. . . .”
Most recently in Graham v. John Deere Co., 383 U.S.
1 (1966), this Court as again reaffirmed that “/[t]he
patent monopoly was not designed to secure to the in-
ventor his natural right in his discoveries.”
Congress has itself clearly recognized that its power
to legislate as to patents is in no sense dependent upon
any alleged natural right of property in information.
Thus, in House Report No. 1494, 52nd Congress, First
Session, written as an incident to the codification of the
| patent statutes in 1894, it was stated that
|
“The object to be attained and the reason for the
constitutional grant of power are imbedded in the
grant itself. They are ‘to promote the progress of
science and the useful arts.’ There is nothing said
44 Compare the efforts of Kewanee in this case to maintain a suit
on the basis of “natural” or contractual property right.
¥
} .
SS oe REP IE ae ee se =e ree 3
28
about any desire or purpose to secure to the author
or inventor his ‘natural right to his property’. The
monopoly given him is avowedly given, not primarily
for his benefit, but for the benefit of society at large.
The claims made so often, especially of recent years,
that the author or inventor has a natural right to
the exclusive use of his production, and is therefore
entitled, as of course, to legislation securing to him
the full enjoyment of this right, does not seem to
have been specifically passed upon by the fathers;
but one thing is absolutely certain, they did not make
this. constitutional grant of power upon any such
ground. Much confusion of thought has arisen from
the assertion of this right as an innate, absolute
right existing in the individual, and a contempo-
raneous neglect to examine the limitation of the
power given in the premises to Congress.
“It is perhaps safe to say that for the past twenty
or thirty years no Committee on Patents has had an
existence which has not had the fortune to listen to
long and very interesting arguments claiming the
existence in the author or inventor of this right, and
the duty of Congress to give by legislative enact-
ment full and complete enjoyment of that right.
Whatever may be the correct conclusion as to the
existence of any such right, the duty of Congress is
measured by its power, and that power can be no
broader than the words conferring it.
“. . . It is sufficient to read the words of the grant
in their plain every-day meaning to discover that
the good of society was the only thing provided for,
or intended to be provided for. . . .” *
As well said by Mr. Justice Brandeis, dissenting, in
International News Service v. Associated: Press, 248 U.S.
215, 250 (1918):
«5 A second Congressional rejection, in much.the same language,
of the natural right argument, was made in connection with copy-
right legislation. See House Report No. 2222, 60th Congress, 2nd
Session (1909) at page 7.
29
. An essential element of individual property is
the “egal right to exclude others from enjoying it. If
the property is private, the right of exclusion may
be absolute; if the property is affected with a public
interest, the right of exclusion is qualified. But the
fact that a product of the mind has cost its producer
money and labor, and has.& value for which others
are willing to pay, is not sufficient to insure to it
this legal attribute of property.** The general rule
of law is, that the noblest of human productions—
knowledge, truths ascertained, conceptions, and ideas
—become, after voluntary communication to others,
free as the air to common use. Upon these incor-
poreal productions the attribute of property is con-
tinued after such communication only in certain
classes of cases where public policy has seemed to
demand it.” *
Essentially to the same effect Justice Holmes, con-
curring with the majority in the same case, said “[p]rop-
erty, a creation of law, does not arise from value, al-
though exchangeable—a matter of fact. Many exchange-
able values may be destroyed intentionally without com-
pensation. Property depends upon exclusion by law from
interference .. .” [248 U.S. at 246].
In short, property rights in technical information do
not arise simply in consequence of the expenditure of
#6 Tmportantly, this fact—i.e. that technical information costs
money and labor, and has a value for which others would be willing
to pay—is one of the bases advanced by petitioner and many of
its amici for protection of the trade secret “property’® rights denied
in the Court below. See infra, Section E,.p. 47.
47 The exceptions recognized in the immediately following passage
are those which are copyrightable and “the inventions and discov-
eries [constituting] . .. the few comprised within the patent law.”
In addition, Justice ‘Brandeis recognized cases in which courts
“interfere to prevent curtailment of plaintiff’s enjoyment of in-
corporeal productions” which are based upon “breach of contract
or of trust, or upon unfair competition” but gave no indication that
incorporeal productions already forfeited to the public could be
protected on any ground.
. 7 mepete oa? : ws aa alas
i bo , ‘¢
30
time, effort, labor or ingenuity; ** nor do they arise be-
cause the time, effort, labor and ingenuity required a
substantial financial outlay.*
D. THE CONSTITUTION AND FEDERAL LAW
PRECLUDE THE PERMANENT INJUNCTION SOUGHT
There being no “natural” property in intangibles such
as technical information, petiitioner’s claimed right to a
permanent injunction must sitand or fall on common or
statutory law of Ohio. The circumstance that there was
no common law right in trade secrets or inventions gen-
erally recognized prior to the adoption of the Constitu-
tion, suggests strongly the lack of basis for any argu-
ment that power to regulate trade secret rights being
48 This was recognized in English courts as early as 1571 in the
case of Matthey’s Patent for a particular kind of knife handle held
invalid on the ground that the cutlers’ guild had previously made
similar knives with a somewhat different type of handle and that
the change was within the ordimary skill of the art. The court
observed, inter alia, that “he could never have benefit from this
patent although he labored very greatly therein.” See Prager,
“Standards of Patentable Invention From 1474 to 1952,” 20 Uni-
versity of Chicago L.R. 69, 71-72 (1952) and authorities cited
therein.
49 Clearly only some financial outlays result in the acquisition of
property. Many others are made in exchange for services of one
sort or another including medical, legal, and accounting assistance,
personal grooming, household help, etc. Many such services can
be performed only through considerable expenditure of time, effort,
labor and ingenuity; yet no one argues that the product of these
services is “property” of any sort.
By far the major portion of research and development outlays
is payment for the services of trained personnel such as engineers,
chemists and the like who conduct the investigations. No reason
has been advanced for viewing the product of the services of these
people any differently from the product of the services of physi-
cians, dentists, lawyers, accountants, beauticians, barbers, maids or
waiters.
Seana ” LEE TENE BANE ARGS TREN PRET A LE RI OS ROR EE I LE NT EP BS NS “eR PR
31
“not given Congress was of course reserved to the
states.” °°
Rather, it seems clear on the fact of the Ninth (2a)
and Tenth (2a) Amendments to the Constitution that
any powers or rights not within the knowledge of the
people at the time the Constitution was adopted, were
intended to be reserved to the people under the Tenth
Amendment or retained by them under the Ninth Amend-
ment at least until expressly delegated to state or federal
government. Any other interpretation would be in direct
derogation of the sovereignty of the people, perhaps the
most basic tenet of our particular form of government.
There is no pretense here of an express reference to
trade secrets in the Constitution of Ohio—and this is
understandable inasmuch as Ohio had been a state well
before the emergence of the trade secret concept. Never-
theless the lack of in haec verba mention of trade secrets
in the earlier federal Constitution is urged by, petitioner’s
amici to be significant to show an intention! not to pre-
empt trade secret law at the federal level.
In short, the intent of the Constitutional framers as
to trade secrets was non-existent and questions of that
5° The quotation is from the brief amicus curiae of the Licensing
Executives Society, pp. 49-50; see also e.g. the brief amicus of the
Manufacturing Chemists’ Association, pp. 20-22; brief amicus of
Burroughs Corp., pp. 19-23 and the brief amicus of the Bar Asso-
ciation of the Distirct of Columbia, pp. 9-10. As to the latter, it
should be noted that the powers of both state and federal govern-
ments, under our system of government, were delegated by the
people. Hence, it is immaterial, even if correct, that “the states
did not delegate any power to regulate rights in secret inventions,”
(id. at 9). It seems fair to suggest, moreover, that the people
never delegated to either state or federal governments the full
power to regulate “secret inventions’”—hence the dicta in some
cases, e.g. United States v. Dubilier Condenser Corp., 289 U.S. 178
(1933) regarding an inventor’s privilege (rather than enforceable
right) only to keep his invention secret, i.e., to refrain from telling
it to anyone if he so chooses.
SSA RNA 2 PS MEN A eT ha Pee 5 = Swany onal =
32
intent are relevant here only insofar as they demonstrate
the meaning of the patent laws and the constitutionally
guaranteed right of every citizen to pursue a trade or
business and thereby show conflict with Ohio law.
1. Preemption by the Patent Clause and Statutes
Grants by the states of exclusionary rights in science
and useful arts which have the net effect of retarding or
even stifling progress are, regardless of purpose, in the
teeth of the Constitutional mandate for promotion of
progress in these fields. Hence, to the extent that Con-
gress exercises its patent power no state may engage in
activities that are contrary to, or otherwise designed to
frustrate, the federal action taken.
a. Patent Policies
For example, the constitutional patent clause contains
a mandatory minimum level standard of invention which
must be. met before a valid patent can issue.™
51 See infra, 5a to 50a. For the states to grant de facto mo-
nopolies under the “trade secret” label in technical information
which falls short of the high constitutional standard of invention
is in the teeth of the patent power and in derogation of Fourteenth
Amendment guarantees that every citizen is entitled to pursue an
ordinary calling (37a to 4la, infra). Hence the suggestion in Adel-
man “Secrecy and Patenting: Some Proposals for Resolving the
Conflict”, 1 APLA Quarterly Journal 296 (1973) that the decision
below be implemented only in regard to “patentable” inventions and
the states be permitted to grant trade secret protection to technical
information falling below the constitutional standard of invention,
flies in the face of constitutional strictures. In addition, the sug-
gestion would be cumbersome to implement.
In line with the “notorious difference” between Patent Office
and court strictness of application of patentability tests which
this Court referred to in Graham, supra, n. 10, “[i]t is now a
truism . . . that if you sit around the Patent Office long enough,
and change your claims often enough, you will eventually get some
kind of a patent on almost anything”. M. Shapiro, “The Supreme
Court and Administrative Agencies”, The Free Press (New York
1968) p. 189. Most patents are found invalid, if litigated—but
a — os
33
Similarly, the constitutional patent clause was drafted
at a time when the idea of a written specification was
very new.
The earliest patents for inventions, including new im-
portations, granted in England and the Italian city states
preceded the introduction of the printing press in Europe.
In those early times and continuing for more than two
centuries subsequent to its adoption, dissemination of
technical information by the written word was extremely
rare. The accepted fact was that an “inventor” (includ-
ing an importer) made his invention public by introduc-
ing it into commercial use.** While the notion of a writ-
ten patent specification appeared in England, spontane-
ously, about the middle of the seventeenth century, Eng-
land had no statute requiring the submission of a written
litigation is time-consuming and expensive and should not be a
requisite to determining whether the rationale below applies.
See also generally Weissman, “Testimony Before the Senate Judi-
ciary Committee, Subcommittee on Patents, Trademarks, and Copy-
rights, Relating to S. 1321 (Hart bill)”, 55 J. Pat. Off. Soc’y 604
(1973) wherein administrative pressures to issue ever increasing
numbers of lower and lower quality patents are quite fully and
candidly exposed.
52 See Federico, “Origin and Early History of Patents’, 11 J.Pat.
Off. Soc’y 292 (1927) which states at p. 304 that
“The consideration of the patent grant was the creation of
a new industry and, as has already been noted, knowledge was
given to the public by the actual establishment of the industry
and, in some cases, by the teaching of apprentices. The pat-
ents in general contained no description, either in writing or
by a drawing, and such description did not seem to have been
necessary. The change to a requirement of a formal written
disclosure, or specification was gradual. A few of the early
seventeenth century patents contained a description of the in-
vention and the custom of presenting a specification increased
with time. These specifications were made solely on the pat-
entee’s initiative and for the purpose of making the scope of
their grants more certain.”
34
specification until 1852,°* well after the promulgation in
this country of the various general patent laws of 1790,
1793 and 1836, each of which required a full and com-
plete written description analogous in every respect to
that required by present 35 U.S.C. 112."
Thus, to a point in time not long before the Constitu-
tion was adopted, commercial use of an invention was
definitely synonymous with making it public. There is
no indication that the requirement, in the first and sub-
sequent United States patent laws, for a written specifi-
cation was intended to change this state of affairs. Per
contra, there is every indication that this was based upon
a desire to “promote’ progress” by disseminating written
information quickly and freely. As one writer has sug-
gested, the intent of the constitutional patent clause and
the patent laws which implemented it “was to encourage
domestic invention, but the actual commercial introduc-
53 See Bugbee, “Genesis of American Patent and Copyright Law”
Washington Public Affairs Press (1967) at p. 41.
54 One of the vices of the “trade secret” concept as espoused by
petitioner and its amici is that an inventor often submits to the
Patent Office a specification couched in vague generalities, includ+
ing a detailed description of a few crude early experiments and
obtains a patent, while, at the same time, withholding from the
Patent Office the “know-how” requisite to actual commercial prac-
tice of the invention. Such deliberate withholding of information
requisite to apprise the public of precisely how to make and use
the invention under 35 U.S.C. 112 is a specific ground for invalidity
of a patent under the provisions of 35 U.S.C. 282. However, it is
difficult for the Patent Office, lacking machinery to compel disclo-
sure of evidence, including even subpoena power, to police the
completeness of the specification effectively. It is noted that on the
order of 70 to 75 per cent of litigated patents are held invalid in
the courts, many at least in part on grounds of deficiency under
35 U.S.C. 112.
The fact that many patent owners use trade secret law to “pro-
tect” know-how outside the patent laws in derogation of 35 U.S.C.
112, is the subject of comment by Doerfer in “The Limits of
Trade Secret Law Imposed by Federal Patent and Antitrust Su-
premacy,” 80 Harvard L.R. 1482, 1442-4 (1967).
Sainte SRP EA RENNER OLED EL ELLIO LE DOLLA LS
35
tion of the invention was left to business enterprise. It
was not intended to require that the inventive thought
should be withheld until the inventor could incorporate
it in actual manufacture. The intent was to bring about
publicity of the ideas as soon as possible as an incentive
for others to improve thereon and to stimulate and ad-
vance the useful arts,” *
Decisions of this Court are consistent with the sug-
gestion that the written specification was not intended
to ‘supplant commercial use as a means of introducing
technology to the public, but was intended as a stimulant
to early disclosure.
One of this Court’s earliest patent decisions, Pennock
v. Dialogue, supra, p. 25, clearly expresses the principle
that deliberate forfeiture by the inventor of the inchoate
right to a patent constitutes a gift to the public.”
55 See Michel, A.J., “Historical Development of Principal Patent .
Systems,” (page 19), a thesis available in the Library of Congress
-D under Card No. T215M43. ~
56 Pointedly there is no evidence that it was intended to so qualify
the history of centuries as to place technical information in the
public domain via commercial use only if completely disclosed by
the marketed product, thereby giving rise to that hypocrisy of
modern patent law—the “secret public use”. See e.g. the brief
amicus of Manufacturing Chemists Association, p. 30-31; P. Br.
. 28-32.
Note in this connection the fact that, as pointed out by Adelman
supra, note 51, recognition of a protectable “trade secret” in
commercially used technology where the product sold or used
does not reveal the “secret” would result in an arbitrary, unfair
and random classification among proprietors of technology as to
who would be eligible for protection and who would not.
57 See the language quoted in note 42 supra. Pennock is cited in
Metallizing Engineering Co. v. Kenyon Bearing & Auto Parts Co.,
153 F.2d 516 (2 Cir. 1946)—a case heavily relied on by petitioner
(P. Br. 29-30)—as supportive of the conclusion that a use can be
both commercial and secret but the real thrust of Pennock is that
commercial use of technical information was at that time, as ear-
lier, understood to constitute a gift to the public absent timely
steps to acquire a patent.
5 ‘ . - — ee teas
EE ————EE PS EE EE ur s es
36 .
The same thought appears clearly in the quotation
from Kendall v. Windsor, 62 U.S. 322 (1858) relied upon
by the court below in its decision in this case (478 F.2d
at 1082; Pet./ Al4).
In Consolidated Frat Jar Co. v. Wright, 94 U.S. 92
(1877), this Court squarely held that commercial use
in excess of the statutory period without filing a timely
patent application results in an unqualified gift to the
public, and hence places the pertinent technology within
the public domain.
As this Court put it:
“Inventors are a meritorious class. They are pub-
lic benefactors. They add to the wealth and comfort
of the community, and promote the progress of civi-
lization. A patent for an invention is as much prop-
erty as a patent for land. The right rests on the
same foundation, and is surrounded and protected
by the same sanctions. There is a like larger domain
held in ownership to the public. Neither an indi-
vidual nor the public can trench upon or appropriate
what belongs to the other. The inventor must comply
with the conditions prescribed by law. If he fails
to do this he acquires no title, and his invention or
discovery, no matter what it may be, is lost to him,
and is henceforward no more his than if he had
never been in anywise connected with it. Jt is made,
thereupon, as it were by accretion, irrevocably a
part of the domain which belongs to the community
at large. The invention here in question is within
this category.” *
58. Amicus the Bar Association of the District of Columbia relies
on the 6-3 decision in Gayler v. Wilder, 51 U.S. 477 (1850) to
allege that this Court has recognized “interplay of common [trade
secret] law and patent law” (Br. 11) by holding an alleged “secret
public use” not to defeat a later applied for patent. But as the ©
amicus is forced to admit (p. 11) the question of the possible
ii a - bas PUFA SFP ES
ELT ILE ELE I I I Ha TM TE I -
pees
37
As petitioner somewhat backhandedly recognizes (P.
Br. 30-31), Egbert ¥. Lippmann, 104 U.S. 333 (1881)
and Hall v. Macneale, 107 U.S. 90 (1882) are consistent
with Consolidated Fruit Jar. Both Hall and Smith &
' Griggs Mfg. Co. v. Sprague, 123 U.S. 141 (1887), which
follows Hall specifically rejected the notion that elements
“hidden from view” as an incident to commercial use
are “secret”.
See also Corona Cord Tire Co. v. Dovan Chemical
Corp., 276 U.S. 610 (1927) where automobile tire inner
tubes cured with diphenylguanidine—a fact not discern-
ible by inspection of the tubes—which were used publicly
by a third party more than the then two year grace
period prior to the patent application, were persuasive
on the question of dedication to the public.
Against this array of authority petitioner and its
amici rely on later lower court decisions,* none of which
reached this Court, to insist that a “public use” may be
so conducted as to reserve “trade secret” rights in the
user. These cases include Macbeth-Evans Glass Co. Vv.
General Electric Co., 246 F. 695 (6 Cir. 191% ; Metalliz-
ing cited supra, n. 57, and Huszar v. Cincinnati Chemi-
cal Works, 172. F.2d 6 (6 Cir. 1949). Notably,
not one of them is concerned with whether a perpetual
injunction-may issue to aid a putative inventor in re-
serving to himself a “secret’’ in technology used com-
dedicatory effect of the use was not argued in Gayler—and the
later decision in Consolidated Fruit Jar is in any event controlling.
Consolidated also clearly demonstrates error in Mine Safety Ap-
pliances Co. V. Electric Storage Battery Co., 405 F.2d 901 (CCPA
1969) cited and quoted by petitioner (p. 28) by making clear that
patent laws operate automaticolly to force technical information
into the public domain on the happening of statutorily defined
events.
59 See P. Br. 28-32; brief amicus of MCA, 29-31; brief amicus
of American Patent Law Association 6-7.
38
mercially for more than one year.® Rather, all find that
the commercial use whether or not embodying an alleged
“secret” bars a patent. Logic would seem to compel that
the same commercial use in excess of the grace period of
35 U.S.C. 102(b) (3a) would equally bar issuance of an
injunction to enforce what Metallizing refers to as “prac-
tical monopoly by means of secrecy.” (153 F.2d at 519).
In opposition to logic, petitioner and its amici advert
to this Court’s alleged recognition of a right to hold
information “secret. But the language quoted is in
every instance dictum and when read ‘in context suggests
only that a self-styled inventor is not under a legal com-
pulsion to obtain a patent or to make a public disclosure
of any kind. As said in Bates v. Coe, 98 U.S. 31, 45-6
(1878) “Inventors may, if they can keep their inventions
secret. . . .” There is no suggestion anywhere in this
-Court’s decisions of a legally protectable right to secrecy
in technology much less a holding that the law will aid
and abet one who claims “secrets” in unpatented and
unpatentable technology in obvious frustration of the con-
stitutional patent policy favoring free circulation of
ideas,“ by enjoining others from competitively using those ~
~ “secrets”.
In sum, this Courts’ pertinent decisions are overwhelm-
ingly to the effect that the forfeitures effected by the
*° Macbeth-Evans was decided under R.S. 4886 when the bar
period was two years and the principle otherwise unchanged.
* See e.g. P. Br. 42-43.
® Significantly Becher v. Contoure Laboratories, Inc., 279 U.S.
388 (1929) (P.Br. 43) involved a suit to compel assignment to the
true inventor’s corporate assignee of a patent which the inventor’s
co-worker wrongfully obtained in his own name and would not be
in any way affected by affirmance of the decision below. Neither,
insofar as the opinions show would the actu holdings in United
States v. Dubilier Condenser Corp., supra, note 50, or Dr. Miles
Medical Co. v. John D. Park & Sons Co., 220 U.S. 373 (1911)
heavily relied on at P. Br. 42-3. :
=
39
patent laws—whether as a consequence of patent expira-
tion, patent invalidity ™ or failure to file a timely ap-
plication when coupled with commercial use in excess of
the statutory grace period “—are automatic and depend
not upon what the public actually knows but upon what
the public has a free right to use, known or unknown.
b. Reasons for Preemption
Petitioner and its amici nonetheless suggest “ the power
of the states to be coextensive with that of the federal
® See Brulotte v. Thys, supra, note 19; Scott ee: Co. V.
Marcalus Mfg. Co., 326 U.S. 249 (1946).
* E.g. Lear, Inc. v. Adkins, 395 U.S. 653 (1969) ; Sears, Roebuck
& Co. v. Stiffel Co., 376 U.S. 225 (1964) ; Compco Corp. v. Day-Brite
Lighting, Inc., 376 U.S. 234 (1964).
65 Supra, pp. 35 to 37.
** Petitioner and its amici seem to suggest that so long as a pro-
- prietor of technology has a “secret he must receive some qu
pro quo in the way of protection to part with it. But the reward
afforded by the patent laws is not at all for giving up a right to
keep technology secret, but for timely disclosure of an invention
beneficial to society. Beginning with the 1790 patent act, the in-
ventor has always been required to disclose his invention in ex-
change for a chance of reward rather than a guarantee of reward,
consistent with the éonstitutionally mandated policy that the public
interest, not the inventor’s, is paramount.
“To approximately 1879, the applicable rules of the Patent Office
routinely made abandoned patent application disclosures publicly
available. Even today abandoned and, sometimes, pending patent
application disclosures are publicly available in a plurality of situ-
ations where no “reward” for the disclosure is given. For example,
European countries including those with patent registration sys-
tems where patents issue virtually immediately require that the
United States counterpart application be supplied as a basis for
claiming a priority right under tht Paris Convention and in such
cases, a copy of the United States application becomes promptly.
available from the foreign patent office. For another example,
abandoned applications mentioned in issued patents are routinely
available.
6 E £. P. Br. 37-40; brief amicus of the Chamber of Com-
merce 8-12; brief amicus of MCA 32-35.
40
government to protect technical information within the
scope of 35 U.S.C. § 101 and argue that, federal and
state objectives being different, there is no reason why
“patent” powers cannot coexist in the same manner as
state and federal copyright laws under Goldstein v.
California, 412 U.S. 546. (1973).
There are several answers to this position. One is that
regardless of possible differences in objectives, the results
of concurrent patent and trade secret “property” protec-
tion within the scope of 35 U.S.C. § 101 are overlapping
and disparate, with the trade secret protection being in
frustration of patent policies.
Another is that Goldstein itself recognizes and reaf-
firms the preemptive effect of the patent laws vis-a-vis
state unfair competition laws—and “trade secrets” are,
after all, just one variety of unfair competition (P.
Br. 46). .
Still another is that Goldstein relates to copyrights
which are narrow and unique rights, protective only
against copying, and not infringed by another’s original
_ ereation of even a closely related work. The patent on
the other hand is an absolute monopoly over a segment
of technology which prevents others from engaging in its
use in any way. State and federal copyright collisions
&8 See Fox, “Monopolies and Patents”, (Toronto 1947) at pp. 14-15
where it is stated: —
“. . . If an independent author arrives at the same results
by independent means, the copyright owner has no right to
prevent to that extent the invasion of his monopoly. The dif-
ference between the monopoly conferred by patent and by
copyright will be immediately perceived. If it could be shown,
as a matter of fact, that two precisely similar works were in
fact produced wholly independently of one another, the author
of the work published first would not be entitled to restrain
the publication by the other author of that author’s independ-
ent original work. What is given is the merely negative right
to prevent the appropriation of the labours of an author by
41
are hence easily avoidable—but state and federal patent
collisions with both operating inside the scope of 35 U.S.C.
$ 101 would be inevitable. Hence, federal law necessarily
governs pursuant to the Supermacy clause (la) and the
conflicting state law is void. See Sears and Compco,
supra, note 64. :
The fact that some state patents were granted in the
years prior to the Constitution as pointed out in Gold-
stein, supra, is not, as petitioner argues (n. 7, pp. 25-26)
supportive of a present right in the states to grant
“patents” or other exclusionary property rights within the
scope of 35 U.S.C. 101. Congress in the Patent Act of
1793 ° specifically conditioned the right to a federal
patent in the very same subject matter area now defined
by § 101 * for a previously state-protected invention upon
the relinquishment of the state patent and thus made clear
an intent to preempt the field absolutely. Failure of sub-
sequent patent acts to deal with the matter can, no doubt,
be attributed to the fact that inventors ceased seeking
state grants after the federal patent laws became ef-
fective."
another. A patent right, on the other hand, is quite different.
The monopoly is absolute, and once an inventor has complied
with the provisions of the Patent Act, and a valid patent has
issued to him, he can prevent the exercise of that invention
by anyone else who has, quite in the belief that he was ac-
tually inventing something new, and without knowledge of the
patentee’s patent, invented the same thing, even simultaneously
with the patentee.”
* 1 Stat. 318 § 7.
701 Stat. 318 § 1; see also the Reviser’s note to present 35 U.S.C.
§ 101. .
™ None of the states had established procedures governing the
manner of applying for a patent—hence, it was necessary for an
inventor to make a separate petition to and meet with the legisla-
ture in each state, a time consuming, cumbersome and expensive
undertaking. No doubt this was one of the reasons why Madison
noted in The Federalist Papers, No. 43, that “The States cannot
. . . Separately make effectual] provision for .. .” patents.
, —_— — Te
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: 42
Patents, unlike copyrights, are also powerful instru-
ments of interstate commerce. As the Court recognized
in Blonder-Tongue Laboratories v. University of Illinois
Foundation, 402 U.S. 313, 346 (1971), the circumstances
obtaining under prior law when a patent had been held
invalid as to ene manufacturer but was presumed valid
as to all others tended to promote artificial marketing and
pricing inequalities and to interfere with the free com-
petitive policy of the antitrust laws. For the states to
compete among themselves and with the federal govern-
ment in the grant of exclusionary rights in subject matter
defined by 35 U.S.C. § 101(3a) is hence to derogate the
exclusivity of federal interstate commerce power ™ and to
disrupt significantly the effectiveness of federal policies
promulgated under that — such as that expressed
in the antitrust laws.
Another compelling reason why the power to grant ex-
clusionary rights within the scope of the 35 U.S.C. 101
subject matter definition is and must be confined to the
operation of federal patent law, is the preeminent right
under the Fifth (la) and Fourteenth (2a) Amendments
to the Constitution (37a to 41a) of every citizen to utilize
his own talents and skills in the pursuit of a trade or
calling.** This right has a necessary interaction with the
patent laws, as explicated, infra, 37a to 47a. The para-
mount interest of society is in preserving the rights of all
citizens in the free use of their own skills and talents—
a goal which would be undermined by indiscriminate
patent grants or other grants of “property” in technology.
The federal patent laws, by strictly defining criteria for
patentable invention that neither interfere with the free
circulation of technical information generally nor with its
free use in pursuit of an ordinary trade or calling, co-
72 Gibbons Vv. Ogden, 22 U.S. 1 (1824).
73 Allgeyer Vv. Louisiana, 165 U.S. 578, 589-90 (1886) quoted
infra, 38a; Greene Vv. McElroy, 360 U.S. 474 (1959).
-
LVS ee ee ae 2¢Agogi ss
ibs, Saw >
43
operate with the Fifth and Fourteenth Amendments. Ex-
ercise by the states of competing powers based upon com-
peting and subsidiary policy objectives would be detri-
mental to the preservation under the patent laws of the
constitutionally mandated individual rights. For a more
detailed discussion of these rights as they have been
explicated by this Court and the manifest relationship
between the preservation of these rights and the strict
maintenance of the constitutional standard for patenable
invention, see, infra, 37a to 41a.
In its exercise of the patent power, Congress has been
careful not to disturb objectives and policies dictated by
- other constitutional mandates. The complex interplay of .
Sh AGA LI Be
the patent system with federal antitrust policy under the
commerce clause and with society’s goal, committed to
federal supervision, of preserving rights of individual
citizens inter alia, in their use of their talents and skill
in pursuit of a trade or calling is a matter of such deli-
cate balance that intervention by the states in furtherance
of secondary policy objectives could not be countenanced.
Congress having preempted the grant of property rights
in technical information defined by 35 U.S.C. 101, the
states may not make conflicting grants."
2. Considerations Affecting Preemption Arising
Solely Under the Commerce Clause
Some of petitioners’ amici have stressed the alleged im-
portance and even necessity to international commerce
and to the United States balance of payments position in
7 The question of whether the states may take action to protect
inchoate property rights in technical information otherwise de-
fined by 35 U.S.C. 101 during the period when an invention is
being completed, a patent application filed and that application
examined in the Patent Office, is not within the scope of this case.
There is accordingly no intention herein to intimate one way or
another what judgment should be made on that question at such
time as it is properly presented in another case.
wi VSI e RAL CUE ee
seyret <i HE SAINT OPAL TR PS PRM _
44
world markets of preserving state trade secret “property
rights” in subject matter defined by 35 U.S.C. 101."
United States patent law and policy is, of course, ir-
relevant to foreign commerce because, as this Court has
repeatedly held, United States patents have no extraterri-
torial effect.**
Power over foreign commerce, however, is exclusively
the province of the federal government under the Com-
merce clause (la). We know of no basis—and peti-
tioners’ amici suggest none—pursuant to which individual
trade secret policies of the states could be validated as a
means for fostering foreign commerce in direct deroga-
tion of an exclusive federal power in which the states,
pursuant to the Supremacy clause (la), may not in-
termeddle.
Hence, to the extent that the trade secret “property”
here in issue is sought to be justified as a spur to
foreign commerce, the argument must be rejected, and the
matter left to such future legislative action as Congress
may elect to take."
3. Considerations Affecting Preemption Arising Solely
Under the Fifth and Fourtheenth Amendments.
The question of whether the state of Ohio may per-
manently enjoin respondents in this case from the use of
75 See e.g., the amicus briefs of the Chamber of Commerce,
especially at pp. 25-26 and 35; the Association for Advancement
of Invention and Innovation (p. 7); the Licensing Executives
Society (App. A., p. 92); Southwire Company (p. 4); Optical
Coating Laboratory, Inc. (p. 8) and Rohr Industries, Inc. (pp. 7-9).
76 See Brown v. Duchesne, supra, p. 26 at 195; see also Deep-
south Packing Co. v. The Laitram Corp., supra, p. 21.
7? In fairness, we do not understand that the record of this case
really raises any question directly relevant to foreign commerce
considerations. Hence, the Court should not in any event rest its
decision here on such considerations.
45
the alleged trade secret “property” in issue is one which,
independently of the patent power and its exercise, must
be examined for repugnance of the state law-authorized
injunction to the property right of every citizen, arising
under the Fifth and Fourteenth Amendments, to utilize
fully his own talents and skills in pursuit of a lawful
trade or calling.
In Greene Vv. McElroy, supra, note 73, this Court
was faced with the question of whether arbitrary
revocation of a security clearance without affording the
injured person an opportunity to cross-examine his ac-
cusers or confront the adverse evidence, was a valid ex-
ercise of federal administrative power in the circum-
stance that the employee was seriously prejudiced in his
ability to pursue his lawful calling and to earn his living.
This Court, having due regard to “the right to hold
specific private employment and to follow a chosen pro-
fession free from unreasonable governmental interference,
[which] comes within the ‘liberty’ and ‘property’ concepts
of the Fifth Amendment,” ** held the arbitrary administra-
tive action to be unjustified.** The facts show that by the
loss of the secret clearance on an arbitrary basis, Greene,
an aeronautical engineer of considerable experience, was
“formally barred from pursuit of many aspects of his
profession, given the current dependence of most phases
of the aircraft industry on Defense Department contracts,
not only for production but for research and develop-
ment work as well... .” 360 U.S. at 492, n. 21. While
the present record contains no facts to show the precise
injury to respondents if the permanent injunction issued,
it is predictable that in this day of intensive technological
specialization, persons like respondents who have devoted
78 360 U.S. at 492.
7?In so doing the Court cited, inter alia, Allgeyer, supra, note
73, thus giving tacit recognition to the same right which arises
under the Fourteenth Amendment and is hence binding on the
states.
BR LAE EL FOREN A ESSE AT RRR GEE, EF NTT ELT IRIE PI BE ASI ET
46
a considerable period of their lifetimes to research and
development in a specific narrow field—here the produc-
tion of the crystals which are the subject of the “trade
secret property” in issue—would be injured if curtailed
in their freedom to continue their studies in this area
utilizing all of the skills necessarily nurtured during the
period of their employment by petitioner.
If the federal government, with legitimate national
security interests to protect, may not freely injure a citi-
zen incident the pursuit of his lawful calling, logic de-
mands that a private corporation having only its own
individual financial “security” interests to protect, can-
not freely erect barriers, in the guise of trade secret
“property” or otherwise, to the pursuit by a former em-
ployee of his lawful calling. Particularly not, moreover,
when the “property” is of a nature such that the right
to a patent thereon has been forfeited, so that the public
policy of the patent laws is subverted.
While the Fifth and Fourteenth Amendment property
rights of every citizen in the use of his own skills and
talents to pursue a lawful calling is often not per se
mentioned in the cases, these rights seem to be the under-
lying rationale for the recognition of the concept of ‘free
mobility of employees.”
At least some state courts have recognized the Four-
teenth Amendment imperative," but these state court
8° See generally in this connection Wilson v. Clarke, 470 F.2d
1218, 1221-2 (1 Cir. 1972); Maloney v. E.J. duPont De Nemours &
Co., 352 F.2d 936, 939 (D.C. Cir. 1965) ; E.W. Bliss Co. v. Struthers-
Dunn, Inc., 408 F.2d 1108 ,1112-13 (8 Cir. 1969) ; see also generally
Blake, “Employer Agreements Not To Compete” 73 Harvard: L.R.
265 (1960).
81 E.g., Levine v. E. A. Johnson & Co., 237 P.2d 309 (Ct. App.
Cal. 1951); Continental Car-Na-Var Corp., v. Moseley, 148 P.2d
9 (Sup. Ct. Cal. 1944); Paraco, Inc. v. Owens, 333 P.2d 360
(Ct. App. Cal. 1959).
47
and lower federal courts as» well *—have most often un-
fortunately done so in context of an effort to “balance”
the rights of the individual employee against the financial
interests of the corporate employer.
The role of the Constitution in our scheme of govern-
ment, coupled with elemental justice, requires that the
basic Fifth and Fourteenth Amendment rights of the in-
dividual citizen be held paramount to the financial in-
terests of corporate employers and hence in this case
that the permanent injunction be refused on grounds
of non-compliance with Fifth and Fourteenth Amendment
guarantees.
E. TRADE SECRET “PROPERTY” IN TECHNOLOGY
—A NECESSARY INCENTIVE TO CONDUCT
RESEARCH??
Petitioner and its amici argue that the recognition of
“property” rights in trade secrets by the states is neces-
Sary as an incentive to the investment of risk capital in
research and development.*
This argument is not new. It is one of the most over-
worked cliches of apologists for drastically denigrated
criteria for patentability. Notably, the same argument
was presented over and over again to Congress at hear-
ings held May 11, 12 and 13, 1971 before the Senate
Subcommittee on Patents, Trademarks and Copyrights in
an effort to justify relaxed patentability criteria, de
82 See the cases cited supra, note 80; see also e.g. Winston Re-
search Corp. Vv. Minnesota Mining & Mfg. Co., 350 F.2d 134 (9
Cir. 1965).
83 This theme appears throughout the briefs filed on petitioner’s
behalf but is perhaps most markedly advanced by the Chamber of
Commerce, the Manufacturing Chemists Association, Burroughs,
Rohr, Optical Coating Laboratories, the Licensing Executives
Society and the Association for the Advancement of Invention and
Innovation.
48
facto removal of patents from the ambit of antitrust
laws, and non-preemption by federal law of state con-
tractual and trade secret concepts. It was made by some
of the same amici and counsel who are now before the
Court, including the Electronic Industries Association, an
amicus for petitioner, by Edward J. Brenner, now Di-
rector of the Association for Advancement of Invention
and Innovation, an amicus here; the American Patent
Law Association, an amicus here and the Department of
Commerce—which, albeit not an amicus in this case, is
liberally quoted in the brief amicus of the Chamber of
Commerce.
The same argument—in support of relaxed criteria for .
patentability—was earlier made at hearings before the
Subcommittee on May 17 and 18, 1967 by Tom Arnold,
counsel here signing the brief of the Licensing Executives
. Society, one of petitioner’s amici. To date, the argument
has not prompted legislative action.
Quite apart from the fact that the argument has be-
come a very tired one, no evidence has ever been pre-
sented in any forum, judicial or legislative, to support it.
Moreover, it seems contrary to the findings of those who
have studied the problem. For example, “The Impact
of the Patent System on Research”, Study #11, Subcom-
mittee on Patents, Trademarks and Copyrights, Com-
mittee on the Judiciary, United States Senate 85th Con-
gress, 2nd Session (1958), by Professor Seymour Melman
of Columbia University concluded that
“There is nothing to indicate that the absence of
the patent system would diminish the scope or char-
acter of scientific research in the universities. In-
deed, insofar as patent pressures were removed from
university scientists, this would probably. strengthen
the universities as producers of science and tech-
nology. Moreover, business expenditures for research,
in the estimate of this writer, would not be appre-
ee ee
49
ciably diminished by the elimination of opportunities
for claiming patent rights. It is true that in the ab-
sence of patenting, some of the characteristics of
individual research might be revised. Competitive
pressures along product and production cost lines,
that now impel the expansion of industrial research
outlays would, however, continue to be operative.”
(p. 56).
Professor Melman particularly noted also that in 1940,
Charles Kettering testified before the Temporary Na-
tional Economic Committee and acknowledged that the
sheer force of competition in the automobile industry
would probably require General Motors, of which he was
then Vice-President in Charge of Research, to continue
to fully operate its industrial laboratories even if’ there
were no patent laws. Professor Melman further showed
in his investigation that industrial research budgets and
scope of research activities at both the American Tele-
phone and Telegraph Company and the IBM Corporation
were programmed for expansion in the years immediately
subsequent to the antitrust consent degrees entered against
both firms in January 1956, requiring them “to make
available to other firms many thousands of patents as
well as related technical knowledge, either at reasonable
rate of royalty or on a free basis altogether.” (Id. p.
52). Professor Melman suggested that “the growth of
product competition and competition for production cost
reduction, account for the general expansion of the in-
dustrial research activity” (id. p. 53), and keep busi-
nesses under pressure to maintain and expand their re-
search and development activities, regardless of property
rights in information.
The September, 1973 report, “Barriers to Innovation
in Industry: Opportunities for Public Policy Changes”,
prepared for the National Science Foundation by Arthur
D. Little, Inc. and Industrial Research Institute, Inc.
expresses the view that “innovation is impeded by two
ACh TM TE NE GEE NIALL IG PILE LEN IE LE’ LIE LAEE ELDRED LEME LOLOL LP OLEOLEL LEO AGS SEO RES
50 4
types of barriers which are related to financial matters”
(p. 20)—(1) lack of funds for development, new plant
facilities and start up and (2) uncertainty about payout
on invested funds. It indicates that the ideas proposed
by the participants in the study—consisting of a carefully
structured sample of twenty-four firms, covering a num-
ber of industrial sectors (p. 2)—suggested that the fi-
nancial barriers to innovation might best be alleviated
by one or more of (a) specially negotiated depreciation
allowances, b) income tax reduction and (c) cost. sharing
on major developmental costs. Importantly, none of the
firms suggested the use of decreased patentability stand-
ards or increased trade secret “property” protection as
the solution to promoting investment in research and de-
velopment.*
Comparison of this study with previous testimony be-
fore the Senate Patent, Trademark and Copyright Sub-
committee (supra, p. 48) and the arguments of peti-
tioners’ amici here suggests that patent lawyers gen-
erally are inclined to express concern that strict observ-
ance of the exacting statutory criteria for patentable
invention will adversely affect the level of investment in
research and. development; corporation executives who are
not patent-oriented have no such fear.*
84 This study does show that the participants expressed concern
about the numerous invalid patent grants, the high incidence of
trivial “nuisance” patents, the non-exclusive licensing of govern-
ment-held patents to industry and the ambiguity of the status of
exclusive “field of use” licensing of patents. (Id. p. 19).
85 Proof that the concern has no substance resides also in the
fact that technologies in which no patents have been permitted
have progressed as well or better than those where they have—e.g.
computer programming and sexually reproduced plants «(where no
“ patents were permitted until the 1971 adoption of 84 Stat. 1558,
§ 131, the Plant Variety Protection Act).
ASTER TN PRL R ITE ORME OS EME OLEATE PITT NE ILL T TL ERE STEIN FI IIT IR GF INTE SIS NS BES
a
51
: CONCLUSION
The decision below is in all respects correct and should
be affirmed. .
/s/ MARY HELEN SEARS
EDWARD §. IRONS
1801 K Street, N.W.
Washington, D. C. 20006
TEE Ay SE ML ES
dire
PLOTTER PER TO ELF PoE Soe ————
APPENDIX
Qe HRM YYMEOT Be ee eee 2A
<*
la
THE CONSTITUTION
ARTICLE 1
SECTION 8, CLAUSES 3 AND 8
The Congress shall have Power...
To regulate Commerce with foreign Nations, and among
the several States, and with the Indian Tribes;
* . * a
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 Dis-
coveries ;
-_ * . *
ARTICLE VI, CLAUSE 2
a a . *
This Constitution, and the Laws of the United States
which shall be made in Pursuance thereof; and all Treaties
made, or which shall be made, under the Authority of the
United States, shall be the supreme Law of the Land; and
the Judges in every State shall be bound thereby, any
Thing in the Constitution or Laws of any State to the
Contrary notwithstanding.
AMENDMENT V
Rights of Accused in Criminal Proceedings
No person shall be held to answer for a capital, or
otherwise infamous crime, unless on a presentment or in-
dictment of a Grand Jury, except in cases arising in the
land or naval forces, or in the Militia, when in actual
service in time of War or public danger; nor shall any
person be subject for the same offense to be twice put in
2a
jeopardy of life or limb, nor shall be compelled in any
criminal case to be a witness against himself, nor be
deprived of life, liberty, or property, without due process
of law; nor shall private property be taken for public use,
without just compensation.
AMENDMENT IX
The enumeration in the Constitution, of certain rights,
shall not be construed to deny or disparage others retained
by the people.
AMENDMENT X
The powers not delegated to the United States by the
Constitution, nor prohibited by it to the States, are re-
served to the States respectively, or to the people.
AMENDMENT XIV
SECTION 1
All persons born or naturalized in the United States,
and subject to the jurisdiction thereof, are citizens of the
United States and of the State wherein they reside. No
State shall make or enforce any law which shall abridge
the privileges or immunities of citizens of the United
States; nor shall any State deprive any person of life,
liberty, or property, without due process of law; nor deny
to any person within its jurisdiction the equal protection
of the laws.
So e J 2
SECTION 5
The Congress shall have power to enforce, by appro-
priate legislation, the provisions of this article.
3a
TITLE 35, U.S. CODE
$101. Inventions patentable
Whoever invents or discovers any new and useful proc-
ess, 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.
$102. Conditions for patentability; novelty and loss of
right to patent
A person shall be entitled to a patent unless—
(b) the invention was patented or described in a
printed publication in this or a foreign country or in pub-
lic use or on sale in.this country, more than one year prior
to the date of the application for patent in the United
a eae
= = = *
4a
THE CONSTITUTIONAL STANDARD
OF INWENTION—
THE TOUCHSTONE FOR PATENT REFORM
[Written pursuant to invitation of the University of Utah
Law Review and shortly to be published therein]
By: Edward S. Irons
Mary Helen Sears
December, 1973
5a
I. INTRODUCTION
Strong historical evidence, as well as often overlooked
legislative and judicial precedents of long standing, and
the totality of the Constitution itself, read in context, sup-
port the view that Congress lacks power to promulgate
patent legislation for protection of alleged inventions of a
nature such as to have arisen in the normal progression
of the application and practice of ordinary skill in the
art at the time they were made.
II. THE CONSTITUTIONAL PATENT CLAUSE
PER SE
On its face, the constitutional patent clause authorizes
Congress to grant exclusive rights to “inventors” only for
a limited purpose—“to promote progress of science and
useful arts.” *
1 The clause in question—Article I, Section 8, clause 8—provides
that “The Congress shall have Power . . . to promote Progress of
Science and useful Arts, by securing for limited times to Authors
and Inventors the exclusive right to their respective Writings and
Discoveries”.
Some writers have argued that this patent clause must be con-
strued as a “balanced sentence” in which “science” is equated to
“knowledge” and hence relates only to the power to protect the
“writings” of “authors”, while the patent power is confined to “dis-
coveries” in the “useful arts”. The argument is, in the main, a re-
action to Mr. Justice Douglas’ observation in Great A&P Tea Co.
v. Supermarket Equipment Corp., 340 U.S. 147, 156 (1951), that
“(t]he Constitution never sanctioned the patenting of gadgets.
Patents serve a higher end—the advancement of science.’ Its
footless character is perhaps best exposed by reference to Section
3 of the Patent Act of 1793, a statute essentially contemporaneous
with the Constitution, which provides, inter alia, for a “written
description” of any invention sought to be patented “and of the
manner of using ... in such full, clear and exact terms as to...
enable any person skilled in the art or science of which it is a branch
or of which it is most nearly connected to make . . . and use the
same... .” (1 Stat. 318 §3). The same language appears in the
Act of 1836, 5 Stat. 117 § 6.
[Footnote continued on page 6a]
ODS OAR
. 6a
Because patents may be granted only for that limited
purpose, Congress may not indiscriminately provide for an.
award of exclusive rights in every “discovery” which hu-
man enterprise might unearth. Certain limits upon con-
gressional power are well understood and have found
virtually universal acceptance from the time of our very
first federal patent statute in 1790.
For example, it is well settled that Congress could not
constitutionally promulgate legislation conferring exclu-
sive patent rights upon discoverers of subject matter not
“new”. Similarly, abstract thoughts and theories includ-
ing mechanical and scientific principles and laws of nature,
though constituting “discoveries” of the most fundamental
sort, are not within the scope of congressional prerogative
under the patent clause of the Constitution because ex-
clusive appropriation, even for a limited period, would
rob the public of access to elemental building blocks of
creative thought and thereby stifle “progress in science
and useful arts”.* Consonant with these principles, every
1[ Continued ]
Nor is there substance to the further argument that, by asserting
patentable inventions ought to “push back the frontiers of chem-
istry, physics and the like”, Justices Black and Douglas in A&P,
supra, postulated “an impossibly high standard of invention” ad-
vanced, inter alia, by Lutz in “The Constitution v. The Supreme
Court Re Patents For Inventions”, 13 U. of Pittsburgh L. R. 449
(1952). ‘Any realist must acknowledge that the level of ordinary
skill in technology at the time of the A&P case encompassed ad-
vanced concepts of “chemistry, physics and the like’—and has
progressed to even more advanced ones today. As said in Graham
v. John Deere Co., 383 U.S. 1, 19 (1966), “[t]he ambit of applicable
art in given fields of science has widened by disciplines unheard of
half a century ago. .. . He who seeks to build a better mousetrap
today has a long path to tread before reaching the Patent Office.”
It seems inescapable, moreover, that this constantly advancing level
of ordinary skill in the art is at least one important part of the
“progress” which the Constitution ordained that Congress should
have power to promote by the promulgation of a patent system.
See infra pp. 40a-4la.
2 Were this not so, the realm of theory and abstract truth would
soon be occupied by a relatively few monoplists and the community
Ta
patent statute enacted by Congress under the Constitution
has been careful to define the inventions for which patents
might be granted as products or processes (i.e. “arts’’)
which are both new and useful.*
It is likewise settled, consistent with every patent stat-
ute so far enacted, that under the Constitution, the patent
at large would be precluded from creative enterprise and endeavor.
Phillips, The Law of Patents for Inventions, 97-98, 109-111 (1837) ;
Curtis, A Treatise on the Law of Patents for Useful Inventions in
the United States of America, 1st ed. (1849), 3, 56-63, 4th ed.
(1873) 2, 156, 187; Robinson, The Law of Patents for Useful In-
ventions (1890) 190-198.
The Court has so recognized in at least LeRoy v. Tatham, 55 U.S.
156, 174-75 (1852); O’Reilly v. Morse, 56 U.S. 62, 112-113 (1853);
Burr v. Duryee, 68 U.S. 531 (1864); DeForest Radio Co. v. General
Electric Co., 283 U.S. 664, 685-86 (1931) ; Mackay Radio & Tel Co.
v. Radio Corp. of America, 306 U.S. 86, 94 (1939); Funk Bros. Seed
Co. v. Kalo Inoculant Co., 333 U.S. 127, 130 (1948). See also
Corning V. Burden, 56 U.S. 282 (1853); Fuller v. Yentzer, 94 U.S.
288 (1877); Cochrane v. Deener, 94 U.S. 780, 787-88 (1877);-
Tilghman Vv. Proctor, 102 U.S. 708 (1881) ; New Process Fermenta-
tion Co. Vv. Maus, 122 U.S. 413, 427-28 (1887); The Telephone
Cases, 126 U.S. 1, 533 (1888) ; Risdon Iron & Locomotive Works v.
Medart, 158 U.S. 68, 76 (1895); Westinghouse v. Boyden Power
Brake Co., 167 U.S. 537 (1898); Busch v. Jones, 184 U.S. 598
(1902); Expanded Metal Co. v. Bradford, 214 U.S. 366, 381-5
(1909).
Most recently this fundamental limitation has been recognized
and again implemented in Gottschalk v. Benson, 409 U.S. 63 (1972).
3 Specifically, the Act of 1790, Section 1, defined that subject
matter for which patents could be granted as “any useful art, manu-
facture, engine, machine, or device, or any improvement therein
not before known or used... .” The language was slightly amended
in Section 1 of the Act of 1793 to refer to “any new. and useful
art, machine, manufacture, or composition of matter, or any new
and useful improvement in any art, machine, manufacture, or com-
position of matter. ...” That language essentially unchanged was
carried forward into Section 6 of the Act of 1836 and Section 24
of the Act of 1870. The latter, as R.S. 4886 (1874), remained in
force to the adoption in 1952 of the present 35 U.S.C. 101 in
which the word “process” has been substituted for the former
word “art” with, according to the pertinent reviser’s note, no change
in meaning.
te
8a
right must be confined to a limited time,‘ must be an
exclusive right,> and may be secured only to inventors”.*
The Supreme Court affirmatively in words, and Con-
gress implicitly by its actions, have consistently discerned
and given effect to a further constitutional requirement
that an alleged invention, to merit patent protection, must
exhibit a character which transcends that attributable to
the exercise of ordinary skill in the art and, within its
time frame, displays real ingenuity and creativity. The
Court has often called this a requirement for “invention”
explaining that if the subject matter sought to be patented
is such that it would have naturally developed incident to
the exercise of ordinary skill in the art—i.e. in the normal
pursuit of the related trade or calling—then the work is
that of a mechanic or other ordinary artisan and not that
of an inventor.’
‘The actual span of the limited time—i.e. the term of the patent
grant—has varied somewhat over the years from 1790 to the pres-
ent. At some periods the statutes have also permitted renewal for a
further limited time beyond the initial term of the grant. In no
case, however, was a grant in perpetuity authorized. Detailed dis-
cussion of this parameter of the patent power is outside the ambit
of this paper.
5 Questions have been raised as to whether statutory compulsory
licensing or working provisions would, if adopted, transgress the
exclusivity of the patent right in derogation of the Constitution.
Such questions, and exhaustive review of the scope of the right
afforded under various patent statutes are outside the scope of
this paper. Suffice it to say that under statutes in effect up to 1952,
patents granted an exclusive right to make, use and sell the patented
invention in the United States while since then, pursuant to 35
U.S.C. 154, the grant has been of “the right to exclude others from
making, using or selling” the patented invention in this country.
®The broad question of what constitutes an “inventor” under
the Constitution and its subsumed question—raised- by various
legislation proposed since 1966, including bills now pending—of
whether assignees may constitutionally apply for patents is outside
the scope of this paper, but will be treated in depth in a later paper.
7 See, e.g., Phillips v. Detroit, 111 U.S. 604, 607 (1884):
“. . . It is plain therefore that the improvement described in
the patent was within the mental reach of anyone skilled in
9a
: (
Ili. THE REQUIREMENT FOR INVENTION
IN THIS COUNTRY
Congress early gave effect to the requirement, albeit
without attempting to define its metes and bounds. Thus,
the patent statutes in the periods from 1790-1793 and
again from 1836-1952 specified that a patent might be
granted even on concededly new and useful subject matter
only if the examining body * deemed it to be “sufficiently
- useful and important”.®
In the time span between 1793 and 1836 when a patent
registration system was in effect and the adjudication of
the patent right left solely to the courts, the controlling
patent act in Section 2 thereof contained a specific limita-
tion “that simply changing the form or the proportion of
any machine, or composition of matter, in any degree shall
not be deemed a discovery”."’ This particular provision
was explicated by Phillips in 1837 as a “construction
[which] would undoubtedly have been put upon the law
without any such express exception”. As Phillips teaches:
“.. . It is indeed but the branch of a more general
rule in giving a construction to the law, namely, that
any change or modification of a machine or other
patentable subject, which would be obvious to every
person acquainted with the use of it, and which makes
no material alteration in the mode and principles of
its operation, and by which no material addition is
made, is not a ground for claiming a patent. To per-
the art to which the patent relates, and did not require in-
vention to devise it, but only the use of ordinary judgment
and mechanical skill. It involves merely the skill of the work-
man and not the genius of the inventor... .”
8In 1790-1793, this “body” was the Patent Board of which
Thomas Jefferson was a member; from and after 1836, it was the
Patent Office.
® See 1 Stat. 109 §1; 5 Stat. 117 § 7; 16 Stat. 198 § 31; R.S. 4893.
1 1 Stat. 318 § 2.
10a
mit a formal, trivial change in an article to be
patentable, or a reconstruction of it upon substan-
tially the same principles, with unimportant differ-
ences in form or proportions, would defeat the bene-
ficial operation of the statute and in effect repeal
Sicsca
The present patent statute, enacted in 1952, recites the
condition that “a patent may not be obtained .. . if the
differences between the subject matter sought to be pat-
ented and the prior art are such that the subject matter
as.a whole would have been obvious at the time the inven-
tion was made to a person having ordinary skill in the art
to which said subject matter pertains.” As phrased, the
statute simply expresses the same requirement for “in-
vention” that the Court had long recognized the Constitu-
tion to require—and the Court has clearly so held in
Graham v. John Deere Co., 383 U.S. 1 (1966) and Ander-
son’s Black-Rock v. Pavement Salvage Co., 396 U.S. 57
(1969) .¥
In so stating, the Court was not, as some writers er-
roneously assert,'' making a startling or novel declaration
11 Phillips, “The Law of Patents For Inventions”, (1837) Section
XII, pp. 125-26. Consistent with Phillips, the Supreme Court in
Reckendorfer v. Faber, 92 U.S. 347, 354 (1876), emphasized that
“(pjrcof that there is no invention or discovery strikes at the root
of the whole claim. The patent is based on an affirmative fact of
which this is the direct negative. Jt needed no statute to aid or
justify this defense.” To the same general effect are Brown v.
Piper, 91 U.S. 44 (1875) ; Mahn v. Harwood, 112 U.S. 354 (1884);
and Slawson v. Grand Street R. R. Co., 107 U.S. 649, 652 (1883).
12 35 U.S.C. 103.
13 The Court itself in Peasce v. Mulford, 102 U.S. 112, 118 (1880),
had similarly characterized the requirement for invention saying,
“i]t must involve something more than what is obvious to persons
skilled in the art to which it relates.”
14 F..g. Kimball, “An Analysis of Recent Supreme Court Asser-
tions Regarding a Constitutional Standard of Invention”, 1 APLA
Quarterly Journal 204 (1973).
lla
of constitutional law. Per contra, the Court had as early
as 1885 decreed that the Constitution requires subject
matter, to be patentable, to transcend the ordinary level
of skill in the art.’
Moreover, the Court’s view that the “requirement for
invention” is constitutionally ordained was foreshadowed
in its early patent decisions. For example, in Pennock v.
Dialogue, 27 U.S. 1, 19 (1829), the inventor’s work was
denominated as “genius”, consistent with established par-
lance of centuries in which “genius” had a meaning be-
yond that of ordinary skill. In Pennock, moreover, the
primary public purpose of our patent system was first
emphasized by the Court."* This primary public purpose
15 See Thompson v. Boisselier, 114 U.S. 1, 11 (1885), in which
the Court stated:
“|. This court, however, has repeatedly held that, under the
Constitution and the Acts of Congress, a person, to be entitled
to a patent, must have invented or discovered some new and
‘useful art, machine, manufacture or composition of matter,
or some new and useful improvement thereof, and that ‘it is
not enough that a thing shall be new, in the sense that in the
shape or form in which it is produced it shall not have been
before known, and that it shall be useful, but it must, under
the Constitution, and the Statute, amount to an invention or
discovery.’ ” .
To the same effect, in Hollister v. Benedict *Mfg. Co., 113 U.S.
59, 73 (1885), the Court, in finding an alleged invention unpatent-
able, stated:
“_. It is but the display of the expected skill of the calling,
and involves only the exercise of the ordinary faculties of
réasoning upon the materials supplied by a special knowledge,
and the facility of manipulation which results from its habitual
and intelligent practice; and is in no sense the creative work
of that inventive faculty which it is the purpose of the Consti-
tution and the patent laws to encourage and reward.”
See also, Hill v. Wooster, 132 U.S. 693, 700 (1890) ; Cuno Engi-
neering Corp. v. Automatic Devices Corp., 314 U.S. 84, 91 (1941);
and the much maligned, but obviously correct, concurring opinion
of Justice Douglas in A&P, supra, note 1, p. 4a, 340 U.S. 156.
16 Specifically, the Court said:
“ .. While one great object [of our patent laws] was, by hold-
. PRM NT TIDES ENR PAC BY TNR RE RAR TY TGF AL EN
LSAT NOR
—
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te ORE aL R ada
12a
was further explicated four years later in Shaw v. Cooper,
32 U.S. 290, 318 (1833), as follows:
“The patent law was @esigned for the public bene-
fit as well as for the benefit of inventors. For a val-
uable invention, the public, on the inventor’s com-
plying with certain conditions, give him for a limited
period the profits arising from the sale of the thing
invented. This holds out an inducemefft for the exer-
cise of genius and skill in making discoveries which
may be useful to society, and profitable to the dis-
coverer. But it was not the intention of this law to
take from the public that of which they were fairly
in possession.
“In the progress of society, the range of discoveries
in the mechanic arts, in science,’ and in all things
which promote the public convenience, as a matter of
course, Will be enlarged. This results from the aggre-
gation of mind and the diversity of talents and pur-
suits, which exist in every intelligent community.
And it would be extremely impolitic to retard or em-
barrass this advance, by withdrawing from the public
any useful invention or art, and making it a subject
of private monopoly. Against this consequence, the
Legislature have carefully guarded in the laws they
have passed on the subject.”
ing out a reasonable reward to inventors, and giving them an
exclusive right to their — for a limited period, to
stimulate the efforts of genius; The main object was ‘to pro-
mote the progress of science and the useful arts;’. . .”
This constitutionally-mandated primary public purpose of the patent
system has been repeatedly emphasized by the Court, inter alia, in
Kendall v. Winsor, 62 U.S. 322 (1859); Motion Picture Patents Co.
v. Universal Film Mfg. Co., 243 U.S. 502 (1917); Mercoid Corp. v.
Mid-Continent Invest. Co., 320 U.S. 661 (1944); Lear vy. Adkins,
395 U.S. 653 (1969); and most recently, Blonder-Tongue Labora-
tories, Inc. v. University of Illinois Foundation, 402 U.S. 3138
(1971).
17 See note 1, supra. The 1833 Court, like Justices Black and
Douglas, understood that the Constitution authorized a patent
system to promote both “science” and the useful arts.
13a
Notwithstanding the clarity and consistency of the
. Court’s pronouncements, many patent practitioners, espe-
cially over the last twenty-five to thirty years, have en-
gaged in vigorous challenge’to the “requirement for inven-
tion’’,** insisting that it lacks historical or constitutional
18 At least one segment of the patent bar professes an inability to
understand the ‘requirement for invention” because of its alleged
imprecision. See, inter alia, Rich, “Congressional Intent—Or, Who
Wrote the Patent Act of 1952”, Patent Procurement and Exploita-
tion, pp. 61-78 (1963); Rich, “The Principles of Patentability”, 28
George Washington L.R. 393 (1960); Rich, “The Vague Concept of
‘Invention’ As Replaced By Section 103 of the 1952 Act”, 8 Jdea
136 (1964).
The same group also professes to discern a different and more
precise meaning in the requirement of 35 U.S.Q 103 for “non-
obviousness”, despite the Supreme Court’s contrary holding in
Graham, supra, note 1, and Anderson's Black-Rock, supra, p. 10a.
Even without the Court’s ruling, however, the controversy be-
tween “invention” and “nonobviousness” would appear to be a
purely semantic one. The Court in Graham, supra, said that “[t]he
emphasis on nonobviousness is one of inquiry, not quality [as with
“invention” ], and, as such, comports with the constitutional stric-
tures (383 U.S. at 17), emphasizing that this did not change the
test. Thus, “. . . it bears repeating that we find no change in the
general strictness with which the overall test is to be applied... .
The standard has remained invariable in this Court.” (383 U.S. at
19).
Under any label, this standard is equally objective with, and
no more imprecise than, that of the “ordinary reasonable man” so
prominent in the law of torts. In Graham, the Court also com-
mented that the difficulties of applying the test “are comparable
to those encountered daily by the courts in such frames as negli-
’ gence and scienter, and should be amenable to a case-by-case de-
velopment”. (383 U.S. at 18). Dispassionately viewed, it seems clear
that the alleged imprecision is more often the result of application
or misapplication of the standard to specific factual situations in
particular cases, or the consequence of lifting a portion of the
language of a decision out of context, than it is of any true variance
or incomprehensibility in the standard itself. Other seeming fluctu-
ations in the staxidard of invention are not that at all, but are
attributable tothe continuing rise in the level of ordinary skill in
the art, which necessarily disqualifies from present patent pro-
tection many alleged inventions which would have been, or were,
eligible to be patented at an earlier period when the level of ordinary
skill was much lower. See note 1, supra.
l4a
' imperative and hence that Congress may change its focus
or even obviate it at will.’
In general, the challengers have ignored or failed to
appreciate the need to read the Patent Clause in context
with the balance of the Constitution or*have overlooked
significant aspects of relevant European and American
history.
IV. EUROPEAN ANTECEDENTS
Numerous writers have traced iri detail the emergence
of patent systems in England and on the Continent.*’ It is
generally acknowledged that the term “patents” was origi-
nally generic to exclusive privileges of various kinds, in-
cluding patents for true inventions, importation franchises
and even monopolies on old products.”
Initially patents were granted randomly and individ-
ually by special law or grant rather than pursuant to an
established administrative or statutory scheme.
19 See, e.g., Lutz, supra, note 1; Kimball, supra, note 14; Fox,
“Monopolies and Patents” (1947); Siedel, “The Constitution And A
Standard of Patentability”, 48 J. Pat. Off. Soc’y 5 (1966) ; Posnack,
“The Continued Erosion of Our Patent System”, 52 J. Pat. Off.
Soc’y 255 (1970).
20 See, inter alia, Mandich, “Venetian Patents”, 30 J. Pat. Off.
Soc’y 166 (1948); Frederico, “Origin and Early History of Pat-
ents”, 11 J. Pat. Off. Soc’y 292 (1927); Bugbee, “Genesis of
American Patent and Copyright Law”, Washington Public Affairs
Press (1967), pp. 12-48; Fox, “Monopolies and Patents”, Toronto
(1947), pp. 19-189; see also, Prager. “A History of Intellectual
Property from 1545 to 1787”, 26 J. Pat. Off. Soc’y 711 (1944);
Prager, ““The Early Growth and Influence of Intellectual Property”,
34 J. Pat. Off. Soc’y 196 (1952).
21 Some specific examples of different kinds of exclusive privi-
leges granted in the Italian city states and in England before 1500
and, later, on the Continent in countries other than Italy, appear,
inter alia, in Bugbee, supra, note 20; Federico, supra, note 20; and
the two Prager articles, supra, note 20.
22 There is some evidence of the existence of a Venetian patent
law in the early part of the 15th Century specifically directed to-
15a
The system of granting exclusive rights to individuals,
whether for an invention per se or the importation of a
new product,** seems to have gained headway in medieval
times as an inducement to encourage foreign craftsmen to
settle in a particular country and teach new technology
to its subjects. Absent such an inducement, foreign crafts-
men would have been precluded by existing local guild
monopolies from practicing any aspects of their arts in a
new country.*
The guild monopolies were of ancient origin, having
evolved from the Third Century when Roman emperors
utilized the sale of monepoly concessions in industry and
trade as revenue-raising measures.** By the Middle Ages
ward inventions in the field of machines and processes for speed-
ing up and improving silk making. See Prager, “The Early Growth
and Influence of Intellectual Property”, supra, note 20, at pp. 130-
31. The City-State of Venice certainly pioneered in the establish-
ment of a formal patent system as evidenced by the statute adopted
in 1474 discussed infra, p. 17a.
23 For many years, the word “invention” embraced importations.
See note 29, infra. For clarity it is utilized herein in its modern
sense to refer only to original creations.
24 For example, Edward III in the Thirteenth Century encouraged
such new industries as the manufacture of worsted cloth from wool
by a patent to Flemish immigrants. As late as the time of Eliza-
beth I, for€ign workmen experienced in various aspects of the art of
glassmaking were granted patents as an inducement to relocation
in England and teaching of these arts to English subjects.
25 Monopoly practices of the Roman emperors in the 3rd and 4th
Centuries resulted in heavy oppression of the common people, and
consequently in so much internal agitation and strife, that Zeno,
Emperor of the Eastern Roman Empire, in 483 outlawed some exist- ©
ing and all future monopoly awards. The same statute was later in-
cluded by Justinian I in his Code. See Mund,, “Monopoly—A
History and Theory”, Princeton University Press (1932) at 6-7.
The Roman law, however, permitted many established com-
mercial monopolies to subsist throughout and these monopolies in
the form of guilds survived the fall of Rome—perhaps because of
their relative stability in the chaotic political situation which fol-
lowed. Mund points out that during the Middle Ages up to at
l6a
these guilds had complete economic control of every aspect
of commerce and the arts. They regulated strictly
every aspect of price, cost and manufacture, as well as
worker education and security. They were empowered to
enforce their broad subject matter monopolies rigorously
within their geographic ambits inter alia by arbitrary
search of non-members’ premises and peremptory confisca-
tion of unauthorized goods. The guilds were, in general,
not interested in promoting technological progress, whether
through introduction of new inventions or otherwise. The
impetus within the guilds was instead for economic stabili-
zation and stagnation, inter alia, by suppression and re-
straint of inventions that infringed or might infringe
guild monopolies.*
It seems indisputable that as originally conceived, pat-
ents, whether for inventions or for importations, had a
triple purpose: first, to encourage new manufactures in
the realm, thereby promoting commerce; second, to edu-
cate the interested people of the realm in new technology,
thereby raising the level of their ordinary skill and pro-
moting further inventions; and third, to afford inventors a
right, otherwise belonging only to the guilds, to profit by
commercial practice of their inventions. The guilds, as
repositories of and autocrats over technology reflecting the
least the 12th Century, the term “monopoly” was not applied to the
guilds or the equally monopolistic agricultural manors even though
it certainly fit both. (Jd. at pp. 8-10).
26 Like all generalities this one had its exceptions, many of which
are pointed out in the books by Bugbee and Fox, supra, note 20.
It is a matter of historical record, however, that the guilds often
brought to bear very heavy pressures to restrain technological
progress. For example, reference is made by Frederico, supra,
note 20, at 298, to the refusal in England in the reign of Elizabeth
I.of a patent on a stocking knitting machine characterized as “one
of the most original and striking inventions of the age’ because
of guild objections that many would be forced out of work if the
machine were put into use. See also, Fox, supra, note 20, at 74.
17a
prevailing level of ordinary skill in the art, particularly
opposed the grant of individual monopolies—i.e. “patents”
—either for new inventions or newly imported manufac-
tures where the effect was to inhibit guild members in the
exercise of the ordinary skills of which they were already
in possession.**
The formal patent statute adopted by the Venetian Re-
public in 1474 is consistent with these principles. While
affirmatively recognizing the need to encourage the work
of “men of great genius apt to invent and discover ingeni-
ous devices”, it was careful to preserve the rights of the
guilds and minimize the invasion of their prerogatives by
requiring that the exclusive patent right be limited to a
term of ten years and be awarded only for “any new and
ingenious device .. . not previously made in our Common-
wealth .. . reduced to perfection so that it can be used
and operated.” **
27 Sir Edward Coke defined monopoly as “an institution or
allowance by the King, by his grant, commission, or otherwise, to
any person or persons, bodies politic or corporate; of or for the
sole buying, selling, making, working or using anything; whereby
any person or persons, bodies politic or corporate, are sought to be
restrained of any freedom or liberty that they had before, or
hindered in their lawful trade”. Institutes of the Laws of England
(London 1797), III, p. 181 (¢. 85); III (1669 ed.) Chap. LXXV,
p. 181.
Of course, the people in Medieval and Renaissance Europe, in-
cluding England, had very little real “freedom or liberty” at any
time “before” the guilds and similar collective monopolies, such as
agricultural manors, were established. Virtually every man had
some “lawful trade” within the framework of the guild or manor.
however; hence, “monopoly” repugnant to its pursuit was con-
sidered “‘odious”’.
°s The full text of this Venetian statute is reproduced in Bugbee,
supra, note 20 at pp. 22-23. Bugbee acknowledges in a footnote the
existence of a different translation of the same statute in Frumkin,
“The Early History of Patents for Invention”, LVIV (1947-48),
p. 27. The critical wording of the original Italian “nuovo et
ingegnoso artificio” is also reproduced by Prager in “The Early
Growth and Influence of Intellectual Property’, supra, note 20 at
p. 139.
PNR NAR ae a ee Se he te oe
18a
Pursuant to the statute, the General Welfare Board of
the City of Venice engaged in an actual inspection (“expe-
rientia”) of each alleged invention in operation before any
patent was awarded. It is important that the Venetian
statute could have provided for the award of patent rights
on the basis of a device that was simply “new”; the fact
that it did not do so reflects the recognition in Venetian
society of a need to balance the guilds’ interest in protect-
ing their members’ continued right to the full exercise of
ordinary judgment and skill in the art with the realm’s
desire to encourage both commercial and intellectual prog-
ress and its resolution—to reward only inventions exhibit-
ing ingenuity above the level of ordinary skill in the art.*°
The English patent system, which evolved concurrently
with that of Venice over several centuries from approxi-
mately the time of Edward III, was parallel in many re-
2° It is important to recognize that as of 1474 there was no way
in which new technology could’be communicated to the public unless
the article or process: involved were put into practical use in com-
mercial channels. The art of printing was then in its earliest in-
fancy, and published material was expensive and scarce. Besides,
writers of that era did not concern themselves with subjects so
mundane as technology.
It was several centuries before the idea of a written specification
describing the invention such as United States patent law has
always required (vide present 35 U.S.C. 112) was even a feasible
alternative, as disclosure of an invention, to the actual construc-
tion or practice of the alleged invention in commerce. The connec-
tidn between the unavailability of publications disclosing new tech-
nology up to the 18th Century or even later and the early practice
in England and on the Continent of classifying importers as “in-
ventors” has been recognized, inter alia, by Prager in “Standards of
Patentable Inventions from 1474 to 1952”, 20 U. Chicago L.R. 69
(1952) and-in “A History of Intellectual Property from 1545 to
1787”, supra, note 20 at p. 139. In the former work, Prager empha-
sized “[t]hat early English practice identified importers with
inventors does not show any lack of interest in the merits of the
items invented or imported. It only shows that, before the advent
of technical instruction in print, disclosure of new technology re-
quired actual commercial introduction and use.” (p. 71).
19a
spects to that of Venice, even though not governed by
any formal statutory or .4dministrative practice until
much later than that established pursuant to the 1474
Venetian statute. Patents came particularly into promi-
nence during the reign of Elizabeth I who utilized them
not only as a tool for promoting commercial and intellec-
tual progress, but also as an instrument of royal favor—a
circumstance which led to numerous abuses because of
indiscriminate award of monopolies in old commodities
ranging from such relative frivolities as playing cards to
such necessities as salt.*° The validity of patents in this
period, however, was within the province of the English
courts. These courts applied criteria essentially the same
as those mandated by the Venetian statute of 1474 and
those now demanded by our Constitution.
Thus, history records that prior to the 1624 Statute of
Monopolies, English courts regularly invalidated patents
granted for subject matter admittedly novel, but well
within the prevailing level of ordinary skill of the art.
In one such case, Matthey’s Patent, granted in 1571 for
a particular type of knife handle, was challenged by the
cutlers’ guild on the ground that “they did use to make
knives before, though not with such hafts, that such a
light difference or invention should be no cause to restrain
them... .”*' This resulted in a decision that “he [ Mat-
they] could never have benefit of his patent although he
labored very greatly therein.”
Another such case involved Hasting’s Patent for a cer-
tain kind of cloth, granted in 1569, but refused enforce-
ment against a guild which demonstrated that its mem-
30 See especially Fox, supra, note 20.
31 See Prager, “Standards of Patentable Invention From 1474 to
1952”, supra, note 29 at pp. 71-72. The same patent case is also
mentioned by Frederico, supra, note 20 at p. 297, but the inventor
“Matthey” is referred to as “Richard Matthew”.
_ ne
20a
bers had, prior to the patent, made cloth “very like to”
(albeit not the same as) that covered by the patent.*
Still another case involved Bircot’s Patent, apparently
granted prior to 1600," which was for a new method of
smelting. It resulted in a court decree of invalidity based
on evidence from which it was concluded that the subject
matter disclosed “was but to put a new button to an old
coat, and it is much easier to add than to invent.” ** These
early English cases are particularly remarkable in at least
two respects. In the first place, the apparently spontane-
ous selection of a standard of invention above the ordinary
level of skill in the art independently of the same selection
in Venice is persuasive evidence of a recognition that
society could not function satisfactorily if patents were
granted which interfered with the normal exercise by the
guilds of ordinary judgment and skill in their respective
arts. In the second place, the essentiality of this require-
ment to the proper functioning of society is the more
marked in view of the fact that these cases were decided
prior to 1624 when the Statute of Monopolies was enacted
and hence at a time when the right of the Crown to grant
patents arbitrarily and even capriciously enjoyed full
sway.**
32 See Prager, id. at p. 72; see also Hulme, “History of the Patent
System”, 12 Law Quarterly Review 141, 149-50 (1896).
33 Prager, id. at p. 72, says that this case was reported in the
Institutes of Sir Edward Coke first published shortly after 1600.
34 The quotation is from 1 Web. Pat. Cases 31, note (p) (1844).
35 The abuses of the patent power by the Crown prior to the
Statute of Monopolies are well known and have been extensively
documented by many writers, including Bugbee and Fox, supra,
note 20. It is important to recognize that the Statute curbed only
some monopolies. It left intact not only patents for inventions (in-
cluding importations) but also “patents”, charters, and franchises
previously granted which conveyed exclusive trading and manu-
facturing privileges to guilds, corporations and similar groups. The
monopolies abolished by the statute, albeit constituting the ones at
that time most bitterly resented by the common people, constituted a
2la
After the adoption of the Statute of Monopolies, the
English courts continued to require inventive merit as a
prerequisite to the enforcement of patents. In particular,
the principle of Bircot’s Patent that “it is much easier to
add than to invent” was so strictly observed that English
courts for many years refused to give effect to “improve-
ment” patents, taking the position that only so-called
“basic manufactures” could exhibit sufficient ingenuity to
constitute invention and hence merit exclusive patent
protection.*
relatively narrow class of “patents” granted to royal favorites on
old commodities such as salt and playing cards (supra, p. 19a).
It is also of interest that the statutory abolition of the Crown’s
power to grant arbitrary “patent” monopolies was initially more
formal than real and that the actual grant of such “odious”
monopolies by the Crown continued for about 50 years after 1624
and gave rise to intense internal strife, including a brief civil war.
36 According to Prager, “Standards of Patentable Inventions
From 1474 to 1952”, supra, note 29 at p. 72, this was the position
of the English courts up to the 1776 case of Morris v. Bransom
when a more lenient view of “inventive merit” was adopted. The
first Supreme Court patent case, Evans v. Eaton, 16 U.S. 454 (1818),
established that, while improvement patents could be given effect
in this country, it was incumbent on their inventors to clearly
delineate the extent of the improvement and distinguish it from
the thing improved. See also in this regard, the later decisions about
the same patent in the same and a related case—to wit, Evans Vv.
Eaton, 20 U.S. 356 (1822), and Evans v. Hettich, 20 U.S. 453
(1822). .
The failure of the English system to examine for “inventive
merit” prior to the grant of a patent persisted from before the
time of Elizabeth I to 1949 when a statute—the Patents and Designs
Act (1949) §14(1)—was adopted which required the British
Patent Office and, implicitly, its adjunct appellate courts, to deal
with questions of invention raised by third parties in opposition
to we grant of a patent. Even today, however, there is no ex
parte examination by the British Patent Office for “invention”,
though lack of inventive merit remains a ground for invalidation of
patents in the British courts. See generally, Meinhardt, “Inventions
Patents and Monopoly”, London, 1946 at p. 45.
22a
V. AMERICAN COLONIAL ANTECEDENTS
The colonization of the United States was initiated es-
sentially contemporaneous with the 1624 Statute of Mo-
nopolies ** and at a time during which economic regimen-
tation in England was at an exceptionally high level. As
one writer has put it:
“The economic system of restriction and regulation
reached its peak in England during the seventeenth
century. Most of the old restraints persisted and
with the growth of trade many new ones developed.
The corporate towns and guilds continued to restrict
the admission of new members and became, in the
words of a contemporary writer, ‘oppressive oligar-
chies, excluding or discouraging the English subjects
from trading in our great
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