Be Careful What You Wish for: Trade Secrets and the America Invents Act

Abstract

In 1974, numerous businesses and practicing lawyers anxiously awaited the decision of the U.S. Supreme Court in Kewanee v. Bicron Oil Corp. At issue was whether the preemption principles that had been announced ten-years earlier in the famous Sears/Compco cases would be applied to preempt state trade secret law. A collective sigh of relief was heard among the business community and practicing bar when the U.S Supreme Court ruled that state trade secret law was not preempted by U.S. patent law. Since that time, it has been assumed that trade secret law and patent law can co-exist. This paper examines whether this assumption is still accurate in light of the adoption of the Leahy-Smith America Invents Act (the AIA) and the changes it has wrought to patentable information that is held in secrecy. More broadly, it explores the impact of the AIA on trade secret law and practice.

Before the adoption of the AIA, businesses arguably faced a clearer choice between trade secret protection and patent protection because secret uses of putative trade secret information would count as prior art for purposes of determining the patent-ability of an invention. The classic case that illustrates this principle involves oil drilling technology. Although the invention was not visible to passers-by because it was used underground, the open and non-secretive performance of drilling operations within the United States met the “known and used” limitation of prior art that served to invalidate the plaintiff’s patent. This language no longer exists in the AIA, raising the issue whether it can still be assumed that most inventors will choose patent protection over trade secret protection when it is available.

Although many argue that the intent of the AIA was not to change longstanding principles that defined "prior art" (except to broaden it to include foreign art), others take the position that the definition of prior art has been narrowed in some respects, particular with respect to so-called "secret prior art." Regardless of which position one takes, however, the AIA introduced new terminology to the definition of prior art that has yet to be defined by the courts; namely, the use of the words "disclosure" and "public disclosure" in new section 102. From a trade secret perspective, this new language raises the issue of whether trade secrecy will be easier to lose, particularly if the definitions of disclosure and public disclosure are broadly defined. From a patent perspective, the question is whether the sharing and licensing of trade secret information triggers the one year grace period in which to file a patent application.

Keywords: patent, trade secret, novelty, prior art, AIA, America Invents Act, preemption, disclosure