Kewanee Oil Company, through its Harshaw Chemical division, developed valuable proprietary methods and know-how for growing large, high-quality thallium-activated sodium iodide crystals used in scintillation detectors for radiation measurement. These processes, techniques, and controls (including parameters for crystal growth, handling, and quality control) were kept secret through comprehensive measures: restricted access to facilities, confidentiality policies, non-disclosure agreements with employees, and compartmentalization of information. Several key employees with intimate knowledge of these processes resigned from Kewanee and soon helped form Bicron Corporation, which began producing competing scintillation crystals. Kewanee sued in state-law trade secret misappropriation, seeking to enjoin Bicron's use of the alleged secrets. Bicron defended in part by arguing that the trade secrets concerned subject matter that could have been patented, and that state trade secret law was preempted by federal patent policy under the Supremacy Clause. The lower courts split over the extent to which Ohio trade secret law could validly protect information that was not patented; the case reached the Supreme Court on the question of federal preemption.
Does federal patent law preempt state trade secret law that protects against the unauthorized use or disclosure of unpatented, potentially patentable information obtained through breaches of confidence or other improper means?
Federal patent law does not preempt state trade secret law so long as the state law (1) protects only secret information against improper acquisition, use, or disclosure (e.g., through breach of confidence or other wrongful conduct), (2) permits reverse engineering and independent discovery, and (3) does not prohibit copying or use of information that is publicly available or in the public domain. In this posture, state trade secret protection does not conflict with the objectives of the patent system and is therefore not preempted.
No. State trade secret law, as exemplified by Ohio's common law of trade secrets, is not preempted by federal patent law. Because trade secret law protects only secret information from misappropriation and allows reverse engineering and independent discovery, it does not frustrate the federal patent system's goal of encouraging disclosure of inventions and does not confer patent-like protection over publicly available ideas.
The Court rejected both field and conflict preemption. First, Congress did not occupy the entire field of intellectual property to the exclusion of all state regulation; rather, the patent system coexists with other forms of protection, such as trade secret law, that serve different functions. Citing prior precedent, the Court explained that the Constitution's Patent Clause does not, by its own force, foreclose all state regulation touching on ideas and information. Second, there was no conflict preemption because Ohio trade secret law does not obstruct the objectives of the federal patent scheme. Patent law grants a time-limited exclusive right as a quid pro quo for public disclosure, thereby facilitating the spread of technical knowledge. By contrast, trade secret law safeguards commercially valuable information only so long as it remains secret, and only against improper means of acquisition or breach of duty; it leaves the public free to copy what is publicly known and to discover the same information independently or by reverse engineering. As a result, state trade secret law does not remove information from the public domain or bar legitimate competitive practices; it only deters wrongful takings and enforces standards of commercial ethics. The Court distinguished Sears and Compco, where state unfair competition laws were used to bar copying of unpatented, publicly available designs, effectively creating patent-like exclusivity. That kind of prohibition conflicted with the federal policy that unpatented ideas in the public domain may be freely copied. Trade secret law, however, is narrower: it confers no rights against the world and ceases once the information becomes public. The Court also addressed the concern that permitting trade secret protection for patentable inventions would deter inventors from seeking patents and thus reduce disclosure. It concluded that any impact on the decision to patent was minimal for two reasons: many inventions cannot practically be kept secret once marketed, and for those that can, firms would often rely on secrecy with or without state remedies; the availability of trade secret law primarily deters breaches of confidence rather than altering the patent calculus in a way that undermines federal objectives. Accordingly, the Court held that Ohio trade secret law complements, rather than conflicts with, federal patent policy.
Kewanee is the cornerstone of modern trade secret preemption doctrine. It establishes that state trade secret regimes—when limited to preventing misappropriation of confidential information and permitting reverse engineering and independent discovery—operate in harmony with the federal patent system. The decision reassures innovators that they may choose between patenting and secrecy without rendering state remedies constitutionally suspect, and it cabins the broader preemption language of Sears and Compco to situations where states confer patent-like exclusivity over publicly available subject matter. Kewanee informs later decisions, including Bonito Boats, which invalidated a state law barring reverse engineering precisely because it conflicted with the principles Kewanee approved. For law students, the case provides the analytical framework for evaluating preemption across IP regimes: identify the federal objective, assess whether the state law removes material from the public domain or bars legitimate copying, and determine whether the state interest (e.g., commercial ethics and investment in R&D) complements federal policy.
Kewanee Oil Co. v. Bicron Corp. affirms the constitutional space for state trade secret protection alongside the federal patent regime. By drawing a careful line between legitimate state interests—deterring breaches of confidence and promoting investment in innovation—and the patent system's commitment to preserving the public's right to copy unpatented, publicly available ideas, the Court ensured complementary incentives rather than conflicting mandates.