Kewanee Oil Co. v. Bicron Corp.

Background

Harshaw Chemical, a company that developed methods to grow large sodium‑iodide crystals, claimed that certain processes and techniques were trade secrets. Several former Harshaw employees left and joined a rival, Bicron, which soon produced similar large crystals. Harshaw sued in federal court under Ohio trade secret law and obtained a permanent injunction against the ex‑employees and Bicron for using twenty of the claimed secrets. The Sixth Circuit agreed the facts supported misappropriation but held Ohio law was preempted by federal patent laws because the processes could have been patented but were used commercially for over a year.

Reasoning

The Supreme Court reviewed whether federal patent law prevents States from enforcing trade secret protection. The Court said Congress’s power to grant patents does not automatically bar state protection. It analyzed trade secrets in three categories—nonpatentable, doubtfully patentable, and clearly patentable—and concluded that trade secret law does not meaningfully interfere with the patent system’s goals of encouraging disclosure. Because trade secret protection is weaker and does not remove matter from the public domain, the Court held Ohio’s trade secret law is not preempted and reversed the Sixth Circuit.

Real world impact

The decision allows states to continue protecting confidential business information and to enjoin former employees and competitors who misappropriate trade secrets. Businesses may still choose secrecy instead of patents, but the Court found no substantial risk that this will undermine patent disclosure. The ruling restores the district court’s injunction against Bicron and the ex‑employees.

Dissents or concurrances

Justice Marshall agreed with the outcome but worried trade secret protection often discourages patenting; Justice Douglas dissented, arguing the decision conflicts with prior cases protecting the public domain.