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Kewanee Revisited: Returning to First Principles of Intellectual Property Law to Determine the Issue of Federal Preemption

SHARON K. SANDEEN Hamline University School of Law Marquette Intellectual Property Law Review, Vol. 12, 2008 Abstract: In 1973, the American Bar Association, Section on Patent, Trademark and Copyright faced a dilemma. For more than six years it had worked to develop a uniform law to govern trade secrets. In 1972, its efforts bore fruit when a draft uniform trade secret law was presented to the National Conference of Commissioners of Uniform State Laws. At the time, it was thought that states could regulate in the area of trade secrets without interfering with federal patent policies. With the decision of the Sixth Circuit Court of Appeals in the case of Kewanee Oil v. Bicron, this conclusion was called into question and further consideration of a uniform act was suspended pending clarification from the U.S. Supreme Court or an act of Congress. In 1974, the U.S. Supreme Court provided the needed clarification when it rendered its decision in Kewanee. However, while Kewanee is often cited for the proposition that state trade secret law is not preempted, this broad statement belies five aspects of the decision. First, Kewanee is based upon Ohio's trade secret law. Although the trade secret law of Ohio was found not to be preempted by U.S. patent law, Kewanee is not an endorsement of the trade secret laws of all states. Second, because Kewanee was decided before the enactment of the UTSA, the U.S. Supreme Court has not ruled on the question whether the UTSA is preempted by federal law. Third, Kewanee was decided based upon the Supreme Court's understanding of U.S. patent law in 1974 and does not reflect significant changes in U.S. patent law that have occurred since that time. Fourth, because the Kewanee decision was rendered before the adoption of the 1976 Copyright Act, the Court did not consider whether trade secret law interferes with federal copyright policies. Lastly, the Court failed to appreciate the possibility that an inventor would assert multiple forms of intellectual property protection for the same invention. This article revisits the issues raised in Kewanee in light of the current state of patent, copyright and trade secret law. Although, like the U.S. Supreme Court in Kewanee, it concludes that state trade secret law is not preempted, it criticizes the reasoning of Kewanee and suggests a substitute analysis that is based upon principles of free competition.

Full post as published by The Trade Secrets Vault on March 18, 2008 (boomark / email).