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In sputum, hermenn, the eettion currently afforded inpatented RAYA he later maks of moouragement of invention and baby born of oneptive ders, Intent by removing protection buna gerst kombon, the result would be less, rather that MAAN, BRAGA 11 hexion had been afforded no protection in Lear ha wań nava, mad the option of either keeping his idea secret until a Tutash, ionad og divbring the idea to the world gratuitously. Absent ********* in philanthropic inventors, such a situation is Ekely to Any Aboue until the often lengthy process of patent application W mg/at/** Moreover, the protection of early disclosure on a limited sale enables an inventor to recover the development costs of his ingentium and continue his experimentation. The self-employed inventor, In particular, mit spend considerable sums of money in developing his idea. The beansing of his as-yet-unpatented ideas allows the inventor to gain money and better equipment with which to continue his waarch At the same time, such licensing allows the competitive use

W 14 at 4. The court here did not decide whether an inventor, having made #reland angustion could be compensated for his disclosure before the patent J 144. Judes Midley did not raise the important issue of whether wware of trade secrete which never can be patented, ie. customer lists, could ***** Phyllis fm dirbaure of these secrets. The decision here implies that even Budrukte desiing with this type of trade secret could not be protected by state lew This implication would undermine the entire area of trade secrets.

# Depot of the President's Commission on the Patent System at 2-3 (1966). #1 $5 4/94 $154 (1964).

** The process of patent application usually runs over two years. See text ***mpanying notes 14 19 infra In Lear, Adkins' patent was issued five years after his initial application.

of the Inventor's ideas without waiting for a completed patent applica tion. Thus the protection afforded by state trade secret and contract law enables earlier disclosure of competitive ideas, albeit on a more limited basis than under the patent sy fem. The position that federal patent policy should overrule any state protection of unpatented ideas also ignores the fact that many valuable competitive ideas may not come within the ambit of the patent system33 or may not warrant a seventeen year monopoly under the statute, yet still merit some protection. These considerations suggest that state law, where it does not directly conflict with the federal patent system, can serve a complementary function in encouraging the development and disco are of competitive ideas. Also if trade secrets were no longer afforded protection, stealing and breach of trust would be encouraged. Thus a person could steal another's secret without having to worry about being punished civilly under state law because the present trade secret law could no longer be used to prosecute him. If license agreements calling for the payment of royalties for unpatented ideas were struck down, the impact could casily be avoided by the inventor selling his invention rather than licensing it. Surely the Court would not interfere with a person's right to make a bona fide sale of his own property.

Perhaps out of the recognition of the practical consequences of upsetting state law regarding trade secrets, state and lower federal courts have generally given Stiffel and Compco a restrictive interpretation, and those instances where courts have followed the Supreme Court's broad language seem to indicate the practical limits of the Stiffel and Compco doctrine.35 The key factor in the two decisions seems not to have been the fact that protection was given to unpatented products, but rather the type of protection which was given. The Illi

38 See note 19 supra.

34 In Servo Corp. of America v. General Elec. Co., 337 F.2d 716 (4th Cir. 1964), cert. denied, 383 U.S. 934 (1966), Servo charged GE with acts of unfair competition in copying techniques and methods developed by Servo which GE had obtained through employees of Servo. The court granted Servo relief under the theory of unjust enrichment. Id. at 725. In stating that trade secrets need not be covered by patents, the court distinguished this case from Stiffel and Compco on the grounds that confidential relationships were involved. The presence of confidential relationships was also held controlling in Schulenburg v. Signatrol, Inc., 33 Ill. 2d 379, 212 N.E.2d 865 (1965), cert. denied, 383 U.S. 959 (1966). The court in holding Stiffel and Compco inapposite concluded that they do not cover a situation of industrial espionage. Id. at 386, 212 N.E.2d at 869. In other cases, courts have adopted Stiffel in theory, but protected trade secrets on other grounds. E.g., Winston Research Corp. v. Minnesota Mining & Mfg. Co., 350 F.2d 134 (9th Cir. 1965). See Doerfer, supra note 24, at 1452-53. But see Van Prods. Co. v. General Welding & Fabricating Co., 419 Pa. 248, 270, 213 A.2d 769, 781 (1965) (Cohen, J., concurring).

85 In Titelock Carpet Strip Co. v. Klasner, 142 U.S.P.Q. 405 (Cal. Super. Ct. 1964), the defendant, a former employee of the plaintiff, deceptively gained access to plaintiff's place of business and obtained parts of plaintiff's machine which he copied in almost every detail. Holding that it was without power to restrict copying, the state court held that plaintiff must rely upon federal patent law for such protection.

* The ydesk system was not tovazet to extend an inventor's common law Aida, et key to be a new and Allerent right Early derisions recognized that we want serped a property right in his invention and that he was free by glinya bas manadian secretly. Caited States v. Drinker Condenser Corp, 289 US 17%, 184 (1909). Indeed, because the common law placed no restrictions gem perihew of an berdim which had become public knowledge, an inventor *** ford to vary wis woksdum secret if he wished to profit from it. R. Ela, Vaiana hangjaarde und Licenses † 4 (24 ed, 1943). The patent system developed se an intentive to inventors to disclose their inventions to the public. In return the moritur subred a ngit of exclusion under a patent monopoly. The patent laws did not rarguire that an invention be submitted for patenting, and patents ware wian gelerred to as contracts between the government and inventor in which the inventor exchanged full disclosure of his invention for a patent. Id. But these trattons, sales would appear to encroach upon the federal area inly when they presumed to grant the "exclusive right” which the Constitution ampergers Congress to grant. US Const. art. 1, } 8, el. 8. State protection, more than the grant of monopoly power obtainable only under federal law, seems to have been envisioned at the time of the adoption of the patent system.

* Las Tresce, Patent Policy and Preemption: The Stiffel and Compco Cases, #U CM L. May. 80, 96 (1964); Note, The Stifel Doctrine and the Law of Trade Secrets, 67 Nw UL. Rev. 956, 973 (1968),

forcement of contracts licensing umpatented inventions, Justice Black, Joined by Chief Justice Warren and Justice Douglas, argued that one who makes a discovery has the option of beeping it secret, but that when the secret is disclosed under a contractual arrangement, the patent laws are violated:TM" Unless Stiflet and Compoo are read broadly, however, to require that all inventions find protection under the federal statute or go unprotected," the state protection involved in Lear is distinguishable from that in the earlier cases. The enforcement of contractual arrangements such as that between Lear and Adkins is not equivalent to the grant of a patent monopoly by the state. Although Adkins had the right to royalties from Lear, he gained no rights against third parties because anyone who discovered the secret invention by lawful means was free to use it. Under trade secret law, the inventor was only afforded protection against people who unlawfully discovered the secret. When the gyroscope was used competitively by Lear, other competitors were free to copy it without restriction.

Because neither the protection in Lear, nor the protection given to trade secrets generally, amounts to the monopoly protection which can be granted under the federal patent system, such state protection should not be construed as in conflict with it. Despite the Painton decision,11 Lear should not be construed to work any major changes in the protection currently afforded unpatented secret ideas. Trade secrets must be given continued state protection. The climination of state protection for unpatented devices would have a great impact on present industrial practices. Forty per cent of the patented inventions commercially used were put into use before patent applications were filed. Fifty per cent were put into use while the application was pending and only 10 per cent after the issuance of the patent. Corporations generally file for 50 per cent or less of the patentable inventions developed by their employees."

Since the elimination of licensee estoppel will enable a greater number of challenges to patents, particularly if Lear is applied retroactively, the practical consequences of Lear may be as important

45

39 395 US. at 677 (Black, J., dissenting in part).

40 See note 37 supra.

41 No. 68 Civ. 3834 (S.D.N.Y., Feb. 4, 1970). See note 27 supra and accompanying text.

4 Sanders, Speedy Entry of Patented Inventions Into Commercial Use, 6 PT.C.J. Res. & Ed. 87 (1962).

43 Id.

44 Id. at 114.

45 Retroactive application of Lear is of importance to existing license agreements that both have and do not have clauses preventing the licensee from challenging the validity of the licensed patent. The issue of retroactive application when such a clause exists has been raised and decided in Kearney & Trecker Corp. v. Giddings & Lewis, Inc., 164 U.S.P.Q. 173 (E.D. Wis. 1969). Here all of plaintiff's license agreements contained clauses preventing the licensees from challenging the validity of the licensed patents. This type of clause prior to Lear had been held valid. Automatic Radio Mfg. Co. v. Hazeltine Research, Inc., 339 U.S. 827 (1950). The court in Kearney faced the issue of whether this clause provides

se the loyal, uertends d hat cupruleord. The Säbely in se tuts will under som ryðal gestarts in the enstag beral system for test og face validty--the conduct between the procedures exé by the Patine (Permband the courts for determining the varity of patents. The wish morama” ty rate of patents in the nevynte have leve a NASA JOM KRen by you only your Bien 1595 and 1963, 57.4 per cent of the patents contested in the courts of appeals we 17.4"MALA se

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a basis for an antitrust violation or misuse defense. The court concluded this newášky; ! clause did not minyky a basis for retroactively Ending an antitrust visible, a vridna wike if found would have concluded a misuse of the patent. The decision represent, sound reasoning on this phase of retroactive application. Lear densad be applied to all license agreements presently in existence. If a cause such as je Kearney exists, this clause shou be declared without any effect. Failure to cancel these causes should not enable the licensee to automatically raise a misuse derick. Any bormore unvier any existing license agreement should now be able to Chalenge the varity of the licensed patent.

The Supreme Court has granted certiorari in a case where 1 issue is Whether the vize nation of Boenset estoppel should be applied retroactively. Stasdard Indus, Inc. v. Tigrett Indus, Inc., cert. granted, 396 US. 885 (1969). Retroactivity is neither prohibited nor required Linkletter v. Wilker, 381 US. 618, 629 (1966); Great N. Ry. v. Sunburst Oil & Ref. Co., 287 US. 358, 364 (1912). To determine when a case should be retroactively applied, one must look at the purpose of the overrung decision, the relance placed on past decisions and the posude burden on the administration of justice. Johnson v. New Jersey, 384 US 719, 727 (1968); Linkletter v. Walker, supra at 627; United States ex rel Angelet v. Boy, 333 P2d 12, 20-21 (2d Cir. 1964), aff'd, 381 U.S. 654 (1965). The purpose of overruling liccusée estoppel was to prevent invalid patents from being much a mongolies. This purpose would be most effectively implemented if Lear were suplied both retroactively and prospectively. This retroactive applicative would not be too harmful since the demise of licensee estoppel had been wat rigsted and the doctrine had been riddled with exceptions. See notes 12-13 supra. Tha mhance on this rule would not be sufficient to bar it from being retroutantly applied. There would be no way in which to estimate the burden of retroactive application on judicial administration, but the effects of eliminating inyaad monegudes should outweigh any possible burdens on the courts. Finally, the Court in Lear implied that its decision would be applied retroactively. 395 CS at 474 #15

49 Comment, 34 UMKCL. Rev. 393, 401 (1966). For figures on the number of patents held invalid between 1948 and 1954 in all of the federal courts see Hearings on $. Ms. 92 Before the Subcomm. on Patents, Trademarks and Copy. rights of the Senate Comm, on the Judiciary, 84th Cong., 1st Sess., 106, at 177-79 (1956). These figures correlate with the 1953 through 1963 figures. 47 5. kep, No. 1202, 86th Cong, 2d Sess. 22 (1960).

48 Report of the President's Commission on the Patent System at 2 (1966). 49 14.