is often unable to check the potion met adequately,5" mod due to the numerous patent grants the check of poor art becomes increasingly more difficult. Examiners formerly were instructed to resolve all reasonable doubts in favor of the applicant," but applicants may appeal an examiner's rejection.52

The procedures utilized by the courts to determine patent valchty differ in several ways from those employed by the Patent Office. The courts which handle the appeals from Patent Office rejections face a disadvantage in that the published case law is confined to tho e droisions in which the examiner's rejection has been overruled; there is no disclosure of the court decisions upholding administrative rejections.” The weight given on appeal to a Patent Office decision denying a patent varies depending upon the court which reviews the decision, The Patent Office decision is presumed correct in the district court and the court of appeals in the District of Columbia, but not in the Court of Customs and Patent Appeals. The courts are also unclear on whether certain elements of patent validity are questions of law or fact, and the Supreme Court has given differing answers. There is no agreement about the precise definition of the statutory requirements of novelty and nonobviousness. The lack of a uniform and consistent approach to patent validity has resulted in a patent being held valid by one court and invalid by another.50

50 Stedman, The US. Patent System and its Current Problems, 42 Texas I.. Rev. 450, 463-64 (1964).

51 Report of the President's Commission on the Patent System at 22 (1966). 52 The applicant can appeal to the Board of Appeals, 35 U.S.C. § 134 (1964). From here an applicant has a choice of appeals. He can appeal either to the Court of Customs and Patent Appeals, id. § 141, or to the United States District Court for the District of Columbia, id. § 145.

63 See Graham v. John Deere Co., 383 U.S. 1 (1966).

54 Doerfer, supra note 24, at 1444.

Report of the President's Commission on the Patent System at 26 (1966). 50 For a discussion of this law-fact controversy see Comment, Appellate Review of Determinations of Patentable Inventions, 29 U. Chi. L. Rev. 185 (1961). 67 Compare Keyes v. Grant, 118 U.S. 25, 37 (1886) with Graham v. John Deere Co., 383 U.S. 1, 17 (1966).

58 For a discussion of how courts apply different standards in interpreting invention see Kitch, Graham v. John Deere Co.: New Standards for Patents, 1966 Sup. Ct. Rev. 293; Note, The Impact of the Supreme Court Section 103 Cases on the Standard of Patentability in the Lower Federal Courts, 35 Geo. Wash. L. Rev. 818 (1967); Comment, 34 Geo. Wash. L. Rev. 802 (1966); Comment, 31 Mo. L. Rev. 553 (1966); Comment, 44 Texas L. Rev. 1405 (1966); Comment, 34 U.M.K.C.L. Rev. 393 (1966).

50 See, e.g., Graham v. John Deere Co., 333 F.2d 529 (8th Cir. 1964), aff'd, 383 U.S. 1 (1966). The same patent held invalid by the Eighth Circuit was found valid by the Fifth Circuit in 1957, Jeoffroy Mfg., Inc. v. Graham, 219 F.2d 511 (5th Cir.), cert. denied, 350 U.S. 826 (1955). See also Bradley v. Great Atl. & Pac. Tea Co., 78 F. Supp. 388 (E.D. Mich. 1948), aff'd sub nom. Great Atl. & Pac. Tea Co. v. Supermarket Equip. Corp., 179 F.2d 636 (6th Cir.), rev'd, 340 U.S. 147 (1950) (a patent upheld by 2 courts was found invalid by the Supreme Court).

There has been no basic change in the patent laws since 1836. A presidential commission on patents was formed and it made numerous recommendations for altering the patent laws." So far, none of these suggestions have been implemented. Due to problems similar to those facing the United States Patent Office, including ever increasing numbers of patent applications with resulting backlogs and difficulty in checking, prior art, several foreign countries have recently made sweep ing changes in their patent systems." Three possible changes in the system would alleviate the present uncertainty surrounding patent litigation. If a claim rejected by an examiner and the Patent Office Board of Appeals could not be reversed unless clearly erroneous," Patent Office decisions would be vested with greater finality and the temptation to litigate patent validity, now increased with the abolition of licensee estoppel, would be significantly limited. A more far-reaching change would be the establishment of a special court composed of experts to review patent validity cases. A third change might be the incorporation of adversary procedures into the disposition of patent applications, as is currently done in several European countries." In those countries, notice is given of an examiner's acceptance of an application, and interested persons may oppose the final grant within

64

60 Report of the President's Commission on the Patent System at 1 (1966). 01 Id.

62 In Germany, due to a 5 year delay in the processing of patent applications, a law was enacted in 1967 which generally reorganized their patent system. Hollman, The German Patent Examining Procedure, 51 J. Pat. Off. Soc'y 4 (1969). No major changes had been made prior to this since 1877. Id. Japan in 1960, and France in 1968 have also drastically altered their patent laws to keep pace with changing industrial conditions. See Hiance & Plasseraud, The New French Patent Law, 50 J. Pat. Off. Soc'y 209 (1968); Jarkovsky, A Comparative Review of Japanese and U.S. Patent and Related Laws, 50 J. Pat. Off. Soc'y 76 (1968). Some of the major changes in these systems are limitations on amending patent applications, opposition proceedings, an increase in personnel, reorganization of examining procedures and the elimination of chemical substances from patent protection-a procedure which greatly reduces the number of patent applications. For a summary of recent changes in foreign patent systems see Gambrell, Kayton & Trucano, Patent Law, 1969-70 Ann. Survey Am. L. 139.

63 The law currently provides that patents are presumed valid and places the burden of showing invalidity on the challenging party. 35 U.S.C. § 282 (Supp. IV, 1969). However, this standard does not seem to have greatly hindered those parties contesting patent validity. See text accompanying note 46 supra. The main difficulty in instituting the clearly erroneous rule would be compelling the courts to adhere to such a rule. Courts easily could find many ways to circumvent this type of rule.

64 The use of a special court was discussed in Harris, A Dual Patent Program: To Increase Patent Reliability and Decrease Litigation Costs, 13 Idea 1 (1969).

For a brief discussion of these opposition proceedings see Harris & Weiser, Informed Foreign Experience and the Opinion on Provisions Similar to Commission Recommendations, 12 Idea 1021 (1968); Stuart-Prince, Patent Oppositions in Great Britain, 40 J. Pat. Off. Soc'y 769 (1958); Reichel & Frishauf, Opposition Proceedings in the German Patent Office in the Light of the Sixth Transfer Law, 44 J. Pat. Off. Soc'y 52 (1962).

a limited time. If there is no opposition, then a patent is issued. Under This system, secrecy is maintained for those applications rejected by the examiners.

ด

Greater public disclosure of unpatented ideas could be achieved by the establishment of a utility law similar to that used by Germany, Japan and Italy." The utility system provides protection for subject matter of slight novelty or ideas which would not merit regular patent protection. These utility products would receive monopoly status for only a limited time, such as three years. The system would involve smaller fees and prompter registration than that provided by the patent system, and inventors would be more likely to apply for a utility patent than rely upon state protection. Such new legislation, moreover, seems more appropriate for realizing the goals of the federal patent system than the Court's expansive interpretation of federal policy in Stiffel, Compco and Lear."7

66 See Mott, The Concept of Small Patent in European Legal Systems and Equivalent Protection Under United States Law, 49 U. Va. L. Rev. 232 (1963). 67 Two bills have been introduced into Congress by Senator McClellan which would preserve the right to enter into licensing agreements and also continue to have state law protect trade secrets. S. 2756, 91st Cong., 1st Sess. § 301 (1969); S. 766, 91st Cong., 1st Sess. § 43(a) (3) (1969). Section 301 was proposed as an addition to the new Patent Act, while § 43(a) (3) was part of a proposed Federal Unfair Competition Act. Thus, congressmen seem to be concerned about the continued protection of trade secrets.

The Court's questioning of state protection of contracts involving impatented ideas represents a continuation of an approach begun in two important 1964 decisions, Sears, Roebuck & Co. v. Stiffel Co.,2" and Compen Corp v Day Bright Lighting, Inc." In Stiffle, Stiffle manu factured a pole lamp on which it had received a patent. Sears manu

opportunity to obtain an advantage over competitors who do not know or use it. It may be a formula for a chemical compound, a process of manufacturing, treating or preserving materials, a pattern for a machine or other device, or a list of customers.

Restatement of Torts § 757, at S (1939). There are 2 general classes of trade secrets: industrial and commercial. See Adelman, Trade Secrets and Federal Phe emption The Aftermath of Sems & Compro, 49 J. Pat. Off. Soc'y 713, 725 (1967). Commercial trade secrets include customer lists, sales procedures, market surveys and other business procedures not involved in the production aspects of a company. These secrets cannot be patented. Industrial trade secrets which include secret processes, machines, formulas and designs used in marketing products are the secrets which the patent laws were designed to disclose and protect.

Trade secrets can but do not have to meet the rigid qualifications for patents. Mycalex Corp. v. Pemco Corp., 64 F. Supp. 420, 423 (D. Md. 1946), aff'd, 159 F.2d 907 (4th Cir. 1947); Restatement of Torts § 757, at 6 (1939). Thus the requirements of utility, 35 U.S.C. 101 (1964), novelty, id. § 102, and nonobviousness, id. § 103, do not have to be met. But trade secrets must constitute a commercial advance and be an idea previously unused. A comprehensive comparison of patents with trade secrets is contained in R. Milgrim, Trade Secrets at 8-10 & 8-11 (1967). In order to constitute consideration for a contract relating to a trade secret, the idea must be new to the one to whom it is proffered. Masline v. New York, New Haven & Hartford R.R., 95 Conn. 702, 112 A. 639 (1921); Burwell v. Baltimore & O).R.R., 31 Ohio App. 22, 164 N.E. 434 (Ct. App. 1928). The ability to make contracts involving trade secrets had rarely been questioned before Lear. Even in Lear, the lower courts never questioned the right of either party to make this contract. Adkins v. Lear, Inc., 52 Cal. Rptr. 795 (Dist. Ct. App. 1966), rev'd, 67 Cal. 2d 882, 435 P.2d 321, 64 Cal. Rptr. 545 (1967), rev'd, 395 U.S. 653 (1969). The common law has always given the inventor the right to make, use and sell his invention. Rawlings v. National Molasses Co., 394 F.2d 645 (9th Cir. 1968); Chemical Foundation, Inc. v. General Aniline Works, Inc., 99 F.2d 276 (3d Cir. 1938). The inventor was considered to have an inchoate right of property in an invention which he could sell, assign or otherwise dispose. Mullins Mfg. Co. v. Booth, 125 F.2d 660 (6th Cir. 1942); Cook Pottery Co. v. J.H. Parker & Son, 89 W. Va. 7, 109 S.E. 744 (1921). License agreements made during the pending of a patent application have not been questioned in cases involving contracts similar to that made between Lear and Adkins. American Gage & Mfg. Co. v. Maasdam, 245 F.2d 62 (6th Cir. 1957); Kraus v. General Motors Corp., 120 F.2d 109 (2d Cir. 1941). Similarly, the right to enter into a contract before an application for a patent has been filed has been upheld. Fur Grooving & Shearing Co. v. Turano, 39 F. Supp. 877 (S.D.N.Y. 1941). It has always been assumed that an unpatented invention might be the subject of an enforceable contract for payment of royalties for its use. Young v. Ralston-Purina Co., 88 F.2d 97 (8th Cir. 1937). An agreement to pay royalties prior to the issuance of a patent cannot be repudiated even if the patent proves to be invalid. Myers v. Gerhardt, 344 Ill. 620, 176 N.E. 713 (1931). Liability, consisting of damages and/or injunction, for breach of a license is imposed by the courts. Filtex Corp. v. Amen Atiyeh, 216 F.2d 443 (9th Cir. 1954); Aktiebolaget v. United States, 194 F.2d 145 (D.C. Cir. 1951).

20 376 U.S. 225 (1964). 21 376 U.S. 234 (1964).

factured and sold an exact copy more cheaply. The patent was invali dated by a district court, but Sears was enjoined from copying this lamp under the Illinois unfair competition laws which prohibited the copying of muticles in the public domain Peasoning that competitors had the right under the federal patent laws to copy any product which was not protected by a patent, the Court held for Sears and struck down the statutes as an encroachment upon the federal patent system In deciding the case, however, the Court stated broadly that states could not, even indirectly, “give protection of a kind that clashes with the objectives of the federal patent laws. In Compro, the defendant had marketed lighting fixtures similar to plaintiff's. Using similar rea soning as in Stiffel, the Court once again held that the unfair com petition laws could not be used to prohibit copying of a competitor's unpatented product. These laws could not be wed to defeat the purposes of the patent system.

Stifel and Compco were widely discussed and several commentators interpreted them as placing the entire body of state trade secret law in jeopardy since trade secrets in unpatented ideas and devices. arguably belonged in the public domain, and any protection of them would be in derogation of the patent system." The Court's suggestion in Lear that its decision would require the states to reconsider to what extent, if any, they could properly protect “unpatented secret ideas" thus seems designed to continue, if not increase, the controversy initiated in 1964. The California Supreme Court seems hesitant to reconsider the protection presently afforded unpatented secret ideas; 2o however, one federal district court in Painton & Co. v. "ourns, Inc.,” has recently decided this issue. The district court in agreeing with Justice Black's dissent in Lear concluded that "federal patent law requires an inventor to submit his ideas to the Patent Office before he can compel consideration for the use of his idea." It was decided

22 376 U.S. at 231. See note 35 infra.

23 376 U.S. at 238.

24 See, e.g., Adelman, supra note 19; Doerfer, The Limits on Trade Secret Law Imposed by Federal Patent and Antitrust Supremacy, 80 Harv. L. Rev. 1432 (1967); Peterson, The Legislative Mandate of Sears and Compco: A Plea for a Federal Law of Unfair Competition, 69 Dick. L. Rev. 347 (1965); Note, The Stiffel Doctrine and The Law of Trade Secrets, 62 Nw. U.L. Rev. 956 (1968); Comment, 37 U. Colo. L. Rev. 86 (1964).

25 395 U.S. at 675.

26 See note 10 supra.

27 No. 68 Civ. 3834 (S.D.N.Y., Feb. 4, 1970). This is the second recent case decided by Judge Motley in the Southern District in which the unanswered issue of Lear was raised. In Epstein v. Dennison Mfg. Co., 164 U.S.P.Q. 291 (S.D.N.Y. 1969), the court acknowledged Lear. However, the court, noting that no New York decision after Lear had answered this question, resorted to pre-Lear law to answer the issue before it. Thus, this court initially avoided reconsidering its basis for enforcing the rights of owners of unpatented secret ideas.

28 No. 68 Civ. 3834, at 5-6 (S.D.N.Y., Feb. 4, 1970).