nately, however, the overwhelming majority of trade secret declsions since Scars have refused to be lured off course, noting in their logs that Beurs does not apply to trade secrets," but Sear:' broad conceptual dictum has remained afloat.

C. The Supreme Court Sights the Shoals

If Mr. Adkins had had any notion what he was to be in for when he went to work for Lear, he might have taken up horticulture. At the beginning of the employment (January 1953) Adkins and Lear entered into an agreement which provided that Adkins' new ideas, discoveries and inventions relating to vertical gyros were to be his property and that he would license them to Lear on a mutually satisfactory royalty basis. Soon thereafter, he developed a gyro for which a patent application was filed (February 1954). Some eighteen months later, after long and undoubtedly tedious negotiations, Lear took a license under which it had the right to terminate if a patent was not granted on the substantial claims of the application or if a patent issued but was subsequently held invalid.

From 1954 to 1957 Adkins' patent application was twice rejected and, on the basis of such rejections and its own patent search, Lear notified Adkins that Lear would no longer pay royalties on most of its gyros of the Adkins type. In 1959 Lear ceased making royalty payments to Adkins although it continued to produce the gyros. A year later a patent was finally granted on the design of a gyroscope apparatus-a claim much narrower in scope than those intially sought, but nonetheless covering the Lear gyros.

In the California state court litigation that ensued when Adkins sought back royalties and damages for breach of the license agreement, Lear attempted to raise the invalidity of Adkins' patent as a defense. The trial court, however, and ultimately the California Supreme Court,12 held that the doctrine of

the Federal Rules of Civil Procedure, see Formulabs, Inc. v. Hartley Pen Co., 275 F.2d 52, 56-57 (9th Cir.), cert. denied, 363 U.S. 830 (1960), and (f) property in exchange for which corporate stock may be issued, see Herold v. Herold China & Pottery Co., 257 F. 911, 912-13 (6th Cir. 1919).

It should be kept in mind that in order for a trade secret owner to have legal protection he must meet the difficult burden of proving (a) that the subject matter was a trade secret, (b) that it was disclosed or imparted to the defendant, (c) subject to valid legal restrictions and (d) that the defendant has used or disclosed the trade secret to the owner's detriment. Trade Secrets, supra note 5, § 7.07[1] at text accompanying nn.5-10.

11 See cases cited in Trade Secrets, supra note 5, § 7.08[2][c] n.43.

12 Adkins v. Lear, Inc., 67 Cal. 2d 882, 435 P.2d 321, 64 Cal. Rptr. 554 (1967), rev'd, 395 U.S. 653 (1969).

licensee estoppel precluded such a defense,” The United States Supreme Court renounced the doctrine of patent licensee estoppel in Lear, Inc. v. Adkins,"" and remanded the ease to permit Lear to avoid payment of royalties accruing after issuance of Adkins' patent if Lear could establish patent invalidity.

The only issue before the Supreme Court in Lear www "the [California Supreme] court's reliance upon the doctrine of estoppel to bar Lear from proving that Adkins' ideas were dedicated to the common welfare by federal law." The Court stated that it granted certiorari solely to reconsider the validity of its prior patent estoppel position" "in the light of our recent decisions emphasizing the strong federal policy favoring free competition in ideas which do not merit patent protection." By framing the issue with this sweeping language, did the Court hint it was about to announce that federal policy subjects the owner of any unpatented matter to use or disclosure notwithstanding contractual or confidential restrictions? Not at all. Federal law, even as enunciated in Scars and Compco, merely “requires that all ideas in general circulation be dedicated to the common good unless they are protected by a valid patent." A comforting statement, being at one with trade secret law.20 But, unfortunately, the Court did not leave the matter there.

1921

Instead, it considered Adkins' claim for pre-1960 royalties, which Adkins said were due whether or not his patent was found valid, a position which the Court characterized as "extreme." Despite the Court's earlier clear statement that only the patent estoppel issue was before it,22 the Court went on to state that "[a]t the core of this case, then, is the difficult question whether

13 The doctrine of licensee estoppel forecloses a patent licensee from attacking the validity of his licensor's patent. As to the licensee estoppel portions of the case, see Comment, 45 N.Y.U.L. Rev. 386 (1970).

14 The foregoing facts are those recited by the Court in Adkins v. Lear, Inc., 395 U.S. 653, 657-61 (1969).

15 Id. at 674.

10 395 U.S. at 662. The estoppel issue was question 1 in Lear's Petition for Certiorari at 3, Lear, Inc. v. Adkins, supra, and the sole issue in the Brief for United States as Amicus Curiae at 2, Lear, Inc. v. Adkins, supra. Neither party nor the Amicus raised any issue of trade secrets in the various petitions, replies and briefs before the Court. 395 US. at 682 (White, J., concurring).

17 See, eg, Automatic Radio Mfg. Co. v. Hazeltine Research, Inc., 339 U.S. 827 (1950); Comment, 45 N.Y.U.L. Rev. 386, 387-88 (1970).

18 395 U.S. at 656 (citing Scars and Compco).

19 Id. at 668 (emphasis added). The majority's statement in Lear is a close parallel to Justice Black's characterization of Sears as he enunciated it in Compco. See text accompanying note 35 infra.

20 See Trade Secrets, supra note 5, §2.05.

21 395 U.S. at 672.

22 See text accompanying notes 16-18 supra.

federal patent policy bars a State from enforcing a contract regulating weess to an umpatented secret iden.""" Thus, after striking down licensee estoppel so that a patent licensee would not be liable for patent royalties accruing after the licensee challenges the patent's validity until final adjudication of validity," the Court expressly reserved the more difficult question of

whether, and to what extent, the States may protect the owners of unpatented inventions who are willing to disclose their ideas to Imanufacturers only upon payınent of royalties. . . . Our decision today will, of course, require the state courts to reconsider the theoretical basis of their decisions enforcing the contractual rights of inventors and it is impossible to predict the extent to which this re-evaluation may revolutionize the law of any particular State in this regard. Consequently, . . . even though an important question of federal law underlies this phase of the controversy, we should not now attempt to define... the extent, if any, to which the States may properly act to enforce the contractual rights of inventors of unpatented secret ideas . . . . Indeed, on remand, the California courts may well reconcile the competing demands of patent and contract law in a way which would not warrant further review in this Court.26

As Justice White aptly noted, the Court did not have jurisdiction to raise the foregoing question." Aside from this jurisdictional issue, Justice White questioned the wisdom of disregarding the Court's rule that only "the questions set forth in the petition or fairly comprised therein will be considered by the court."2 Nevertheless, the question has been posed and can be satisfactorily answered under trade secret principles which are consonant with the federal patent scheme.28

D. The Sheep Continue To Leap Over the Stick

29

Oh Justice White's prophetic soul! Enter Judge Motley in Painton & Co. v. Bourns, Inc.2 -a declaratory judgment action brought by Painton, an English licensee, against Bourns, its California licensor of unpatented potentiometer technology. The license agreement between the parties had been terminated by Bourns for the licensee's failure to attain minimum production.

23 395 U.S. at 672.

24 Id. at 673-74.

25 Id. at 674-75. Matter contained in patent applications and not otherwise disclosed or generally known is treated as being in the nature of a trade secret. See Trade Secrets, supra note 5, § 8.02[7].

26 395 U.S. at 678 (concurring opinion).

27 Id. at 681. See U.S. Sup. Ct. Rule 23(1)(c).

28 See text accompanying notes 59-63 infra.

29 309 F. Supp. 271 (S.D.N.Y. 1970), appeal docketed, No. 34959 (2d Cir., June 1, 1970). Argument was heard on February 11, 1971.

The agreement contained no express restriction on Painton's use or disclosure of the licensed technology. Painton argued that after termination it had an unfettered right to use; Bourns, on the other hand, claimed that an implied negative covenant precluded further use.

Cross motions for summary judgment were filed on submitted facts. On the contract issue, Judge Motley held that California law would not supply a negative covenant. As an alternative and on entirely unsolicited (by argument or motion briefs) grounds, Judge Motley held for the licensee:

Our patent policy of strict regulation of inventions would be undercut if inventors could enforce agreements for compensation for alleged secret ideas without being required to submit those ideas to the Patent Office, and, thereby, eventually have the ideas disclosed to the public. Furthermore, patent policy (reaffirmed by the holding in Lear that estoppel will not be a bar to challenging the validity of a patent. . .) which allows compensation only for ideas which rise to the level of invention would be further undermined by the enforcement of such a contract, since compensation would be awarded for non-inventions. And if this court were to hold that before a state could enforce a trade secrets contract, the ideas must be found to be an invention as prescribed by the rigid requirements of federal patent law, inventors would be able to circumvent "the manner in which (inventions] may be protected." [Citing Lear, at 677.] Inventors would be encouraged to avoid filing applications altogether and contract for long licensing arrangements. The severely restricted area which the Supreme Court left open to applicable State law would become a yawning abyss. Fewer patent applications would be made. The Patent Office would soon have a less accurate view of the state of the art in a particular field. And state courts, rather than the Patent Office, would become the initial triers of whether a discovery is an invention.

For these reasons, this court holds 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. The court, however, does not decide whether under California law an inventor, if he makes a patent application, can be compensated for his disclosure before the patent has issued. [Citing Lear, at 676-77.] That question is not before this court.30

In so holding, it is submitted, Judge Motley misconstrued the holding and thrust of Lear and followed, instead, Justice Black's dissent in Lear.31

80 Id. at 274.

31 395 U.S. at 676 (Black, J., Warren, C.J., & Douglas, J., concurring in part and dissenting in part). Since the significant portions of his opinion constitute a dissent, it is referred to in text as such. That Judge Motley relied on Black's opinion was recognized by Painton: "The District Judge in substance abolished the law of trade secrets on th basis of the concurring opinion of Mr. Justice Black in Lear... (she erroneously attributed the concurring opinion to Mr.

P. Black on Black

That dissent purported to reiterate a belief expressed by Justice Black when he wrote the Court's opinions In Sears and Compco:

I still entertain the belief I expressed for the Court in Sears and Compeo that no state has a right to authorize any kind of monopoly on what is claimed to be a new invention, except when a patent has been obtained from the Patent Office under the exacting standards of the patent laws. One who makes a discovery may, of course, keep it secret if he wishes, but private arrangements under which self-styled "inventors" do not keep their discoveries

Justice Douglas .)" Brief for Appellee at 47, Painton & Co. v. Bourns, Inc., 309 F. Supp. 271 (S.D.N.Y. 1970) (reference is to brief on appeal). Since Lear, approximately 30 decisions have considered trade secret issues. With the exception of Painton, not one opinion has found Lear, Sears or Compco impediments to the continued vitality of trade secret principles; relief has been granted or denied on the basis of fundamental trade secret principles. A list of the cases decided since Lear and involving trade secret issues is set forth below. For ready reference, the cases have been divided (somewhat arbitrarily) into five categorics:

1. Trade secret protection granted. E.I. duPont de Nemours & Co. v. Christopher, 431 F.2d 1012 (5th Cir. 1970), cert. denied, 39 U.S.L.W. 3321 (U.S. Jan. 25, 1971); Water Servs., Inc. v. Teseco Chems., Inc., 410 F.2d 163 (5th Cir. 1969); Mixing Equip. Co. v. Philadelphia Gear, Inc., 312 F. Supp. 1269 (E.D. Pa. 1970); Sperry Rand Corp. v. Pentronix, Inc., 311 F. Supp. 910 (E.D. Pa. 1970); Raybestos-Manhattan, Inc. v. Rowland, 310 F. Supp. 993 (D.S.C. 1969) (recognizing trade secret status of pending patent application); Homes v. Thew Shovel Co., 305 F. Supp. 139 (N.D. Ohio 1969) (patent application); Heathbath Corp. v. Ifkovits, 117 Ill. App. 2d 158, 254 N.E.2d 139 (1969); Carboline Co. v. Jarboe, 454 S.W.2d 540 (Mo. Sup. Ct. 1970); Glass Laboratories, Inc. v. Crystal, 165 U.S.P.Q. 647 (N.J. Super. Ct. 1970).

2. Subject matter held not to be a trade secret. Cataphote Corp. v. Hudson, 422 F.2d 1290 (5th Cir. 1970); Midland-Ross Corp. v. Sunbeam Equip. Corp., 316 F. Supp. 171 (W.D. Pa. 1970); Cudahy Co. v. American Laboratories, Inc., 313 F. Supp. 1399 (D. Neb. 1970); Central Specialties Co. v. Schaeffer, 165 U.S.P.Q. 15 (N.D. II. 1970); G.T.I. Corp. v. Calhoon, 309 F. Supp. 762 (S.D. Ohio 1969).

3. Absence of contractual or implied legal restriction on use or disclosure. Chemithron Corp. v. Procter & Gamble Co., 427 F.2d 893 (4th Cir. 1970); Bendix Corp. v. Balax, Inc., 421 F.2d 809 (7th Cir. 1970); Shatterproof Glass Corp. v. Guardian Glass Co., 168 U.S.P.Q. 212 (E.D. Mich. 1970); Superior Testers, Inc. v. Damco Testers, Inc., 315 F. Supp. 934 (E.D. La. 1970); Gallo v. Norris Dispensers, Inc., 315 F. Supp. 38 (E.D. Mo. 1970); Thomson Mach. Co. v. LaRose, 306 F. Supp. 681 (E.D. La. 1969); Bimba Mfg. Co. v. Starz Cylinder Co., 119 Ill. App. 2d 251, 256 N.E.2d 357 (1969); J.T. Healy & Son, Inc. v. James A. Murphy & Son, Inc., 260 N.E.2d 723 (Mass. 1970).

4. Submission of ideas. Joseph Bancroft & Sons, Inc. v. M. Lowenstein & Sons, Inc., 167 U.S.P.Q. 137 (D. Del. 1970); Epstein v. Dennison Mfg. Co., 314 F. Supp. 116 (S.D.N.Y. 1969) (Motley, J.); Flemming v. Ronson Corp., 107 N.J. Super. 311, 258 A.2d 153 (1969). As to submission of ideas generally, see M. Nimmer, Copyright, ch. 15 (1963); Trade Secrets, supra note 5, § 8.03.

5. Miscellaneous. Varo, Inc. v. Corbin Mfg. Co., 168 U.S.P.Q. 95 (E.D. Pa. 1970) (burden of proof); Struthers Scientific & Int'l Corp. v. General Foods Corp., 314 F. Supp. 313 (D. Del. 1970) (discovery).