U.S. Supreme Court Kewanee Oil Co. v. Bicron Corp., 416
U.S. 470 (1974) Kewanee Oil Co. v. Bicron
Corp. No. 73-187 Argued January 9,
1974 Decided May 13, 1974 416
U.S. 470 CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE SIXTH
CIRCUIT Syllabus Harshaw Chemical Co., an unincorporated division of petitioner,
over a period of years, developed certain processes in the growth
and encapsulation of synthetic crystals and purification of raw
materials, some of which processes were considered to be trade
secrets; it eventually succeeded for the first time in growing a
17-inch crystal of a type useful in the detection of ionizing
radiation. The individual respondents, former employees of Harshaw
who. while working there. had signed agreements not to disclose
trade secrets obtained as employees, formed or later joined
respondent Bicron Corp., which competed with Harshaw in producing
crystals; Bicron, soon after its formation, also grew a 17-inch
crystal. Petitioner brought this diversity action seeking
injunctive relief and damages for misappropriation of trade
secrets. The District Court, applying Ohio trade secret law,
granted a permanent injunction. The Court of Appeals reversed on
the ground that Ohio's trade secret law conflicted with the federal
patent laws. Held: Ohio's trade secret law is not preempted by the
federal patent laws. Pp. 416 U. S.
474 -493.

															(a) The States are not forbidden to protect the kinds of
intellectual property that may make up the subject matter of trade
secrets; just as the States may exercise regulatory power over
writings, Goldstein v. California, 412 U.
S. 546 , so may they regulate with respect to
discoveries, the only limitation being that regulation in the area
of patents and copyrights must not conflict with the operation of
federal laws in this area. Pp. 416 U. S.
478 -479.

															(b) Abolition of trade secret protection would not result in
increased disclosure to the public of discoveries in the area of
nonpatentable subject matter, and the public would not be benefited
by disclosure of such discoveries. Pp. 416 U. S. 482 483.

															(c) The federal patent policy of encouraging invention is not
disturbed by the existence of another form of incentive to
invention such as trade secret protection, and, in this respect,
the two systems are not in conflict. P. 416 U. S.
484 .

															(d) Nor is the patent policy that matter once in the public
domain must remain there incompatible with the existence of trade
secret protection. P. 416 U. S.
484 . Page 416 U. S. 471 (e) Nor is there any conflict between trade secret law and the
patent policy of disclosure whether a trade secret concerning
patentable subject matter is in the category of discovery which is
(1) clearly unpatentable, (2) doubtfully patentable, or (3) clearly
patentable. As to the first category, the patent alternative is not
available, and trade secret law will encourage invention and prompt
the innovator to proceed with the discovery and exploitation of his
invention, and to license others to exploit secret processes. As to
the second category, the risk and cost of eventual patent
invalidity may impel the inventor not to seek patent protection
regardless of the existence of trade secret law, and the
encouragement by the elimination of trade secret protection of
patent applications by some with doubtfully patentable inventions
is likely to have a deleterious effect on society and patent
policy. As to the third category, trade secret law, which affords
weaker protection than the patent laws, presents no reasonable risk
of deterrence from patent application. Pp. 416 U. S.
484 -491.

															(f) There being no real possibility that trade secret law will
conflict with federal patent policy, partial preemption as to
clearly patentable inventions would not be appropriate, and could
well unnecessarily burden administration of trade secret law by
States. Pp. 416 U. S.
491 -492.

															478 F.2d 1074, reversed and remanded for reinstatement of
District Court Judgment.

															BURGER, C.J., delivered the opinion of the Court, in which
STEWART, WHITE, BLACKMUN, and REHNQUIST, JJ., joined. MARSHALL, J.,
filed an opinion concurring in the result, post, p. 416 U.S. 493 . DOUGLAS, J.,
filed a dissenting opinion, in which BRENNAN, .J., joined, post, p. 416 U.S.
495 . POWELL, J., took no part in the decision of the
case. Page 416 U. S. 472 MR. CHIEF JUSTICE BURGER delivered the opinion of the Court.

															We granted certiorari to resolve a question on which there is a
conflict in the courts of appeals: whether state trade secret
protection is preempted by operation of the federal patent law.
[ Footnote 1 ] In the instant
case, the Court of Appeals for the Sixth Circuit held that there
was preemption. [ Footnote 2 ]
The Courts of Appeals for the Second, Fourth, Fifth, and Ninth
Circuits have reached the opposite conclusion. [ Footnote 3 ] Page 416 U. S. 473 I Harshaw Chemical Co., an unincorporated division of petitioner,
is a leading manufacturer of a type of synthetic crystal which is
useful in the detection of ionizing radiation. In 1949, Harshaw
commenced research into the growth of this type crystal and was
able to produce one less than two inches in diameter. By 1966, as
the result of expenditures in excess of $1 million, Harshaw was
able to grow a 17-inch crystal, something no one else had done
previously. Harshaw had developed many processes, procedures, and
manufacturing techniques in the purification of raw materials and
the growth and encapsulation of the crystals which enabled it to
accomplish this feat. Some of these processes Harshaw considers to
be trade secrets.

															The individual respondents are former employees of Harshaw who
formed or later joined respondent Bicron. While at Harshaw, the
individual respondents executed, as a condition of employment, at
least one agreement each, requiring them not to disclose
confidential information or trade secrets obtained as employees of
Harshaw. Bicron was formed in August, 1969, to compete with Harshaw
in the production of the crystals, and by April, 1970, had grown a
17-inch crystal.

															Petitioner brought this diversity action in United States
District Court for the Northern District of Ohio seeking injunctive
relief and damages for the misappropriation of trade secrets. The
District Court, applying Ohio trade secret law, granted a permanent
injunction against the disclosure or use by respondents of 20 of
the 40 claimed trade secrets until such time as the trade secrets
had Page 416 U. S. 474 been released to the public, had otherwise generally become
available to the public, or had been obtained by respondents from
sources having the legal right to convey the information.

															The Court of Appeals for the Sixth Circuit held that the
findings of fact by the District Court were not clearly erroneous,
and that it was evident from the record that the individual
respondents appropriated to the benefit of Bicron secret
information on processes obtained while they were employees at
Harshaw. Further, the Court of Appeals held that the District Court
properly applied Ohio law relating to trade secrets. Nevertheless,
the Court of Appeals reversed the District Court, finding Ohio's
trade secret law to be in conflict with the patent laws of the
United States. The Court of Appeals reasoned that Ohio could not
grant monopoly protection to processes and manufacturing techniques
that were appropriate subjects for consideration under 35 U.S.C. §
101 for a federal patent but which had been in commercial use for
over one year, and so were no longer eligible for patent protection
under 35 U.S.C. § 102(b).

															We hold that Ohio's law of trade secrets is not preempted by the
patent laws of the United States, and, accordingly, we reverse. II Ohio has adopted the widely relied-upon definition of a trade
secret found at Restatement of Torts § 757, comment b (1939). B. F. Goodrich Co. v. Wohlgemuth, 117 Ohio App.
493, 498, 192 N.E.2d 99, 104 (1963); W. R. Grace & Co. v.
Naradine, 392 F.2d 9, 14 (CA6 1968). According to the
Restatement,

															"[a] trade secret may consist of any formula, pattern, device or
compilation of information which is used in one's business, and
which gives him an opportunity to obtain an advantage over
competitors who do not Page 416 U. S. 475 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."

															The subject of a trade secret must be secret, and must not be of
public knowledge or of a general knowledge in the trade or
business. B. F. Goodrich Co. v. Wohlgemuth, supra, at 499,
192 N.E.2d at 104; National Tube Co. v. Eastern Tube Co., 3 Ohio C.C.R. (n.s.) 459, 462 (1902), aff'd, 69 Ohio St.
560, 70 N.E. 1127 (1903). This necessary element of secrecy is not
lost, however, if the holder of the trade secret reveals the trade
secret to another "in confidence, and under an implied obligation
not to use or disclose it." Cincinnati Bell Foundry Co. v.
Dodds, 10 Ohio Dec.Reprint 154, 156, 19 Weekly L.Bull. 84
(Super.Ct. 1887). These others may include those of the holder's
"employees to whom it is necessary to confide it, in order to apply
it to the uses for which it is intended." National Tube Co. v.
Eastern Tube Co., supra, at 462. Often, the recipient of
confidential knowledge of the subject of a trade secret is a
licensee of its holder. See Lear, Inc. v. Adkins, 395 U. S. 653 (1969).

															The protection accorded the trade secret holder is against the
disclosure or unauthorized use of the trade secret by those to whom
the secret has been confided under the express or implied
restriction of nondisclosure or nonuse. [ Footnote 4 ] The law also protects the holder of a
trade Page 416 U. S. 476 secret against disclosure or use when the knowledge is gained
not by the owner's volition, but by some "improper means,"
Restatement of Torts § 757(a), which may include theft,
wiretapping, or even aerial reconnaissance. [ Footnote 5 ] A trade secret law, however, does not
offer protection against discovery by fair and honest means, such
as by independent invention, accidental disclosure, or by so-called
reverse engineering, that is, by starting with the known product
and working backward to divine the process which aided in its
development or manufacture. [ Footnote 6 ]

															Novelty, in the patent law sense, is not required for a trade
secret, W. R. Grace & Co. v. Hargadine, 392 F.2d at
14. "Quite clearly, discovery is something less than invention." A. O. Smith Corp. v. Petroleum Iron Works Co., 73 F.2d
531, 538 (CA6 1934), modified to increase scope of
injunction, 74 F.2d 934 (1935). However, some novelty will be
required, if merely because that which does not possess novelty is
usually known; secrecy, in the context of trade secrets, thus
implies at least minimal novelty. [ Footnote 7 ]

															The subject matter of a patent is limited to a "process,
machine, manufacture, or composition of matter, or . . .
improvement thereof," 35 U.S.C. § 101, which fulfills the three
conditions of novelty and utility as articulated and defined in 35
U.S.C. §§ 101 and 102, and nonobviousness, Page 416 U. S. 477 as set out in 35 U.S.C. § 103. [ Footnote 8 ] If an invention meets the rigorous statutory
tests for the issuance of a patent, the patent is granted, for a
period of 17 Page 416 U. S. 478 years, giving what has been described as the "right of
exclusion," R. Ellis, Patent Assignments and Licenses § 4, p. 7 (2d
ed.1943). [ Footnote 9 ] This
protection goes not only to copying the subject matter, which is
forbidden under the Copyright Act, 17 U.S.C. § 1 et seq., but also to independent creation. III The first issue we deal with is whether the States are forbidden
to act at all in the area of protection of the kinds of
intellectual property which may make up the subject matter of trade
secrets.

															Article I, § 8, cl. 8, of the Constitution grants to the
Congress the power

															"[t]o promote the Progress of Science and useful Arts, by
securing for limited Times to Authors and Inventors the exclusive
Right to their respective Writings and Discoveries. . . ."

															In the 1972 Term, in Goldstein v. California, 412 U. S. 546 (1973), we held that the cl. 8 grant of power to Congress was not
exclusive, and that, at least in the case of writings, the States
were not prohibited from encouraging and protecting the efforts of
those within their borders by Page 416 U. S. 479 appropriate legislation. The States could, therefore, protect
against the unauthorized rerecording for sale of performances fixed
on records or tapes, even though those performances qualified as
"writings" in the constitutional sense and Congress was empowered
to legislate regarding such performances and could preempt the area
if it chose to do so. This determination was premised on the great
diversity of interests in our Nation -- the essentially nonuniform
character of the appreciation of intellectual achievements in the
various States. Evidence for this came from patents granted by the
States in the 18th century. 412 U.S. at 412 U. S.
557 .

															Just as the States may exercise regulatory power over writings,
so may the States regulate with respect to discoveries. States may
hold diverse viewpoints in protecting intellectual property
relating to invention as they do in protecting the intellectual
property relating to the subject matter of copyright. The only
limitation on the States is that, in regulating the area of patents
and copyrights, they do not conflict with the operation of the laws
in this area passed by Congress, and it is to that more difficult
question we now turn. IV The question of whether the trade secret law of Ohio is void
under the Supremacy Clause involves a consideration of whether that
law "stands as an obstacle to the accomplishment and execution of
the full purposes and objectives of Congress." Hines v.
Davidowitz, 312 U. S. 52 , 312 U. S. 67 (1941). See Florida Avocado Growers v. Paul, 373 U.
S. 132 , 373 U. S. 141 (1963). We stated in Sear, Roebuck Co. v. Stiffel Co., 376 U. S. 225 , 376 U. S. 229 (1964), that, when state law touches upon the area of federal
statutes enacted pursuant to constitutional authority,

															"it is 'familiar doctrine' that the federal policy Page 416 U. S. 480 'may not be set at naught, or its benefits denied,' by the state
law. Sola Elec. Co. v. Jefferson Elec. Co., 317 U. S.
173 , 317 U. S. 176 (1942). This
is true, of course, even if the state law is enacted in the
exercise of otherwise undoubted state power."

															The laws which the Court of Appeals in this case held to be in
conflict with the Ohio law of trade secrets were the patent laws
passed by the Congress in the unchallenged exercise of its clear
power under Art. I, § 8, cl. 8, of the Constitution. The patent law
does not explicitly endorse or forbid the operation of trade secret
law. However, as we have noted, if the scheme of protection
developed by Ohio respecting trade secrets "clashes with the
objectives of the federal patent laws," Sears, Roebuck &
Co. v. Stiffel Co., supra, at 376 U. S. 231 ,
then the state law must fall. To determine whether the Ohio law
"clashes" with the federal law, it is helpful to examine the
objectives of both the patent and trade secret laws.

															The stated objective of the Constitution in granting the power
to Congress to legislate in the area of intellectual property is to
"promote the Progress of Science and useful Arts." The patent laws
promote this progress by offering a right of exclusion for a
limited period as an incentive to inventors to risk the often
enormous costs in terms of time, research, and development. The
productive effort thereby fostered will have a positive effect on
society through the introduction of new products and processes of
manufacture into the economy, and the emanations by way of
increased employment and better lives for our citizens. In return
for the right of exclusion -- this "reward for inventions," Universal Oil Co. v. Globe Co., 322 U.
S. 471 , 322 U. S. 484 (1944) -- the patent laws impose upon the inventor a requirement of
disclosure. To insure adequate and full disclosure so that upon
the Page 416 U. S. 481 expiration of the 17-year period, "the knowledge of the
invention enures to the people, who are thus enabled without
restriction to practice it and profit by its use," United
States v. Dubilier Condenser Corp., 289 U.
S. 178 , 289 U. S. 187 (1933), the patent laws require [ Footnote 10 ] that the patent application shall include a
full and clear description of the invention and "of the manner and
process of making and using it" so that any person skilled in the
art may make and use the invention. 35 U.S.C. § 112. When a patent
is granted and the information contained in it is circulated to the
general public and those especially skilled in the trade, such
additions to the general store of knowledge are of such importance
to the public weal that the Federal Government is willing to pay
the high price of 17 years of exclusive use for its disclosure,
which disclosure, it is assumed, will stimulate ideas and the
eventual development of further significant advances in the art.
The Court has also articulated another policy of the patent law:
that which is in the public domain cannot be removed therefrom by
action of the States. "[F]ederal law requires that all ideas in
general circulation be dedicated to the common good unless they are
protected by a valid patent." Lear, Inc. v. Adkins, 395
U.S. at 395 U. S. 668 . See also Goldstein v. California, 412 U.S. at 412 U. S.
570 -571; Sears, Roebuck & Co. v. Stiffel Co.,
supra; Compco Corp. v. Day-Brite Lighting, Inc., 376 U.
S. 234 , 376 U. S.
237 -238 (1964); International News Service v.
Associated Press, 248 U. S. 215 , 248 U. S. 250 (1918) (Brandeis, J., dissenting). The maintenance of standards of
commercial ethics and the encouragement of invention are the
broadly stated policies behind trade secret law. "The necessity of
good faith and honest, fair dealing, is the very life Page 416 U. S. 482 and spirit of the commercial world." National Tube Co. v.
Eastern Tube Co., 3 Ohio C.C.R. (n.s.), at 462. [ Footnote 11 ] In A. O. Smith
Corp. v. Petroleum Iron Works Co., 73 F.2d at 539, the Court
emphasized that, even though a discovery may not be patentable,
that does not

															"destroy the value of the discovery to one who makes it, or
advantage the competitor who by unfair means, or a the beneficiary
of a broken faith, obtains the desired knowledge without himself
paying the price in labor, money, or machines expended by the
discoverer."

															In Wexler v. Greenberg, 399 Pa. 569, 578-579, 160 A.2d
430, 434-435 (1960), the Pennsylvania Supreme Court noted the
importance of trade secret protection to the subsidization of
research and development and to increased economic efficiency
within large companies through the dispersion of responsibilities
for creative developments. [ Footnote 12 ]

															Having now in mind the objectives of both the patent and trade
secret law, we turn to an examination of the interaction of these
systems of protection of intellectual property -- one established
by the Congress and the other by a State to determine whether and
under what circumstances the latter might constitute "too great an
encroachment on the federal patent system to be tolerated." Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. at 376 U. S.
232 .

															As we noted earlier, trade secret law protects items which would
not be proper subjects for consideration for patent protection
under 35 U.S.C. § 101. As in the Page 416 U. S. 483 case of the recordings in Goldstein v. California, Congress, with respect to nonpatentable subject matter, "has drawn
no balance; rather, it has left the area unattended, and no reason
exists why the State should not be free to act." Goldstein v.
California, supra, at 412 U. S. 570 (footnote omitted).

															Since no patent is available for a discovery, however useful,
novel, and nonobvious, unless it falls within one of the express
categories of patentable subject matter of 35 U.S.C. § 101, the
holder of such a discovery would have no reason to apply for a
patent whether trade secret protection existed or not. Abolition of
trade secret protection would, therefore, not result in increased
disclosure to the public of discoveries in the area of
nonpatentable subject matter. Also it is hard to see how the public
would be benefited by disclosure of customer lists or advertising
campaigns; in fact, keeping such items secret encourages businesses
to initiate new and individualized plans of operation, and
constructive competition results. This, in turn, leads to a greater
variety of business methods than would otherwise be the case if
privately developed marketing and other data were passed illicitly
among firms involved in the same enterprise.

															Congress has spoken in the area of those discoveries which fall
within one of the categories of patentable subject matter of 35
U.S.C. § 101 and which are, therefore, of a nature that would be
subject to consideration for a patent. Processes, machines,
manufactures, compositions of matter, and improvements thereof,
which meet the tests of utility, novelty, and nonobviousness are
entitled to be patented, but those which do not are not. The
question remains whether those items which are proper subjects for
consideration for a patent may also have available the alternative
protection accorded by trade secret law. Page 416 U. S. 484 Certainly the patent policy of encouraging invention is not
disturbed by the existence of another form of incentive to
invention. In this respect, the two systems are not and never would
be in conflict. Similarly, the policy that matter once in the
public domain must remain in the public domain is not incompatible
with the existence of trade secret protection. By definition, a
trade secret has not been placed in the public domain. [ Footnote 13 ]

															The more difficult objective of the patent law to reconcile with
trade secret law is that of disclosure, the quid pro quo of the right to exclude. Universal Oil Co. v. Globe Co., 322 U.S. at 322 U. S. 484 .
We are helped in this stage of the analysis by Judge Henry
Friendly's opinion in Painton & Co. v. Bourns, Inc., 442 F.2d 216 (CA2 1971). There, the Court of Appeals thought it
useful, in determining whether inventors will refrain because of
the existence of trade secret law from applying for patents,
thereby depriving the public from learning of the invention, to
distinguish between three categories of trade secrets:

															"(1) the trade secret believed by its owner to constitute a
validly patentable invention; (2) the trade secret known to its
owner not to be so patentable; and (3) the trade secret whose valid
patentability is considered dubious." Id. at 224. Trade secret protection in each of these
categories would run against breaches of confidence -- the employee
and licensee situations -- and theft and other forms of industrial
espionage.

															As to the trade secret known not to meet the standards Page 416 U. S. 485 of patentability, very little in the way of disclosure would be
accomplished by abolishing trade secret protection. With trade
secrets of nonpatentable subject matter, the patent alternative
would not reasonably be available to the inventor.

															"There can be no public interest in stimulating developers of
such [unpatentable] know-how to flood an overburdened Patent Office
with applications [for] what they do not consider patentable." Ibid. The mere filing of applications doomed to be
turned down by the Patent Office will bring forth no new public
knowledge or enlightenment, since, under federal statute and
regulation, patent applications and abandoned patent applications
are held by the Patent Office in confidence, and are not open to
public inspection. 35 U.S.C. § 122; 37 CFR § 1.14(b).

															Even as the extension of trade secret protection to patentable
subject matter that the owner knows will not meet the standards of
patentability will not conflict with the patent policy of
disclosure, it will have a decidedly beneficial effect on society.
Trade secret law will encourage invention in areas where patent law
does not reach, and will prompt the independent innovator to
proceed with the discovery and exploitation of his invention.
Competition is fostered, and the public is not deprived of the use
of valuable, if not quite patentable, invention. [ Footnote 14 ]

															Even if trade secret protection against the faithless employee
were abolished, inventive and exploitive effort in the area of
patentable subject matter that did not meet the standards of
patentability would continue, although at a reduced level.
Alternatively, with the effort that remained, however, would come
an increase in the amount of self-help that innovative
companies Page 416 U. S. 486 would employ. Knowledge would be widely dispersed among the
employees of those still active in research. Security precautions
necessarily would be increased, and salaries and fringe benefits of
those few officers or employees who had to know the whole of the
secret invention would be fixed in an amount thought sufficient to
assure their loyalty. [ Footnote
15 ] Smaller companies would be placed at a distinct economic
disadvantage, since the costs of this kind of self-help could be
great, and the cost to the public of the use of this invention
would be increased. The innovative entrepreneur with limited
resources would tend to confine his research efforts to himself and
those few he felt he could trust without the ultimate assurance of
legal protection against breaches of confidence. As a result,
organized scientific and technological research could become
fragmented, and society, as a whole, would suffer.

															Another problem that would arise if state trade secret
protection were precluded is in the area of licensing others to
exploit secret processes. The holder of a trade secret would not
likely share his secret with a manufacturer who cannot be placed
under binding legal obligation to pay a license fee or to protect
the secret. The result would be to hoard, rather than disseminate,
knowledge. Painton Co. v. Bourns, Inc., 442 F.2d at 223.
Instead, then, of licensing others to use his invention and making
the most efficient use of existing manufacturing and marketing
structures within the industry, the trade secret holder would tend
either to limit his utilization of the invention, thereby depriving
the public of the maximum benefit of its use, or engage in the
time-consuming and economically wasteful enterprise of Page 416 U. S. 487 constructing duplicative manufacturing and marketing mechanisms
for the exploitation of the invention. The detrimental
misallocation of resources and economic waste that would thus take
place if trade secret protection were abolished with respect to
employees or licensees cannot be justified by reference to any
policy that the federal patent law seeks to advance.

															Nothing in the patent law requires that States refrain from
action to prevent industrial espionage. In addition to the
increased costs for protection from burglary, wiretapping, bribery,
and the other means used to misappropriate trade secrets, there is
the inevitable cost to the basic decency of society when one firm
steals from another. A most fundamental human right, that of
privacy, is threatened when industrial espionage is condoned or is
made profitable; [ Footnote
16 ] the state interest in denying profit to such illegal
ventures is unchallengeable.

															The next category of patentable subject matter to deal with is
the invention whose holder has a legitimate doubt as to its
patentability. The risk of eventual patent invalidity by the courts
and the costs associated with that risk may well impel some with a
good faith doubt as to patentability not to take the trouble to
seek to obtain and defend patent protection for their discoveries,
regardless of the existence of trade secret protection. Trade
secret protection would assist those inventors in the more
efficient exploitation of their discoveries and not conflict with
the patent law. In most cases of genuine doubt as to patent
validity, the potential rewards of patent protection are so far
superior to those accruing to holders of trade secrets that the
holders of Page 416 U. S. 488 such inventions will seek patent protection, ignoring the trade
secret route. For those inventors "on the line" as to whether to
seek patent protection, the abolition of trade secret protection
might encourage some to apply for a patent who otherwise would not
have done so. For some of those so encouraged, no patent will be
granted, and the result

															"will have been an unnecessary postponement in the divulging of
the trade secret to persons willing to pay for it. If [the patent
does issue], it may well be invalid, yet many will prefer to pay a
modest royalty than to contest it, even though Lear allows
them to accept a license and pursue the contest without paying
royalties while the fight goes on. The result in such a case would
be unjustified royalty payments from many who would prefer not to
pay them, rather than agreed fees from one or a few who are
entirely willing to do so." Painton Co. v. Bourns, Inc., 442 F.2d at 225. The point
is that those who might be encouraged to file for patents by the
absence of trade secret law will include inventors possessing the
chaff as well as the wheat. Some of the chaff -- the nonpatentable
discoveries -- will be thrown out by the Patent Office, but, in the
meantime, society will have been deprived of use of those
discoveries through trade secret-protected licensing. Some of the
chaff may not be thrown out. This Court has noted the difference
between the standards used by the Patent Office and the courts to
determine patentability. Graham v. John Deere Co., 383 U. S. 1 , 383 U. S. 18 (1966). [ Footnote 17 ] In Lear, Inc. v. Adkins, 395 U. S. 653 (1969), the Court thought that an invalid patent was so serious a
threat to the free use of Page 416 U. S. 489 ideas already in the public domain that the Court permitted
licensees of the patent holder to challenge the validity of the
patent. Better had the invalid patent never been issued. More of
those patents would likely issue if trade secret law were
abolished. Eliminating trade secret law for the doubtfully
patentable invention is thus likely to have deleterious effects on
society and patent policy which we cannot say are balanced out by
the speculative gain which might result from the encouragement of
some inventors with doubtfully patentable inventions which deserve
patent protection to come forward and apply for patents. There is
no conflict, then, between trade secret law and the patent law
policy of disclosure, at least insofar as the first two categories
of patentable subject matter are concerned.

															The final category of patentable subject matter to deal with is
the clearly patentable invention, i.e., that invention
which the owner believes to meet the standards of patentability. It
is here that the federal interest in disclosure is at its peak;
these inventions, novel, useful and nonobvious, are " the things
which are worth to the public the embarrassment of an exclusive
patent.'" Graham v. John Deere Co., supra, at 383 U. S. 9 (quoting Thomas Jefferson). The interest of the public is that the
bargain of 17 years of exclusive use in return for disclosure be
accepted. If a State, through a system of protection, were to cause
a substantial risk that holders of patentable inventions would not
seek patents, but rather would rely on the state protection, we
would be compelled to hold that such a system could not
constitutionally continue to exist. In the case of trade secret
law, no reasonable risk of deterrence from patent application by
those who can reasonably expect to be granted patents
exists. Trade secret law provides far weaker protection in Page 416 U. S. 490 many respects than the patent law. [ Footnote 18 ] While trade secret law does not forbid
the discovery of the trade secret by fair and honest means, e.g., independent creation or reverse engineering, patent
law operates "against the world," forbidding any use of the
invention for whatever purpose for a significant length of time.
The holder of a trade secret also takes a substantial risk that the
secret will be passed on to his competitors, by theft or by breach
of a confidential relationship, in a manner not easily susceptible
of discovery or proof. Painton & Co. v. Bourns, Inc., 442 F.2d at 224. Where patent law acts as a barrier, trade secret
law functions relatively as a sieve. The possibility that an
inventor who believes his invention meets the standards of
patentability will sit back, rely on trade secret law, and, after
one year of use, forfeit any right to patent protection, 35 U.S.C.
§ 102(b), is remote indeed.

															Nor does society face much risk that scientific or technological
progress will be impeded by the rare inventor with a patentable
invention who chooses trade secret protection over patent
protection. The ripeness-of-time concept of invention, developed
from the study of the many independent multiple discoveries in
history, predicts that, if a particular individual had not made a
particular discovery, others would have, and in probably a
relatively short period of time. If something is to be discovered
at all, very likely it will be discovered by more than one person.
Singletons and Multiples in Science (1961), in R. Merton, The
Sociology of Science 343 (1973); J. Cole & S. Cole, Social
Stratification in Science 12-13, 229-230 (1973); Ogburn &
Thomas, Are Inventions Inevitable?, 37 Pol.Sci.Q. 83 (1922).
[ Footnote 19 ] Even Page 416 U. S. 491 were an inventor to keep his discovery completely to himself,
something that neither the patent nor trade secret laws forbid,
there is a high probability that it will be soon independently
developed. If the invention, though still a trade secret, is put
into public use, the competition is alerted to the existence of the
inventor's solution to the problem, and may be encouraged to make
an extra effort to independently find the solution thus known to be
possible. The inventor faces pressures not only from private
industry, but from the skilled scientists who work in our
universities and our other great publicly supported centers of
learning and research.

															We conclude that the extension of trade secret protection to
clearly patentable inventions does not conflict with the patent
policy of disclosure. Perhaps because trade secret law does not
produce any positive effects in the area of clearly patentable
inventions, as opposed to the beneficial effects resulting from
trade secret protection in the areas of the doubtfully patentable
and the clearly unpatentable inventions, it has been suggested that
partial preemption may be appropriate, and that courts should
refuse to apply trade secret protection to inventions which the
holder should have patented, and which would have been, thereby,
disclosed. [ Footnote 20 ]
However, since there is no real possibility that trade secret law
will conflict with the federal policy favoring disclosure of
clearly patentable inventions, partial preemption is
inappropriate. Page 416 U. S. 492 Partial preemption, furthermore, could well create serious
problems for state courts in the administration of trade secret
law. As a preliminary matter in trade secret actions, state courts
would be obliged to distinguish between what a reasonable inventor
would and would not correctly consider to be clearly patentable,
with the holder of the trade secret arguing that the invention was
not patentable and the misappropriator of the trade secret arguing
its undoubted novelty, utility, and nonobviousness. Federal courts
have a difficult enough time trying to determine whether an
invention, narrowed by the patent application procedure [ Footnote 21 ] and fixed in the
specifications which describe the invention for which the patent
has been granted, is patentable. [ Footnote 22 ] Although state courts in some circumstances
must join federal courts in judging whether an issued patent is
valid, Lear, Inc. v. Adkins, supra, it would be
undesirable to impose the almost impossible burden on state courts
to determine the patentability -- in fact, and in the mind of a
reasonable inventor -- of a discovery which has not been patented
and remains entirely uncircumscribed by expert analysis in the
administrative process. Neither complete nor partial preemption of
state trade secret law is justified. Our conclusion that patent law
does not preempt trade secret law is in accord with prior cases of
this Court. Universal Oil Co. v. Globe Co., 322 U.S. at 322 U. S. 484 ; United States v. Dubilier Condenser Corp., 289 U.S. at 289 U. S.
186 -187; Becher v. Contoure Laboratories, 279 U. S. 388 , 279 U. S. 391 (1929); Du Pont Powder Co. v. Masland, 244 U.
S. 100 , 244 U. S. 102 (1917); Dr. Miles Medical Co. v. Park & Sons Co., 220 U. S. 373 , 220 U. S.
402 -403 (1911); Board of Trade v.
Christie Page 416 U. S. 493 Grain & Stock Co., 198 U.
S. 236 , 198 U. S.
250 -251 (1905). [ Footnote 23 ] Trade secret law and patent law have
coexisted in this country for over one hundred years. Each has its
particular role to play, and the operation of one does not take
away from the need for the other. Trade secret law encourages the
development and exploitation of those items of lesser or different
invention than might be accorded protection under the patent laws,
but which items still have an important part to play in the
technological and scientific advancement of the Nation. Trade
secret law promotes the sharing of knowledge, and the efficient
operation of industry; it permits the individual inventor to reap
the rewards of his labor by contracting with a company large enough
to develop and exploit it. Congress, by its silence over these many
years, has seen the wisdom of allowing the States to enforce trade
secret protection. Until Congress takes affirmative action to the
contrary, States should be free to grant protection to trade
secrets.

															Since we hold that Ohio trade secret law is not preempted by the
federal patent law, the judgment of the Court of Appeals for the
Sixth Circuit is reversed, and the case is remanded to the Court of
Appeals with directions to reinstate the judgment of the District
Court. It is so ordered. MR. JUSTICE POWELL took no part in the decision of this
case.

															[ Footnote 1 ]

															414 U.S. 818 (1973)

															[ Footnote 2 ]

															478 F.2d 1074 (1973)

															[ Footnote 3 ] Painton & Co. v. Bourns, Inc., 442 F.2d 216 (CA2
1971); Servo Corp. of America v. General Electric Co., 337
F.2d 716 (CA4 1964), cert. denied, 383 U.S. 934 (1966); Water Services, Inc. v. Tesco Chemicals, Inc., 410 F.2d
163 (CA5 1969); Winston Research Corp. v. Minnesota Mining
& Mfg. Co., 350 F.2d 134 (CA9 1965); Dekar Industries,
Inc. v. Bisett-Berman Corp., 434 F.2d 1304 (CA9 1970), cert. denied, 402 U.S. 945 (1971).

															[ Footnote 4 ]

															Ohio Rev.Code Ann. § 1333.51(C) (Supp. 1973) provides:

															"No person, having obtained possession of an article
representing a trade secret or access thereto with the owner's
consent, shall convert such article to his own use or that of
another person, or thereafter without the owner's consent make or
cause to be made a copy of such article, or exhibit such article to
another."

															Ohio Rev.Code Ann. § 1333.99(E) (Supp. 1973) provides:

															"Whoever violates section 1333.51 of the Revised Code shall be
fined not more than five thousand dollars, imprisoned not less than
one nor more than ten years, or both."

															[ Footnote 5 ] E. I. duPont de Nemours & Co. v. Christopher, 431
F.2d 1012 (CA5 1970), cert. denied, 400 U.S. 1024 (1971). See generally Comment, Theft of Trade Secrets: The Need
for a Statutory Solution, 120 U.Pa.L.Rev. 378 (1971).

															[ Footnote 6 ] National Tube Co. v. Eastern Tube Co., 3 Ohio C.C.R.
(n.s.) 459, 462 (1902), aff'd, 69 Ohio St. 560, 70 N.E.
1127 (1903).

															[ Footnote 7 ] See Comment, The Stiffel Doctrine and the Law
of Trade Secrets, 62 Nw.U.L.Rev. 956, 969 (1968).

															[ Footnote 8 ]

															"§ 101. Inventions patentable "

															"Whoever invents or discovers any new and useful process,
machine, manufacture, or composition of matter, or any new and
useful improvement thereof, may obtain a patent therefor, subject
to the conditions and requirements of this title."

															"§ 102. Conditions for patentability; novelty and loss of
right to patent "

															"A person shall be entitled to a patent unless --"

															"(a) the invention was known or used by others in this country,
or patented or described in a printed publication in this or a
foreign country, before the invention thereof by the applicant for
patent, or"

															"(b) the invention was patented or described in a printed
publication in this or a foreign country or in public use or on
sale in this country, more than one year prior to the date of the
application for patent in the United States, or"

															"(c) he has abandoned the invention, or"

															"(d) the invention was first patented or caused to be patented,
or was the subject of an inventor's certificate, by the applicant
or his legal representatives or assigns in a foreign country prior
to the date of the application for patent in this country on an
application for patent or inventor's certificate filed more than
twelve months before the filing of the application in the United
States, or"

															"(e) the invention was described in a patent granted on an
application for patent by another filed in the United States before
the invention thereof by the applicant for patent, or"

															"(f) he did not himself invent the subject matter sought to be
patented, or"

															"(g) before the applicant's invention thereof, the invention was
made in this country by another who had not abandoned, suppressed,
or concealed it. In determining priority of invention there shall
be considered not only the respective dates of conception and
reduction to practice of the invention, but also the reasonable
diligence of one who was first to conceive and last to reduce to
practice, from a time prior to conception by the other."

															"§ 103. Conditions for patentability; non-obvious subject
matter "

															"A patent may not be obtained though the invention is not
identically disclosed or described as set forth in section 102 of
this title, if the differences between the subject matter sought to
be patented and the prior art are such that the subject matter as a
whole would have been obvious at the time the invention was made to
a person having ordinary skill in the art to which said subject
matter pertains. Patentability shall not be negatived by the manner
in which the invention was made."

															[ Footnote 9 ]

															Title 35 U.S.C. § 154 provides:

															"Every patent shall contain a short title of the invention and a
grant to the patentee, his heirs or assigns, for the term of
seventeen years, subject to the payment of issue fees as provided
for in this title, of the right to exclude others from making,
using, or selling the invention throughout the United States,
referring to the specification for the particulars thereof. A copy
of the specification and drawings shall be annexed to the patent
and be a part thereof."

															[ Footnote 10 ]

															35 U.S.C. § 111.

															[ Footnote 11 ] See also Winston Research Corp. v. Minnesota Mining &
Mfg. Co., 350 F.2d at 138.

															[ Footnote 12 ] See also Water Services, Inc. v. Tesco Chemicals, Inc., 410 F.2d at 171.

															[ Footnote 13 ]

															An invention may be placed "in public use or on sale" within the
meaning of 35 U.S.C. § 102(b) without losing its secret character. Painton & Co. v. Bourns, Inc., 442 F.2d at 224 n. 6; Metallizing Engineering Co. v. Kenyon Bearing & Auto Parts
Co., 153 F.2d 516, 520 (CA2), cert. denied, 328 U.S.
840 (1946).

															[ Footnote 14 ]

															Doerfer, The Limits on Trade Secret Law Imposed by Federal
Patent and Antitrust Supremacy, 80 Harv.L.Rev. 1432, 1454
(1967).

															[ Footnote 15 ] See generally Wydick, Trade Secrets: Federal Preemption
in Light of Goldstein and Kewanee (Part II --
Conclusion), 56 J. Pat.Off.Soc. 4, 23-24 (1974).

															[ Footnote 16 ]

															Note, Patent Preemption of Trade Secret Protection of Inventions
Meeting Judicial Standard of Patentability, 87 Harv.L.Rev. 807, 828
(1974).

															[ Footnote 17 ]

															For a possible explanation see P. Areeda, Antitrust
Analysis � 406(d), pp. 327-328 (1967).

															[ Footnote 18 ] Water Services, Inc. v. Tesco Chemicals, Inc., 410 F.2d
at 172.

															[ Footnote 19 ] See J. Watson, The Double Helix (1968). If Watson and
Crick had not discovered the structure of DNA it is likely that
Linus Pauling would have made the discovery soon. Other examples of
multiple discovery are listed at length in the Ogburn and Thomas
article.

															[ Footnote 20 ] See Note, Patent Preemption of Trade Secret Protection
of Inventions Meeting Judicial Standards of Patentability, 87
Harv.L.Rev. 807 (1974); Brief for the United States as Amicus
Curiae, presenting the view within the Government favoring
limited preemption (which view is not that of the United States,
which believes that patent law does not preempt state trade secret
law).

															[ Footnote 21 ] See P. Areeda, Antitrust Analysis � 407, p. 329
(1967).

															[ Footnote 22 ] See Judge L. Hand's lament in Harries v. Air King
Products Co., 183 F.2d 158, 162 (CA2 1950).

															[ Footnote 23 ]

															The Court of Appeals below relied, in part, on Kendall v.
Winsor , 21 How. 322 (1859), a case decided nine
years before trade secret law was imported into this country from
England by means of the landmark case of Peabody v.
Norfolk, 98 Mass. 452 (1868).

															MR. JUSTICE MARSHALL, concurring in the result.

															Unlike the Court, I do not believe that the possibility that an
inventor with a patentable invention will rely Page 416 U. S. 494 on state trade secret law, rather than apply for a patent is
"remote indeed." Ante at 416 U. S. 490 .
State trade secret law provides substantial protection to the
inventor who intends to use or sell the invention himself, rather
than license it to others, protection which, in its unlimited
duration, is clearly superior to the 17-year monopoly afforded by
the patent laws. I have no doubt that the existence of trade secret
protection provides, in some instances, a substantial disincentive
to entrance into the patent system, and thus deprives society of
the benefits of public disclosure of the invention which it is the
policy of the patent laws to encourage. This case may well be such
an instance.

															But my view of sound policy in this area does not dispose of
this case. Rather, the question presented in this case is whether
Congress, in enacting the patent laws, intended merely to offer
inventors a limited monopoly in exchange for disclosure of their
invention, or instead to exert pressure on inventors to enter into
this exchange by withdrawing any alternative possibility of legal
protection for their inventions. I am persuaded that the former is
the case. State trade secret laws and the federal patent laws have
co-existed for many, many years. During this time, Congress has
repeatedly demonstrated its full awareness of the existence of the
trade secret system, without any indication of disapproval. Indeed,
Congress has, in a number of instances, given explicit federal
protection to trade secret information provided to federal
agencies. See, e.g., 5 U.S.C. § 552(b)(4); 18 U.S.C. §
1905; see generally Appendix to Brief for Petitioner.
Because of this, I conclude that there is

															"neither such actual conflict between the two schemes of
regulation that both cannot stand in the same area, nor evidence of
a congressional design to preempt the field." Florida Avocado Growers v.
Paul , Page 416 U. S. 495 373 U. S. 132 , 373 U. S. 141 (1963). I therefore concur in the result reached by the majority of
the Court.

															MR. JUSTICE DOUGLAS, with whom MR. JUSTICE BRENNAN concurs,
dissenting.

															Today's decision is at war with the philosophy of Sears,
Roebuck & Co. v. Stiffel Co., 376 U.
S. 225 , and Compco Corp. v. Day-Brite Lighting,
Inc., 376 U. S. 234 .
Those cases involved patents -- one of a pole lamp and one of
fluorescent lighting fixtures -- each of which was declared
invalid. The lower courts held, however, that though the patents
were invalid, the sale of identical or confusingly similar products
to the products of the patentees violated state unfair competition
laws. We held that, when an article is unprotected by a patent,
state law may not forbid others to copy it, because every article
not covered by a valid patent is in the public domain. Congress, in
the patent laws, decided that, where no patent existed, free
competition should prevail; that, where a patent is rightfully
issued, the right to exclude others should obtain for no longer
than 17 years, and that the States may not,

															"under some other law, such as that forbidding unfair
competition, give protection of a kind that clashes with the
objectives of the federal patent laws, [ Footnote 2/1 ]"

															376 U.S. at 376 U. S.
231 .

															The product involved in this suit, sodium iodide synthetic
crystals, was a product that could be patented, but was not.
Harshaw, the inventor, apparently contributed greatly to the
technology in that field by developing processes, procedures, and
techniques that produced Page 416 U. S. 496 much larger crystals than any competitor. These processes,
procedures, and techniques were also patentable, but no patent was
sought. Rather, Harshaw sought to protect its trade secrets by
contracts with its employees. And the District Court found that, as
a result of those secrecy precautions, "not sufficient disclosure
occurred so as to place the claimed trade secrets in the public
domain," and those findings were sustained by the Court of
Appeals.

															The District Court issued a permanent injunction against
respondents, ex-employees, restraining them from using the
processes used by Harshaw. By a patent, which would require full
disclosure, Harshaw could have obtained a 17-year monopoly against
the world. By the District Court's injunction, which the Court
approves and reinstates, Harshaw gets a permanent injunction
running into perpetuity against respondents. In Sears, as
in the present case, an injunction against the unfair competitor
issued. We said:

															"To allow a State by use of its law of unfair competition to
prevent the copying of an article which represents too slight an
advance to be patented would be to permit the State to block off
from the public something which federal law has said belongs to the
public. The result would be that, while federal law grants only 14
or 17 years' protection to genuine inventions, see 35
U.S.C. §§ 154, 173, States could allow perpetual protection to
articles too lacking in novelty to merit any patent at all under
federal constitutional standards. This would be too great an
encroachment on the federal patent system to be tolerated."

															376 U.S. at 376 U. S.
231 -232.

															The conflict with the patent laws is obvious. The decision of
Congress to adopt a patent system was based on the idea that there
will be much more innovation if discoveries are disclosed and
patented than there will be when everyone works in secret. Society
thus fosters a Page 416 U. S. 497 free exchange of technological information at the cost of a
limited 17-year monopoly. [ Footnote
2/2 ]

															A trade secret, [ Footnote 2/3 ]
unlike a patent, has no property dimension. That was the view of
the Court of Appeals, 478 F.2d 1074, 1081, and its decision is
supported by what Mr. Justice Holmes said in Du Pont Powder Co.
v. Masland, 244 U. S. 100 , 244 U. S.
102 :

															"The word property, as applied to trade-marks and trade secrets,
is an unanalyzed expression of certain Page 416 U. S. 498 secondary consequences of the primary fact that the law makes
some rudimentary requirements of good faith. Whether the plaintiffs
have any valuable secret or not the defendant knows the facts,
whatever they are, through a special confidence that he accepted.
The property may be denied, but the confidence cannot be.
Therefore, the starting point for the present matter is not
property or due process of law, but that the defendant stood in
confidential relations with the plaintiffs, or one of them. These
have given place to hostility, and the first thing to be made sure
of is that the defendant shall not fraudulently abuse the trust
reposed in him. It is the usual incident of confidential relations.
If there is any disadvantage in the fact that he knew the
plaintiffs' secrets, he must take the burden with the good.
[ Footnote 2/4 ]"

															A suit to redress theft of a trade secret is grounded in tort
damages for breach of a contract -- a historic remedy, Cataphote Corp. v. Hudson, 422 F.2d 1290. Damages for
breach of a confidential relation are not preempted by this patent
law, but an injunction Page 416 U. S. 499 against use is preempted because the patent law states the only
monopoly over trade secrets that is enforceable by specific
performance, and that monopoly exacts as a price full disclosure. A
trade secret can be protected only by being kept secret. Damages
for breach of a contract are one thing; an injunction barring
disclosure does service for the protection accorded valid patents,
and is therefore preempted.

															From the findings of fact of the lower courts, the process
involved in this litigation was unique, such a great discovery as
to make its patentability a virtual certainty. Yet the Court's
opinion reflects a vigorous activist anti-patent philosophy. My
objection is not because it is activist. This is a problem that
involves no neutral principle. The Constitution in Art. I, § 8, cl.
8, expresses the activist policy which Congress has enforced by
statutes. It is that constitutional policy which we should enforce,
not our individual notions of the public good.

															I would affirm the judgment below.

															[ Footnote 2/1 ]

															Here, as in Lear, Inc. v. Adkins, 395 U.
S. 653 , 395 U. S. 674 ,
which held that a licensee of a patent is not precluded by a
contract from challenging the patent, for if he were, that would
defeat the policy of the patent laws: "enforcing this contractual
provision would undermine the strong federal policy favoring the
full and free use of ideas in the public domain."

															[ Footnote 2/2 ]

															"The holding [of the Court of Appeals] in Kewanee seems
correct. If it is permissible for an inventor to use the law of
unfair competition as a substitute for patenting, certain
categories of inventions would receive privileged protection under
that law. Thus, a new laser, television set, or airplane could not
be protected because inventions which by their nature cannot be put
into commercial use without disclosure, are not eligible for trade
secret protection after they are put on the market. Those that can
be maintained are eligible. But as the basic economic function of
the patent system is to encourage the making and commercialization
of inventions, there seems to be no justification for providing
incentives beyond those provided by the patent law to discriminate
between different categories of inventions, i.e., those
that may inherently be kept secret and those that may not.
Moreover, state rules which would grant such incentives seem to
conflict with the economic quid pro quo underlying patent
protection; i.e., a monopoly limited in time, in return
for full disclosure of the invention. Thus, federal law has struck
a balance between incentives for inventors and the public's right
to a competitive economy. In this sense, the patent law is an
integral part of federal competitive policy."

															Adelman, Secrecy and Patenting: Some Proposals for Resolving the
Conflict, 1 APLA Quarterly Journal 296, 298-299 (1973).

															[ Footnote 2/3 ]

															Trade secrets often are unpatentable. In that event, there is no
federal policy which is contravened when an injunction to bar
disclosure of a trade secret is issued. Moreover, insofar as
foreign patents are involved, our federal patent policy is
obviously irrelevant. S. Oppenheim, Unfair Trade Practices 264-265
(2d ed.1965). As respects further contrasts between patents and
trade secrets, see Milgrim, Trade Secret Protection and
Licensing, 4 Pat.L.Rev. 375 (1972).

															[ Footnote 2/4 ]

															As to Goldstein v. California, 412 U.
S. 546 , the ruling of Mr. Justice Bradley concerning the
distinction between patents and copyright is relevant:

															"The difference between the two things, letters-patent and
copyright, may be illustrated by reference to the subjects just
enumerated. Take the case of medicines. Certain mixtures are found
to be of great value in the healing art. If the discoverer writes
and publishes a book on the subject (as regular physicians
generally do), he gains no exclusive right to the manufacture and
sale of the medicine; he gives that to the public. If he desires to
acquire such exclusive right, he must obtain a patent for the
mixture as a new art, manufacture, or composition of matter. He may
copyright his book, if he pleases, but that only secures to him the
exclusive right of printing and publishing his book. So of all
other inventions or discoveries." Baker v. Selden, 101 U. S. 99 , 101 U. S.
102 -103.

Summary: The U.S. Supreme Court case Kewanee Oil Co. v. Bicron Corp. (1974) dealt with the conflict between state trade secret laws and federal patent laws. The Court held that state trade secret laws are not preempted by federal patent laws, as they serve different purposes and do not conflict with each other. Trade secret protection encourages invention and innovation, and its abolition would not lead to increased disclosure of discoveries to the public. The Court also distinguished between trade secrets and patentable inventions, highlighting that trade secrets are often unpatentable and involve different forms of incentive and protection. This decision affirmed the importance of state trade secret laws in protecting intellectual property and ensuring a competitive economy.


U.S. Supreme Court Parker v. Flook, 437
U.S. 584 (1978) Parker v. Flook No. 77-642 Argued April 25, 1978 Decided June 22, 1978 437
U.S. 584 CERTIORARI TO THE COURT OF CUSTOMS
AND PATENT APPEALS Syllabus Respondent's method for updating alarm limits during catalytic
conversion processes, in which the only novel feature is a
mathematical formula, held not patentable under § 101 of the Patent
Act. The identification of a limited category of useful, though
conventional, post-solution applications of such a formula does not
make the method eligible for patent protection, since, assuming the
formula to be within prior art, as it must be, O'Reilly v.
Morse , 15 How. 62, respondent's application
contains no patentable invention. The chemical processes involved
in catalytic conversion are well known, as are the monitoring of
process variables, the use of alarm limits to trigger alarms, the
notion that alarm limit values must be recomputed and readjusted,
and the use of computers for "automatic process monitoring." Pp. 437 U. S.
588 -596.

															559 F.2d 21, reversed.

															STEVENS, J., delivered the opinion of the Court, in which
BRENNAN, WHITE, MARSHALL, BLACKMUN, and POWELL, JJ., joined.
STEWART, J., filed a dissenting opinion, in which BURGER, C.J., and
REHNQUIST, J., joined, post, p. 437 U. S.
598 . Page 437 U. S. 585 MR. JUSTICE STEVENS delivered the opinion of the Court.

															Respondent applied for a patent on a "Method for Updating Alarm
Limits." The only novel feature of the method is a mathematical
formula. In Gottschalk v. Benson, 409 U. S.
63 , we held that the discovery of a novel and useful
mathematical formula may not be patented. The question in this case
is whether the identification of a limited category of useful,
though conventional, post-solution applications of such a formula
makes respondent's method eligible for patent protection. I An "alarm limit" is a number. During catalytic conversion
processes, operating conditions such as temperature, pressure, and
flow rates are constantly monitored. When any of these "process
variables" exceeds a predetermined "alarm limit," an alarm may
signal the presence of an abnormal condition indicating either
inefficiency or perhaps danger. Fixed alarm limits may be
appropriate for a steady operation, but during transient operating
situations, such as start-up, it may be necessary to "update" the
alarm limits periodically.

															Respondent's patent application describes a method of updating
alarm limits. In essence, the method consists of three steps: an
initial step which merely measures the present value of the process
variable ( e.g., the temperature); an intermediate step
which uses an algorithm [ Footnote
1 ] to calculate an updated alarm limit value; and a final step
in which the actual alarm limit is adjusted to the updated value.
[ Footnote 2 ] The only
difference Page 437 U. S. 586 between the conventional methods of changing alarm limits and
that described in respondent's application rests in the second step
-- the mathematical algorithm or formula. Using the formula, an
operator can calculate an updated alarm limit once he knows the
original alarm base, the appropriate margin of safety, the time
interval that should elapse between each updating, the current
temperature (or other process variable), and the appropriate
weighting factor to be used to average the original alarm base and
the current temperature.

															The patent application does not purport to explain how to select
the appropriate margin of safety, the weighting factor, or any of
the other variables. Nor does it purport to contain any disclosure
relating to the chemical processes at work, the monitoring of
process variables, or the means of setting off an alarm or
adjusting an alarm system. All that it provides is a formula for
computing an updated alarm limit. Although the computations can be
made by pencil and paper calculations, the abstract of disclosure
makes it clear that the formula is primarily useful for
computerized calculations producing automatic adjustments in alarm
settings. [ Footnote 3 ]

															The patent claims cover any use of respondent's formula for
updating the value of an alarm limit on any process variable
involved in a process comprising the catalytic chemical conversion
of hydrocarbons. Since there are numerous processes of that kind in
the petrochemical and oil-refining industries, [ Footnote 4 ] the claims cover a broad range of
potential uses of the method. They do not, however, cover every
conceivable application of the formula. Page 437 U. S. 587 II The patent examiner rejected the application. He found that the
mathematical formula constituted the only difference between
respondent's claims and the prior art, and therefore a patent on
this method "would, in practical effect, be a patent on the formula
or mathematics itself." [ Footnote
5 ] The examiner concluded that the claims did not describe a
discovery that was eligible for patent protection.

															The Board of Appeals of the Patent and Trademark Office
sustained the examiner's rejection. The Board also concluded that
the "point of novelty in [respondent's] claimed method" [ Footnote 6 ] lay in the formula or
algorithm described in the claims, a subject matter that was
unpatentable under Benson, supra. The Court of Customs and Patent Appeals reversed. In re
Flook, 559 F.2d 21. It read Benson as applying only
to claims that entirely preempt a mathematical formula or
algorithm, and noted that respondent was only claiming on the use
of his method to update alarm limits in a process comprising the
catalytic chemical conversion of hydrocarbons. The court reasoned
that, since the mere solution of the algorithm would not constitute
infringement of the claims, a patent on the method would not
preempt the formula.

															The Acting Commissioner of Patents and Trademarks filed a
petition for a writ of certiorari, urging that the decision of the
Court of Customs and Patent Appeals will have a debilitating effect
on the rapidly expanding computer "software" industry, [ Footnote 7 ] and will require him to
process thousands of additional Page 437 U. S. 588 patent applications. Because of the importance of the question,
we granted certiorari, 434 U.S. 1033. III This case turns entirely on the proper construction of § 101 of
the Patent Act, which describes the subject matter that is eligible
for patent protection. [ Footnote
8 ] It does not involve the familiar issues of novelty and
obviousness that routinely arise under §§ 102 and 103 when the
validity of a patent is challenged. For the purpose of our
analysis, we assume that respondent's formula is novel and useful,
and that he discovered it. We also assume, since respondent does
not challenge the examiner's finding, that the formula is the only
novel feature of respondent's method. The question is whether the
discovery of this feature makes an otherwise conventional method
eligible for patent protection.

															The plain language of § 101 does not answer the question. It is
true, as respondent argues, that his method is a "process" in the
ordinary sense of the word. [ Footnote 9 ] But that was also true of the algorithm, which
described a method for converting binary-coded decimal numerals
into pure binary numerals, Page 437 U. S. 589 that was involved in Gottschalk v. Benson. The holding
that the discovery of that method could not be patented as a
"process" forecloses a purely literal reading of § 101. [ Footnote 10 ] Reasoning that an
algorithm, or mathematical formula, is like a law of nature, Benson applied the established rule that a law of nature
cannot be the subject of a patent. Quoting from earlier cases, we
said:

															"'A principle, in the abstract, is a fundamental truth; an
original cause; a motive; these cannot be patented, as no one can
claim in either of them an exclusive right.' Le Roy v.
Tatham , 14 How. 156, 55 U. S.
175 . Phenomena of nature, though just discovered, mental
processes, and abstract intellectual concepts are not patentable,
as they are the basic tools of scientific and technological
work."

															409 U.S. at 409 U. S.
67 .

															The line between a patentable "process" and an unpatentable
"principle" is not always clear. Both are "conception[s] of the
mind, seen only by [their] effects when being executed or
performed." Tilghman v. Proctor, 102 U.
S. 707 , 102 U. S. 728 .
In Benson, we concluded that the process application in
fact sought to patent an idea, noting that

															"[t]he mathematical formula involved here has no substantial
practical application except in connection with a digital computer,
which means that, if the judgment below is affirmed, the patent
would wholly preempt the mathematical formula and, in practical
effect, would be a patent on the algorithm itself."

															409 U.S. at 409 U. S.
71 -72.

															Respondent correctly points out that this language does not
apply to his claims. He does not seek to "wholly preempt the
mathematical formula," since there are uses of his Page 437 U. S. 590 formula outside the petrochemical and oil refining industries
that remain in the public domain. And he argues that the presence
of specific "post-solution" activity -- the adjustment of the alarm
limit to the figure computed according to the formula --
distinguishes this case from Benson and makes his process
patentable. We cannot agree.

															The notion that post-solution activity, no matter how
conventional or obvious in itself, can transform an unpatentable
principle into a patentable process exalts form over substance. A
competent draftsman could attach some form of post-solution
activity to almost any mathematical formula; the Pythagorean
theorem would not have been patentable, or partially patentable,
because a patent application contained a final step indicating that
the formula, when solved, could be usefully applied to existing
surveying techniques. [ Footnote
11 ] The concept of patentable subject matter under § 101 is not
"like a nose of wax, which may be turned and twisted in any
direction. . . ." White v. Dunbar, 119 U. S.
47 , 119 U. S.
51 .

															Yet it is equally clear that a process is not unpatentable
simply because it contains a law of nature or a mathematical
algorithm. See Eibel Process Co. v. Minnesota Ontario Paper
Co., 261 U. S. 45 ; Tilghman v. Proctor, supra. [ Footnote 12 ] For Page 437 U. S. 591 instance, in Mackay Radio & Telegraph Co. v. Radio Corp.
of America, 306 U. S. 86 , the
applicant sought a patent on a directional antenna system in which
the wire arrangement was determined by the logical application of a
mathematical formula. Putting the question of patentability to one
side as a preface to his analysis of the infringement issue, Mr.
Justice Stone, writing for the Court, explained:

															"While a scientific truth, or the mathematical expression of it,
is not patentable invention, a novel and useful structure created
with the aid of knowledge of scientific truth may be." Id. at 306 U. S.
94 . Funk Bros. Seed Co. v. Kalo Co., 333 U.
S. 127 , 333 U. S. 130 ,
expresses a similar approach:

															"He who discovers a hitherto unknown phenomenon of nature has no
claim to a monopoly of it which the law recognizes. If there is to
be invention from such a discovery, it must come from the
application of the law of nature to a new and useful end." Mackay Radio and Funk Bros. point to the
proper analysis for this case: the process itself, not merely the
mathematical algorithm, must be new and useful. Indeed, the novelty
of the mathematical algorithm is not a determining factor at all.
Whether the algorithm was in fact known or unknown at the time of
the claimed invention, as one of the "basic tools of scientific and
technological work," see Gottschalk v. Benson, Page 437 U. S. 592 409 U.S. at 409 U. S. 67 , it
is treated as though it were a familiar part of the prior art.

															This is also the teaching of our landmark decision in O'Reilly v.
Morse , 15 How. 62. In that case, the Court rejected
Samuel Morse's broad claim covering any use of electromagnetism for
printing intelligible signs, characters, or letters at a distance. Id. at 56 U. S.
112 -121. In reviewing earlier cases applying the rule
that a scientific principle cannot be patented, the Court placed
particular emphasis on the English case of Neilson v.
Harford, Web.Pat.Cases 295, 371 (1844), which involved the
circulation of heated air in a furnace system to increase its
efficiency. The English court rejected the argument that the patent
merely covered the principle that furnace temperature could be
increased by injecting hot air, instead of cold into the furnace.
That court's explanation of its decision was relied on by this
Court in Morse: "'It is very difficult to distinguish it [the Neilson patent]
from the specification of a patent for a principle, and this at
first created in the minds of the court much difficulty; but after
full consideration, we think that the plaintiff does not merely
claim a principle, but a machine, embodying a principle, and a very
valuable one. We think the case must be considered as if the
principle being well known, the plaintiff had first invented a mode
of applying it. . . . '"

															15 How. at 56 U. S. 115 (emphasis added). [ Footnote
13 ] We think this case must also be considered as if the
principle or mathematical formula were well known.

															Respondent argues that this approach improperly imports into §
101 the considerations of "inventiveness" which are the proper
concerns of §§ 102 and 103. [ Footnote 14 ] This argument is based on two fundamental
misconceptions. Page 437 U. S. 593 First, respondent incorrectly assumes that, if a process
application implements a principle in some specific fashion, it
automatically falls within the patentable subject matter of § 101
and the substantive patentability of the particular process can
then be determined by the conditions of §§ 102 and 103. This
assumption is based on respondent's narrow reading of Benson, and is as untenable in the context of § 101 as it
is in the context of that case. It would make the determination of
patentable subject matter depend simply on the draftsman's art, and
would ill serve the principles underlying the prohibition against
patents for "ideas" or phenomena of nature. The rule that the
discovery of a law of nature cannot be patented rests not on the
notion that natural phenomena are not processes, but rather on the
more fundamental understanding that they are not the kind of
"discoveries" that the statute was enacted to protect. [ Footnote 15 ] The obligation to
determine what type of discovery is sought to be patented must
precede the determination of whether that discovery is, in fact,
new or obvious.

															Second, respondent assumes that the fatal objection to his
application is the fact that one of its components -- the
mathematical Page 437 U. S. 594 formula -- consists of unpatentable subject matter. In
countering this supposed objection, respondent relies on opinions
by the Court of Customs and Patent Appeals which reject the
notion

															"that a claim may be dissected, the claim components searched in
the prior art, and, if the only component found novel is outside
the statutory classes of invention, the claim may be rejected under
35 U.S.C. § 101." In re Chatfield, 545 F.2d 152, 15 (CCPA 1976).
[ Footnote 16 ] Our approach
to respondent's application is, however, not at all inconsistent
with the view that a patent claim must be considered as a whole.
Respondent's process is unpatentable under § 101 not because it
contains a mathematical algorithm as one component, but because,
once that algorithm is assumed to be within the prior art, the
application, considered as a whole, contains no patentable
invention. Even though a phenomenon of nature or mathematical
formula may be well known, an inventive application of the
principle may be patented. Conversely, the discovery of such a
phenomenon cannot support a patent unless there is some other
inventive concept in its application.

															Here it is absolutely clear that respondent's application
contains no claim of patentable invention. The chemical processes
involved in catalytic conversion of hydrocarbons are well known, as
are the practice of monitoring the chemical process variables, the
use of alarm limits to trigger alarms, the notion that alarm limit
values must be recomputed and readjusted, and the use of computers
for "automatic monitoring alarming." [ Footnote 17 ] Respondent's application simply provides a
new and presumably better method for calculating alarm limit Page 437 U. S. 595 values. If we assume that that method was also known, as we must
under the reasoning in Morse, then respondent's claim is,
in effect, comparable to a claim that the formula 2�r can be
usefully applied in determining the circumference of a wheel.
[ Footnote 18 ] As the Court
of Customs and Patent Appeals has explained,

															"if a claim is directed essentially to a method of calculating,
using a mathematical formula, even if the solution is for a
specific purpose, the claimed method is nonstatutory." In re Richman, 563 F.2d 1026, 1030 (1977).

															To a large extent, our conclusion is based on reasoning derived
from opinions written before the modern business of developing
programs for computers was conceived. The youth of the industry may
explain the complete absence of precedent supporting patentability.
Neither the dearth of precedent nor this decision should therefore
be interpreted as reflecting a judgment that patent protection of
certain novel and useful computer programs will not promote the
progress of science and the useful arts, or that such protection is
undesirable as a matter of policy. Difficult questions of policy
concerning the kinds of programs that may be appropriate for patent
protection and the form and duration of such protection can be
answered by Congress on the basis of current empirical data not
equally available to this tribunal. [ Footnote 19 ] Page 437 U. S. 596 It is our duty to construe the patent statutes as they now read,
in light of our prior precedents, and we must proceed cautiously
when we are asked to extend patent rights into areas wholly
unforeseen by Congress. As MR. JUSTICE WHITE explained in writing
for the Court in Deepsouth Packing Co. v. Latram Corp., 406 U. S. 518 , 406 U. S.
531 :

															"[W]e should not expand patent rights by overruling or modifying
our prior cases construing the patent statutes unless the argument
for expansion of privilege is based on more than mere inference
from ambiguous statutory language. We would require a clear and
certain signal from Congress before approving the position of a
litigant who, as respondent here, argues that the beachhead of
privilege is wider, and the area of public use narrower, than
courts had previously thought. No such signal legitimizes
respondent's position in this litigation."

															The judgment of the Court of Customs and Patent Appeals is

															Reversed.

															| 437
U.S. 584 app| APPENDIX TO OPINION OF THE COURT Claim 1 of the patent describes the method as follows:

															"1. A method for updating the value of at least one alarm limit
on at least one process variable involved in a process comprising
the catalytic chemical conversion of hydrocarbons wherein said
alarm limit has a current value of"

															" Bo + K" "wherein Bo is the current alarm base and K is a predetermined
alarm offset which comprises: " Page 437 U. S. 597 "(1) Determining the present value of said process variable,
said present value being defined as PVL;"

															"(2) Determining a new alarm base B1, using the following
equation:"

															" B1=Bo(1.0-F) + PVL(F)" "where F is a predetermined number greater than zero and less
than 1.0;"

															"(3) Determining an updated alarm limit which is defined as B1 +
K; and thereafter"

															"(4) Adjusting said alarm limit to said updated alarm limit
value."

															App. 63A.

															In order to use respondent's method for computing a new limit,
the operator must make four decisions. Based on his knowledge of
normal operating conditions, he first selects the original "alarm
base" (Bo); if a temperature of 400 degrees is normal, that may be
the alarm base. He next decides on an appropriate margin of safety,
perhaps 50 degrees; that is his "alarm offset" (K). The sum of the
alarm base and the alarm offset equals the alarm limit. Then he
decides on the time interval that will elapse between each
updating; that interval has no effect on the computation, although
it may, of course, be of great practical importance. Finally, he
selects a weighting factor (F), which may be any number between 99%
and 1% * and which is
used in the updating calculation.

															If the operator has decided in advance to use an original alarm
base (Bo) of 400 degrees, a constant alarm offset (K) of 50
degrees, and a weighting factor (F) of 80%, the only additional
information he needs in order to compute an updated alarm limit
(UAV), is the present value of the process variable (PVL). The
computation of the updated alarm limit according to respondent's
method involves these three steps:

															First, at the predetermined interval, the process variable Page 437 U. S. 598 is measured; if we assume the temperature is then 425 degrees,
PVL will then equal 425.

															Second, the solution of respondent's novel formula will produce
a new alarm base (B1) that will be a weighted average of the
preceding alarm base (Bo) of 400 degrees and the current
temperature (PIL) of 425. It will be closer to one or the other,
depending on the value of the weighting factor (F) selected by the
operator. If F is 80%, that percentage of 425 (340) plus 20% (1-F)
of 400 (80) will produce a new alarm base of 420 degrees.

															Third, the alarm offset (K) of 50 degrees is then added to the
new alarm base (B1) of 420 to produce the updated alarm limit (UAV)
of 470.

															The process is repeated at the selected time intervals. In each
updating computation, the most recently calculated alarm base and
the current measurement of the process variable will be substituted
for the corresponding numbers in the original calculation, but the
alarm offset and the weighting factor will remain constant.

															* More precisely, it is defined as a number greater than 0, but
less than 1.

															[ Footnote 1 ]

															We use the word "algorithm" in this case, as we did in Gottschalk v. Benson, 409 U. S. 63 , 409 U. S. 65 , to
mean "[a] procedure for solving a given type of mathematical
problem. . . ."

															[ Footnote 2 ]

															Claim 1 of the patent is set forth in the 437
U.S. 584 app|>appendix to this opinion, which also contains a
more complete description of these three steps.

															[ Footnote 3 ]

															App. 13A.

															[ Footnote 4 ]

															Examples mentioned in the abstract of disclosure include naphtha
reforming, petroleum distillate and petroleum residuum cracking,
hydrocracking and desulfurization, aromatic hydrocarbon and
paraffin isomerization and disproportionation, paraffin-olefin
alkylation, and the like. Id. at 8A.

															[ Footnote 5 ] Id. at 47A.

															[ Footnote 6 ] Id. at 60A.

															[ Footnote 7 ]

															The term "software" is used in the industry to describe computer
programs. The value of computer programs in use in the United
States in 1976 was placed at $43.1 billion, and projected at $70.7
billion by 1980 according to one industry estimate. See Brief for the Computer & Business Equipment Manufacturers Assn.
as Amicus Curiae 17-18, n. 16.

															[ Footnote 8 ]

															Title 35 U.S.C. § 101 provides:

															"Whoever invents or discovers any new and useful process,
machine, manufacture, or composition of matter, or any new and
useful improvement thereof, may obtain a patent therefor, subject
to the conditions and requirements of this title."

															Section 100(b) provides:

															"The term 'process' means process, art or method, and includes a
new use of a known process, machine, manufacture, composition of
matter, or material."

															[ Footnote 9 ]

															The statutory definition of "process" is broad. See n 8, supra. An
argument can be made, however, that this Court has only recognized
a process as within the statutory definition when it either was
tied to a particular apparatus or operated to change materials to a
"different state or thing." See Cochrane v. Deener, 94 U. S. 780 , 94 U. S.
787 -788. As in Benson, we assume that a valid
process patent may issue even if it does not meet one of these
qualifications of our earlier precedents. 409 U.S. at 409 U. S.
71 .

															[ Footnote 10 ]

															In Benson, we phrased the issue in this way:

															"The question is whether the method described and claimed is a
'process' within the meaning of the Patent Act." Id. at 409 U. S.
64 .

															[ Footnote 11 ]

															It should be noted that, in Benson, there was a
specific end use contemplated for the algorithm -- utilization of
the algorithm in computer programming. See In re
Chatfield, 545 F.2d 152, 161 (CCPA 1976) (Rich, J.,
dissenting). Of course, as the Court pointed out, the formula had
no other practical application; but it is not entirely clear why a
process claim is any more or less patentable because the specific
end use contemplated is the only one for which the algorithm has
any practical application.

															[ Footnote 12 ]

															In Eibel Process Co., the Court upheld a patent on an
improvement on a papermaking machine that made use of the law of
gravity to enhance the flow of the product. The patentee, of
course, did not claim to have discovered the force of gravity, but
that force was an element in his novel conception. Tilghman v. Proctor involved a process claim for
" the manufacturing of fat acids and glycerine from fatty
bodies.'" The Court distinguished the process from the principle
involved as follows: "[T]he claim of the patent is not for a mere principle. The
chemical principle or scientific fact upon which it is founded is,
that the elements of neutral fat require to be severally united
with an atomic equivalent of water in order to separate from each
other and become free. This chemical fact was not discovered by
Tilghman. He only claims to have invented a particular mode of
bringing about the desired chemical union between the fatty
elements and water."

															102 U.S. at 102 U. S.
729 .

															[ Footnote 13 ] See also Risdon Locomotive Works v. Medart, 158 U. S. 68 ; Tilghman v. Proctor, supra. [ Footnote 14 ]

															Sections 102 and 103 establish certain conditions, such as
novelty and nonobviousness, to patentability.

															[ Footnote 15 ]

															The underlying notion is that a scientific principle, such as
that expressed in respondent's algorithm, reveals a relationship
that has always existed.

															"An example of such a discovery [of a scientific principle] was
Newton's formulation of the law of universal gravitation, relating
the force of attraction between two bodies, F, to their masses, m
and m', and the square of the distance, d, between their centers,
according to the equation F=mm'/d^2. But this relationship always
existed -- even before Newton announced his celebrated law. Such
'mere' recognition of a theretofore existing phenomenon or
relationship carries with it no rights to exclude others from its
enjoyment. . . . Patentable subject matter must be new (novel), not
merely heretofore unknown. There is a very compelling reason for
this rule. The reason is founded upon the proposition that, in
granting patent rights, the public must not be deprived of any
rights that it theretofore freely enjoyed."

															P. Rosenberg, Patent Law Fundamentals, § 4, p. 13 (1975).

															[ Footnote 16 ]

															Section 103, by its own terms, requires that a determination of
obviousness be made by considering "the subject matter as a whole."
35 U.S.C. § 103. Although this does not necessarily require that
analysis of what is patentable subject matter under § 101 proceed
on the same basis, we agree that it should.

															[ Footnote 17 ]

															App. 22

															[ Footnote 18 ]

															Respondent argues that the inventiveness of his process must be
determined as of "the time the invention is made" under § 103, and
that, therefore, it is improper to judge the obviousness of his
process by assessing the application of the formula as though the
formula were part of the prior art. This argument confuses the
issue of patentable subject matter under § 101 with that of
obviousness under § 103. Whether or not respondent's formula can be
characterized as "obvious," his process patent rests solely on the
claim that his mathematical algorithm, when related to a computer
program, will improve the existing process for updating alarm
units. Very simply, our holding today is that a claim for an
improved method of calculation, even when tied to a specific end
use, is unpatentable subject matter under § 101.

															[ Footnote 19 ]

															Articles assessing the merits and demerits of patent protection
for computer programming are numerous. See, e.g., Davis,
Computer Programs and Subject Matter Patentability, 6 Rutgers J. of
Computers and Law 1 (1977), and articles cited therein, at 2 n. 5.
Even among those who favor patentability of computer programs,
there is questioning of whether the 17-year protection afforded by
the current Patent Act is either needed or appropriate. See
id. at 20 n. 133.

															MR. JUSTICE STEWART, with whom THE CHIEF JUSTICE and MR. JUSTICE
REHNQUIST join, dissenting.

															It is a commonplace that laws of nature, physical phenomena, and
abstract ideas are not patentable subject matter. [ Footnote 2/1 ] A patent could not issue, in other
words, on the law of gravity, or the multiplication tables, or the
phenomena of magnetism, or the fact that water at sea level boils
at 100 degrees centigrade and freezes at zero -- even though newly
discovered. Le Roy v.
Tatham , 14 How. 156, 55 U. S. 175 ; O'Reilly v.
Morse , 15 How. 62, 56 U. S.
112 -121; Rubber-Tip Pencil Co. v.
Howard , 20 Wall. Page 437 U. S. 599 498, 87 U. S. 507 ; Tilghman v. Proctor, 102 U. S. 707 ; Mackay Radio & Telegraph Co. v. Radio Corp. of
America, 306 U. S. 86 , 306 U. S. 94 ; Funk Bros. Seed Co. v. Kalo Co., 333 U.
S. 127 , 333 U. S.
130 .

															The recent case of Gottschalk v. Benson, 409 U. S.
63 , stands for no more than this long-established
principle, which the Court there stated in the following words:

															"Phenomena of nature, though just discovered, mental processes,
and abstract intellectual concepts are not patentable, as they are
the basic tools of scientific and technological work." Id. at 409 U. S. 67 . In Benson, the Court held unpatentable claims for an
algorithm that "were not limited to any particular art or
technology, to any particular apparatus or machinery, or to any
particular end use." Id. at 409 U. S. 64 . A
patent on such claims, the Court said, "would wholly preempt the
mathematical formula and, in practical effect, would be a patent on
the algorithm itself." Id. at 409 U. S.
72 .

															The present case is a far different one. The issue here is
whether a claimed process [ Footnote
2/2 ] loses its status of subject matter patentability simply
because one step in the process would not be patentable
subject matter if considered in isolation. The Court of Customs and
Patent Appeals held that the process is patentable subject matter, Benson being inapplicable, since

															"[t]he present claims do not preempt the formula or algorithm
contained therein, because solution of the algorithm, per
se, would not infringe the claims." In re Flook, 559 F.2d 21, 23.

															That decision seems to me wholly in conformity with basic
principles of patent law. Indeed, I suppose that thousands of
processes and combinations have been patented that contained one or
more steps or elements that themselves would have been Page 437 U. S. 600 unpatentable subject matter. [ Footnote 2/3 ] Eibel Process Co. v. Minnesota &
Ontario Paper Co., 261 U. S. 45 , is a
case in point. There the Court upheld the validity of an
improvement patent that made use of the law of gravity, which, by
itself, was clearly unpatentable. See also, e.g., Tilghman v.
Proctor, supra. The Court today says it does not turn its back on these well
settled precedents, ante at 437 U. S. 594 ,
but it strikes what seems to me an equally damaging blow at basic
principles of patent law by importing into its inquiry under 35
U.S.C. § 101 the criteria of novelty and inventiveness. Section 101
is concerned only with subject matter patentability. Whether a
patent will actually issue depends upon the criteria of §§ 102 and
103, which include novelty and inventiveness, among many others. It
may well be that, under the criteria of §§ 102 and 103, no patent
should issue on the process claimed in this case, because of
anticipation, abandonment, obviousness, or for some other reason.
But, in my view, the claimed process clearly meets the standards of
subject matter patentability of § 101.

															In short, I agree with the Court of Customs and Patent Appeals
in this case, and with the carefully considered opinions of that
court in other cases presenting the same basic issue. See In re
Freeman, 573 F.2d 1237; In re Richman, 563 F.2d 1026; In re De Castelet, 562 F.2d 1236; In re Deutsch, 553 F.2d 689; In re Chatfield, 545 F.2d 152. Accordingly,
I would affirm the judgment before us.

															[ Footnote 2/1 ]

															Title 35 U.S.C. § 101 provides:

															"Whoever invents or discovers any new and useful process,
machine, manufacture, or composition of matter, or any new and
useful improvement thereof, may obtain a patent therefor, subject
to the conditions and requirements of this title."

															[ Footnote 2/2 ]

															Title 35 U.S.C. § 100(b) provides:

															"The term 'process' means process, art or method, and includes a
new use of a known process, machine, manufacture, composition of
matter, or material."

															[ Footnote 2/3 ]

															In Gottschalk v. Benson, the Court equated process and
product patents for the purpose of its inquiry: "We dealt there
with a product' claim, while the present case deals with a
`process' claim. But we think the same principle applies." 409 U.S.
at 409 U. S.
67 -68.

Summary: The Supreme Court ruled that a method for updating alarm limits during catalytic conversion processes, where the only novel element is a mathematical formula, is not eligible for a patent. The Court held that the identification of conventional post-solution applications of the formula does not make the method patentable, as the formula itself is within the prior art. The decision highlights the distinction between subject matter patentability under § 101 and the criteria for patent issuance under §§ 102 and 103, which include novelty and inventiveness.