A Brief History of U.S. Trade Secret Law

December 14, 2022

AIPLA Quarterly Journal

The thing to remember about trade secret law is that it comes from the courts. Even with the Uniform Trade Secrets Act ("UTSA") and the Defend Trade Secrets Act ("DTSA"), judges continue to sculpt this category of intellectual property. And it's critical that they get it right, because for hyperconnected, data-driven businesses, secrecy is the primary method of protecting their most valuable and vulnerable assets.
That's what makes it so hard today to imagine how, fifty years ago, we came close to losing it all. I still remember the day when, in my first full year of practice, I noticed one of the senior partners hunched over his desk reading from the advance sheets. Because it was unusual for this partner to be reading cases at all, I asked him what had captured his attention. "Trade secrets," he said. "The Supreme Court says they're okay."

The case was Kewanee Oil Co. v. Bicron Corp., and indeed the Court held that state law on trade secrets survived a preemption challenge based on federal patent law. Viewed from today's perspective, the outcome may seem evident, the challenge even a bit absurd. But the decision wasn't unanimous; Justices Douglas and Brennan dissented, observing that the patent system hinged on encouraging disclosure and that secrecy's "conflict with the patent laws is obvious."

This article's focus is on the past fifty years, the era of what we might call "modern trade secret law." But before we examine the exciting developments of the current period, it's important to understand how we managed to get to that day in 1974 when a whole body of law was on the line, and we could not be sure how it would turn out.

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