Jerking the Rug Out from Under a Trade Secret Licensee: Is Transfer of the Patent a Remedy?

Predominantly state trade secret law and exclusively federal patent law enjoy a sometimes-uneasy coexistence. Inventions almost always are secret until and unless they are patented; publicizing them for too long will negate the availability of a patent. Misappropriation of trade secrets often is accompanied by application for a patent on the same subject matter. This commonly occurs when an employee gains access to his employer’s trade secrets, quits, and then applies for a patent on them in his own name, maybe after going to work for a competitor of the original employer. It is also conceivable that the owner of a trade secret licenses it to another and then proceeds to get a patent on it, making the license worthless, because the publication of the patent and its application extinguish the trade secret. When that happens, what happens to the business opportunities that the licensee has developed by using the trade secrets? Can he convert his now useless trade secret license into a license to practice the patent? If he can protect his own practice of the patent, can he also exclude others? Answering these questions requires nuanced understanding and careful application of complex boundaries between state and federal law; rights, privileges, and powers comprising the bundle of interests that define intellectual property; and appreciation of the remedies available in law and equity for misappropriation and infringement in light of their historical development.