3. Software trade secrets and patents: Conflicting or complementary?
Konica asserted that trade-secret law is distinguished from patent law in that the former does not protect ideas, which are the province of the latter. The company cited Silvaco Data Systems v. Intel Corp., supra, 184 Cal.App.4th 210 at 221 as standing for the proposition that "[t]rade secret law does not protect ideas as such." (Altavion, Inc. v. Konica Minolta Systems Laboratory, Inc., supra, 226 Cal.App.4th 26 at 54.)
To counter Konica's assertion as to the limitations of trade-secret protection, the Court cited Sinclair v. Aquarius Electronics, Inc. (1974) 42 Cal.App.3d 216, 222, which "explained the overlap between trade secret law and patent law as follows:
"'[A]lthough a trade secret may be a device or process which is patentable, patentability is not a condition precedent to the classification of a trade secret. Thus, it has been said that a trade secret may be a device or process which is clearly anticipated in the prior art or one which is merely a mechanical improvement on a machine or device. Novelty and invention are not requisite for a trade secret as they are for patentability . . . . In harmony with these precepts, it has been held that a trade secret in the broad sense consists of any unpatented idea which may be used for industrial and commercial purposes . . . .' (Id. at 222, italics added, citing Painton & Co. v. Bourns, Inc. (2d Cir. 1971) 442 F.2d 216, 222 . . . see Kewanee Oil Co. v. Bicron Corp. (1974) 416 U.S. 470, 491 [40 L. Ed. 2d 315, 94 S. Ct. 1879] ['extension of trade secret protection to clearly patentable inventions does not conflict with the patent policy of disclosure']; Sketchley v. Lipkin (1950) 99 Cal.App.2d 849, 854 [222 P.2d 927] ['owner of an unpatented device is by legal principles protected against the piracy of his invention because it is his own by virtue of being the original product of his mind']; AvidAir Helicopter Supply, Inc. v. Rolls-Royce (8th Cir. 2011) 663 F.3d 966, 973 ['[t]rade secret protection does not shield an idea from "infringing" other uses of the idea; instead it protects valuable information from being misappropriated despite reasonable efforts to keep it secret']; Gabriel Technologies Corp. v. Qualcomm, Inc. (S.D.Cal., Dec. 12, 2011, No. 08cv1992 AJB (MDD)) 2011 WL 6152240, p. *5 [court agreed that 'a unique approach to a problem can constitute a process that is a protectable trade secret provided that the approach process is sufficiently described'].)" (Altavion, Inc. v. Konica Minolta Systems Laboratory, Inc., supra, 226 Cal.App.4th 26 at 54-55.)
The Altavion Court further distinguished trade-secret protections from patent protections:
"An inventor who fails to obtain a patent for a patentable idea incurs significant risks. The secret may leak, or other circumstances may arise that frustrate the inventor's right to obtain a patent. (Kewanee Oil Co. v. Bicron Corp., supra, 416 U.S. at p. 490; Painton & Co. v. Bourns, Inc., supra, 442 F.2d at p. 224.) Nevertheless, the 'long-standing principle' is 'that an inventor who chooses to exploit his invention by private arrangements is entirely free to do so, though in so doing he may thereby forfeit his right to a patent.' (Painton & Co., at p. 225; see ibid. ['inventor "may keep his invention secret and reap its fruits indefinitely"’]; Sinclair v. Aquarius Electronics, Inc., supra, 42 Cal.App.3d at p. 223 ['although a trade secret does not give its owner any monopoly and once contracted away is subject to being copied, the inventor is entirely free to keep his idea secret and not to divulge it to the general public . . .']; Learning Curve Toys, Inc. v. PlayWood Toys, Inc. (7th Cir. 2003) 342 F.3d 714, 727 . . . [stating it is 'irrelevant that PlayWood did not seek to patent its concept'].) Indeed, as a leading scholar has observed, because a 'substantial number of patents' are invalidated by the courts, resulting in disclosure of an invention to competitors with no benefit, 'many businesses now elect to protect commercially valuable information through reliance upon the state law of trade secret protection.' (1 Milgrim on Trade Secrets, supra, § 1.01[a], p. 1-36.)" (Altavion, Inc. v. Konica Minolta Systems Laboratory, Inc., supra, 226 Cal.App.4th 26 at 55.)
As the Altavion Court explained, trade secret law provides inventors with added protections to safeguard their inventions in light of recent decisions that have invalidated technology patents. However, for the "idea" to qualify as a trade secret, it must be kept secret by the holder, who thereby retains the “right to control the dissemination of information” (Silvaco Data Systems v. Intel Corp., supra, 184 Cal.App.4th 210 at 221).
1. Secret and valuable
2. Described with particularity