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INTRODUCTION
The United States patent system is designed to force innovators to make a choice: maintain their innovations as trade secrets or disclose them in exchange for patent protection.
Trade secret protection offers the prospect of perpetual protection, but it may be defeated by independent discovery of the secret.1 Conversely, patent protection offers protection against independent discovery, but it limits the term of protection.2
The patent system is often referred to in contract terms: the public obtains information which the innovator had the right to keep secret plus the right to use the innovation once the patent expires, while the innovator obtains enhanced protection for the innovation during the term of the patent. It is elementary contract law that there must be a "meeting of the minds";3 each party must know what they are giving up and what they are receiving.
Through the mid-twentieth century, innovators were able to make rational decisions between the two forms of protection; the decision did not need to be made until the terms of the patent on offer were finalized. Therefore, the innovator could compare known patent protection against known trade secret protection, fully understanding the bargain.
Four developments have made innovators' decisions more of a gamble and less of a contract: (1) patent office disclosure of innovations before reaching a decision on patentability, resulting from the introduction of pregrant publication;4 (2) delay in processing patent applications resulting from increased volume of applications;5 (3) restrictions and uncertainty as to what is patentable, resulting from Supreme Court decisions regarding statutory subject matter;6 and (4) incentives to file patent applications early (and possibly prematurely), resulting from the change from a first-to-invent system to a first-to-file system.7
Combined, these developments force innovators to guess what might be on the other side of the bargain. They know that they must give up trade secret protection but they no longer know what, if any, patent protection they will get in exchange.
This Article begins by describing the fundamental patent bargain: the federal government's offer of patent rights to an innovator in exchange for the innovator's trade secret rights. It then describes how the bargain was reached in "the good old days"-prior to the recent wave of patent reform. It then describes that wave of...