An increasingly common defense in trade secret cases concerning an invention or technology is that the plaintiff’s previously publicly available patent or patent application discloses and thus waives any related trade secrets. A recent case from the United States Court of Appeals for the Fifth Circuit, Tewari De-Ox Systems, Inc. v. Mountain States/Rosen, L.L.C., Case No. 10-50137, (5th Cir., April 5, 2011), joins a number of other cases refusing to adopt a broad rule in this situation and requires a district court to examine the fact of each trade secret case. (A fine post commenting upon this case can be found in the pre-emenint blog, Patently-O).

The plantiff in Tewari had designed a “zero ppm oxygen meat-packaging method” for packing fresh meat for shipment and display in retail stores. Essentially, the system removed air from packets used to preserve that meat. Tewari had shared this process with the defendant, MTSR, pursuant to a non-disclosure agreement and later concluded that MTSR misappropriated its trade secrets.

Applying Texas law, the district court found that trade secrets in question had been destroyed by publication in a patent application or had already been disclosed and known in the industry, and the court granted summary judgment. On appeal, the Fifth Circuit reversed, holding that a genuine issue of material fact existed on the issue of whether a trade secret existed. The Fifth Circuit cited previous authority that “the question of whether certain information constitutes a trade secret ordinarily is best ‘resolved by a fact finder after full presentation of evidence from each side'” (Tewari at p. 12). The Fifth Circuit recognized that to the extent that the information was fully disclosed in an earlier patent application, it would not be entitled to trade secret protection, a holding reflecting settled law that a trade secret that is publicly disclosed can no longer be considered a secret.

However, to the extent that the trade secret in question was a combination of information found not only within the patent application but from other sources, the Fifth Circuit applied the doctrine that a trade secret can be composed of many different elements, each of which may be found within a public source, so long as the combination is not publicly disclosed. For this reason, the Fifth Circuit found that a genuine issue of material fact remained and remanded the case to the district court.

The takeaway from Tewari? If you are filing a trade secret case that might involve an invention that is the subject of a publicly available patent application, be certain that the trade secrets that you are seeking to protect have not been fully disclosed within that patent or patent application. This will obviously require a careful examination of the patent application or patent prior to filing the complaint. To the extent tha the trade secrets do include some of the information found in a patent application, be prepared, as the plaintiff did successfully on appeal, to argue that the information (if any) found in a patent application is part of a larger combination of other information giving rise to the trade secret.