# BondPro v. Siemens: A Patent Application Can Vaporize a Trade Secret

> Judge Posner upholds the loss of a trade-secret verdict, explaining that a process published in a patent application ordinarily loses secrecy and that BondPro showed no measurable value.

Topic: Trade Secrets  |  Author: Lidiia Levitska  |  Source: Intellectual Property Law (outsideipcounsel.com)
Canonical: https://outsideipcounsel.com/blog/bondpro-v-siemens-patent-application-destroys-secret/


Trade-secret strategy and patent strategy pull in opposite directions. A patent is a bargain of disclosure for exclusivity; a trade secret is protection through concealment. *BondPro Corp. v. Siemens Power Generation, Inc.*, 463 F.3d 702 (7th Cir. 2006), decided September 12, 2006 in an opinion by Judge Richard Posner of the United States Court of Appeals for the Seventh Circuit, sits at the collision point. Posner affirmed the district court's decision to take a jury verdict away from the trade-secret owner and, along the way, delivered one of the sharpest appellate statements of a principle every dual-track IP strategist must reckon with: information published in a patent application ordinarily stops being a trade secret, even when the disclosure came from someone else's filing. The decision is short, but its warning is durable.

## At a glance

- **Case:** *BondPro Corp. v. Siemens Power Generation, Inc.*, 463 F.3d 702 (7th Cir. 2006)
- **Decided:** September 12, 2006, opinion by Judge Richard Posner; district court's judgment as a matter of law for Siemens affirmed
- **Holding:** A trade-secret verdict cannot stand where the claimed secret was disclosed in a published patent application and the plaintiff showed no measurable commercial value and failed to define the secret with adequate specificity.
- **Significance:** A leading articulation of the patent-publication tripwire in trade-secret law, coupled with a rigorous demand that a plaintiff prove both the definiteness and the value of the asset it claims.

## The process and the dispute

BondPro developed a manufacturing process for the slot cells used to insulate the conductor bars in large electrical generators. The technique dispensed with the conventional female mold: instead of clamping the insulating material between matched molds, BondPro placed the material on the outside of a male mold, pressed it into place with a vacuum bag, and cured the assembly under heat and pressure in an autoclave. BondPro shared aspects of the idea with Siemens in the course of a business relationship. Siemens later filed a patent application for a similar slot-cell process, though the application did not specify using an autoclave for the final hardening step.

BondPro sued, claiming Siemens had misappropriated its trade secret. A jury found for BondPro on liability. Before the jury could reach damages, the district judge granted Siemens judgment as a matter of law, and BondPro appealed. The Seventh Circuit affirmed, and Posner's opinion explains why the verdict could not survive.

## The patent-publication tripwire

The most quoted feature of the opinion is its treatment of the patent application. Posner reasoned that published patent applications are actually studied by inventors working in the relevant field, so a secret disclosed in such an application will ordinarily lose its status as a trade secret once the application publishes. The logic is straightforward. A trade secret exists only so long as the information is not generally known or readily ascertainable by proper means. A published patent application is, by design, a public document that skilled practitioners consult. Whatever it discloses becomes readily ascertainable, and the secret evaporates.

The striking wrinkle is that this can be true even when the person who filed the application is the alleged wrongdoer. Posner acknowledged that Siemens could remain liable for having disclosed the secret if it had wrongfully done so, because the act of publishing another's secret can itself be a form of misappropriation. But the information, once published, is public as to everyone else. A third party who reads the Siemens application and practices the process commits no violation, because there is no longer a secret to violate. The disclosure and the ongoing secrecy are two different things: liability for the disclosing act can coexist with the total loss of the asset's secret character.

This is the tripwire that makes dual-track strategy hazardous. An inventor who chooses to keep a process secret can lose that choice if anyone, a competitor, a former partner, even an adversary, files and publishes a patent application describing it. The trade-secret owner does not control the timing or the fact of publication, yet publication can end the secret.

## Why the verdict collapsed on value

The publication point did not stand alone. The decisive ground for affirming judgment as a matter of law was the absence of measurable commercial value, an element built into the very definition of a trade secret. Under the Wisconsin version of the Uniform Trade Secrets Act that governed this diversity case, information qualifies only if it derives independent economic value, actual or potential, from not being generally known and not being readily ascertainable by proper means. Posner found the inference compelling that BondPro's process had no such value, then or when disclosed. The evidence pointed hard in that direction: neither BondPro nor Siemens ever used the process commercially despite the money each had spent exploring it, Siemens concluded the method cost more than its conventional process, and the related patent application was rejected. A process that no one adopts, that costs more than the incumbent method, and that the patent office declines to reward is difficult to characterize as a valuable secret.

Posner also faulted BondPro for failing to define its trade secret with the specificity the law demands. The company identified the broad outline of its process but did not pin down the crucial operating details, the precise temperatures, durations, and parameters, that would distinguish a genuine, valuable secret from a general engineering concept. A plaintiff cannot recover for the misappropriation of a secret it cannot describe. Vagueness about what the secret is undermines both the secrecy and the value inquiries, because a court cannot assess whether undefined information is unknown, ascertainable, or worth anything.

The damages posture sharpened the problem. BondPro's proof of value rested substantially on an expert report the court had rejected, leaving no credible basis to estimate what the process was worth. With no defined secret and no demonstrated value, the verdict had nothing to stand on.

## What BondPro changed

*BondPro* did not invent the rule that publication defeats secrecy; that principle is old. What the opinion contributed was a memorable, authoritative framing from an influential judge, tying the publication tripwire to the rigorous value and definiteness requirements in a single decision. It is frequently cited for the proposition that a company cannot maintain as a trade secret what a patent application has disclosed, and for the companion lesson that a trade-secret plaintiff must prove its asset is both concretely defined and genuinely valuable, not merely that a defendant took something.

For strategists, the case crystallizes the daily tension of managing a portfolio that mixes patents and secrets. Every patent filing is a scheduled disclosure. The moment an inventor commits information to an application that will publish, that information's future as a trade secret ends. The company must decide in advance which elements to disclose in exchange for patent protection and which to withhold and guard, understanding that the two regimes cannot both cover the same disclosed feature.

## Open questions

*BondPro* resolves the case but leaves edges for future disputes. It does not fully map the remedy available against a defendant who wrongfully discloses a secret in a patent application when the secret had real value before publication, a scenario where the disclosure destroys an asset that was worth protecting. It leaves open how courts should treat information disclosed in an application that is later abandoned or rejected before formal publication, where the public-availability rationale is weaker. And it does not resolve how much operational detail a plaintiff must marshal to satisfy the specificity requirement in a complex process, an inquiry that will vary with the technology and that continues to trip up trade-secret plaintiffs who plead their secrets in general terms.

## Implications for inventors and businesses

- **Treat every patent filing as a disclosure deadline.** Information placed in a patent application will publish and, once public, cannot remain a trade secret. Decide before filing which features to patent and which to keep secret, and never assume you can do both with the same disclosed element.
- **Watch competitors' and partners' filings.** A third party's published application can destroy the secrecy of your information. Monitor the patent landscape in your field so you learn early if a filing has exposed something you were holding in confidence.
- **Define the secret with operational precision.** A trade-secret claim requires more than a general concept. Document the specific parameters, temperatures, durations, and process steps that make your information valuable and non-obvious, because a secret you cannot describe is a secret you cannot protect.
- **Prove value with real evidence.** Commercial use, cost savings, or competitive advantage are the currency of a trade-secret claim. A process no one has adopted and that costs more than the alternative will struggle to show the independent economic value the law requires.

## Frequently asked questions

**Can a patent application destroy someone else's trade secret?** It can destroy the secrecy of the information it discloses. In *BondPro v. Siemens* Judge Posner explained that published patent applications are studied by inventors in the field, so a secret disclosed in one will ordinarily lose its trade-secret status once published. That is true even if the person who filed the application learned the information from the trade-secret owner. The filer may still be liable for the wrongful disclosure, but the information itself enters the public domain.

**Why did BondPro lose even though the jury found for it?** The district court granted judgment as a matter of law for Siemens and the Seventh Circuit affirmed. The decisive problem was value. Neither company ever used the process commercially, Siemens concluded it cost more than its existing method, and the related patent application was rejected. Judge Posner found the inference compelling that the process had no measurable commercial value, and BondPro also failed to define its secret with the specificity, such as precise temperatures and durations, that a trade-secret claim requires.

**What does BondPro teach about combining patents and trade secrets?** That the patent system is a tripwire for trade-secret strategy. Filing a patent application publishes the disclosed information roughly eighteen months later, so an inventor cannot keep as a trade secret what the application reveals. Companies must decide, invention by invention, which elements to patent and which to hold in confidence, and must recognize that a competitor's or partner's filing can expose the same information and end its secret status.

## Authorities and sources

- *BondPro Corp. v. Siemens Power Generation, Inc.*, 463 F.3d 702 (7th Cir. 2006), full opinion text (No. 05-3077): [law.resource.org](https://law.resource.org/pub/us/case/reporter/F3/463/463.F3d.702.05-3077.html)
- *BondPro Corp. v. Siemens Power Generation, Inc.*, case brief: [Quimbee](https://www.quimbee.com/cases/bondpro-corp-v-siemens-power-generation-inc)
- 35 U.S.C. § 122(b), publication of patent applications eighteen months after filing: [Cornell LII](https://www.law.cornell.edu/uscode/text/35/122)
- Wis. Stat. § 134.90(1)(c)1., the Wisconsin Uniform Trade Secrets Act definition of "trade secret" (independent economic value from not being generally known): [Wisconsin Legislature](https://docs.legis.wisconsin.gov/statutes/statutes/134/90)
- Uniform Trade Secrets Act (Trade Secrets Act) overview: [Uniform Law Commission](https://www.uniformlaws.org/committees/community-home?CommunityKey=3a2538fb-e030-4e2d-a9e2-90373dc05792)