Trade Secret Law and Information Development Incentives
THE LAW AND THEORY OF TRADE SECRECY: A HANDBOOK OF CONTEMPORARY RESEARCH, Rochelle C. Dreyfuss, Katherine J. Strandburg, eds., Edward Elgar Publishing, 2010
38 Pages Posted: 30 May 2009 Last revised: 9 May 2013
Date Written: May 29, 2009
Trade secrets differ from other forms of intellectual property in many subtle ways that affect incentives to invest in information development. These differences relate not only to the types of information protected, but also to the requirements one must meet to protect that type of information. The various divergences and intersections of trade secret laws with other intellectual property laws lead to differences in the amount and types of investments companies make in developing information.
This chapter explores five types of differential incentives associated with trade secret law:
- Trade secret law v. no trade secret law - Trade secret law v. patent law - Trade secret law v. copyright law - Trade secret law v. trademark law - Trade secret law v. right to privacy
Trade secret law provides little incentive to innovate as compared to a world without trade secret law for two possible reasons. First, the law provides little incentive because companies will create secret information even in the absence of the legal protection - trade secret law provides little protection that self-help protection does not. Second, the value of shared information means that nominal secrets would otherwise be shared, such that trade secret laws are routinely disregarded in investment decisions. This chapter explores each of these alternate theories, as well as limits and exceptions to each.
Trade secret law does, however, provide some incentives to innovate vis a vis other types of intellectual property, although the incentives are not always obvious, intuitive, or necessarily great. This chapter considers how trade secret law differs from other types of intellectual property laws, and uses those distinctions to show that trade secret law will have some effect on incentives to innovate when compared to other forms of protection.
Keywords: trade secret, incentives, information, research and development, R & D, copyright, patent, trademark, privacy
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