The (still) shaky foundations of trade secret law

Texas Law Review

Volumn 92, Issue 7, 2014, Pages 1803-1838

  Bone, Robert G ^a  

^a UNIVERSITY OF TEXAS   (United States)

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EID: 84904052536     PISSN: 00404411     EISSN: None     Source Type: Journal    
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References (123)

1. An inventor must publicly disclose her invention as a condition to obtaining a patent. 35 U.S.C. § 112(a) (2012).
2. 1 Melvin F. Jager, Trade Secrets Law § 3.11, at 3-49 (2010) (noting that "unlike a patent owner, a person who possesses a trade secret does not have an exclusive right to the information").
3. Robert G. Bone, A New Look at Trade Secret Law: Doctrine in Search of Justification, 86 Calif. L. Rev. 241 (1998) [hereinafter Bone, A New Look];
4. Robert G. Bone, Trade Secrecy, Innovation and the Requirement of Reasonable Secrecy Precautions, in The Law and Theory of Trade Secrecy: A Handbook of Contemporary Research 46 (Rochelle C. Dreyfuss & Katherine J. Strandburg eds., 2011) [hereinafter Bone, Trade Secrecy] (critically analyzing the case for requiring secrecy precautions).
5. John E. Jankowski, Business Use of Intellectual Property Protection Documented in NSF Survey, Nat'l Sci. Found. (Feb. 2012), http://www.nsf.gov/statistics/ infbrief/nsf12307/ns f12307.pdf (reporting results from a NSF survey showing heavy reliance on trade secrecy in some industries); Trends in Proprietary Information Loss: Survey Report, Asis Int'l 1-3 (June 2007), https://foundation.asisonline.org/FoundationResearch/Publications/Documents/trendsinproprietary informationloss.pdf (discussing the threat U.S. businesses face from foreign countries).
6. David S. Almeling et al., A Statistical Analysis of Trade Secret Litigation in Federal Courts, 45 Gonz. L. Rev. 291, 293 (2009-2010) [hereinafter Almeling et al., Federal Courts] (reporting that published trade secret cases in federal court have grown "exponentially, " doubling between 1988 and 1995 and again between 1995 and 2004)
7. David S. Almeling et al., A Statistical Analysis of Trade Secret Litigation in State Courts, 46 Gonz. L. Rev. 57, 61 (2010-2011) [hereinafter Almeling et al., State Courts] (reporting that published trade secret cases in state courts have grown at a linear rate).
8. For example, the federal government has stepped up enforcement of the Economic Espionage Act, see Thomas P. O'Brien & John J. O'Kane IV, Heightened Enforcement Environment Signals Increased Use of Economic Espionage Act, 84 Pat. Trademark & Copyright J. (BNA) 208, 208 (June 1, 2012)
9. It is worth noting that I am not the only one who recommends confining trade secret law mostly to contract. See Thornton Robison, The Confidence Game: An Approach to the Law About Trade Secrets, 25 Ariz. L. Rev. 347, 383-84 (1983) (proposing that trade secret protection be based on contract in employer-employee settings).
10. Unif. Trade Secrets Act (amended 1985), 14 U.L.A. 529 (2005). See generally 1 Roger M. Milgrim & Eric E. Bensen, Milgrim on Trade Secrets § 1.01[2] (2013) (discussing the UTSA).
11. Unif. Trade Secrets Act § 1(4)
12. Robert P. Merges, Peter S. Menell & Mark A. Lemley, Intellectual Property in the New Technological Age 37 (6th ed. 2012).
13. Restatement (First) of Torts § 757 cmt. f (1939); E.I. duPont deNemours & Co. v. Christopher, 431 F.2d 1012, 1017 (5th Cir. 1970) (holding that aerial photography was an "improper method" of obtaining a trade secret).
14. David S. Almeling et al., A Statistical Analysis of Trade Secret Litigation in State Courts, 46 Gonz. L. Rev. 57, 61 (2010-2011) [hereinafter Almeling et al., State Courts] (reporting that published trade secret cases in state courts have grown at a linear rate).
15. David S. Almeling et al., A Statistical Analysis of Trade Secret Litigation in State Courts, 46 Gonz. L. Rev. 57, 61 (2010-2011) [hereinafter Almeling et al., State Courts] (reporting that published trade secret cases in state courts have grown at a linear rate).
16. William M. Landes & Richard A. Posner, The Economic Structure of Intellectual Property Law 4 (2003) ("Today it is acknowledged that analysis and evaluation of intellectual property law are appropriately conducted within an economic framework that seeks to align that law with the dictates of economic efficiency. ")
17. 431 F.2d 1012 (5th Cir. 1970).
18. Robert G. Bone, A New Look at Trade Secret Law: Doctrine in Search of Justification, 86 Calif. L. Rev. 241 (1998) [hereinafter Bone, A New Look];
19. Robert G. Bone, The (Still) Shaky Foundations of Trade Secret Law, 92 Texas L. Rev. 1803 (2014)
20. It is well understood that firms, especially in certain industries, favor trade secret law over patent even for clearly patentable inventions when those inventions are difficult to reverse engineer. Mark A. Lemley, The Surprising Virtues of Treating Trade Secrets as IP Rights, 61 Stan. L. Rev. 311, 339-40 & n.121 (2008) (citing an empirical study to support the argument that some companies prefer trade secret protection for inventions that are "not transparent to the world")
21. John E. Jankowski, Business Use of Intellectual Property Protection Documented in NSF Survey, Nat'l Sci. Found. (Feb. 2012), http://www.nsf.gov/statistics/ infbrief/nsf12307/ns f12307.pdf (reporting results from a NSF survey showing heavy reliance on trade secrecy in some industries); Trends in Proprietary Information Loss: Survey Report, Asis Int'l 1-3 (June 2007), https://foundation.asisonline.org/FoundationResearch/Publications/Documents/trendsinproprietary informationloss.pdf (discussing the threat U.S. businesses face from foreign countries).
22. Mark A. Lemley, Where to File Your Patent Case, 38 AIPLA Q.J. 401, 405 & tbl.2 (2010) (finding both districts to be among the most favored for patent lawsuits). Note, however, that because we count only cases with merits decisions, rather than all cases filed, a district's share of cases in our data set may not match their share of filed cases because cases in some districts are more likely to settle than others.
23. Robert G. Bone, The (Still) Shaky Foundations of Trade Secret Law, 92 Texas L. Rev. 1803 (2014)
24. Michael Risch, Why Do We Have Trade Secrets?, 11 Marq. Intell. Prop. L. Rev. 1, 50 n.235 (2007)
25. Robert G. Bone, The (Still) Shaky Foundations of Trade Secret Law, 92 Texas L. Rev. 1803 (2014)
26. Michael J. Trebilcock, The Common Law of Restraint of Trade: A Legal and Economic Analysis 11-12, 140 (1986) (noting the "quite severe" costs of monitoring compliance by employees with contractual covenants restraining disclosure)
27. Ian C. Ballon, Alternative Corporate Responses to Internet Data Theft, in 17th Annual Institute on Computer Law 737, 740 (1997) (stressing the detection problems with computer data theft)
28. James H.A. Pooley et al., Understanding the Economic Espionage Act of 1996, 5 Tex. Intell. Prop. L.J. 177, 224 (1997) (noting that "[i]nformation loss is inherently difficult to detect").
29. Robert G. Bone, The (Still) Shaky Foundations of Trade Secret Law, 92 Texas L. Rev. 1803 (2014)
30. Am. Intellectual Prop. Law Ass'n, Report of the Economic Survey 2013, at 34-36 (2013), available at http://library.constantcontact.com/download/get/file/1109295819134-177/AIPLA+2013+Survey_Press_Summary+pages.pdf (reporting survey results showing that trade secret litigation costs on average $425,000 for suits worth less than a million dollars up to $2,950,000 for suits worth more than 25 million dollars, compared to patent litigation for which the comparable figures are $700,000 and $5,500,000, respectively).
31. Robert G. Bone, The (Still) Shaky Foundations of Trade Secret Law, 92 Texas L. Rev. 1803 (2014)
32. generally John Rawls, A Theory of Justice 17-22 (rev. ed. 1999) (describing the concept of the "original position").
33. Robert G. Bone, The (Still) Shaky Foundations of Trade Secret Law, 92 Texas L. Rev. 1803 (2014)
34. Robert G. Bone, The (Still) Shaky Foundations of Trade Secret Law, 92 Texas L. Rev. 1803 (2014)
35. Mark A. Lemley, Where to File Your Patent Case, 38 AIPLA Q.J. 401, 405 & tbl.2 (2010) (finding both districts to be among the most favored for patent lawsuits). Note, however, that because we count only cases with merits decisions, rather than all cases filed, a district's share of cases in our data set may not match their share of filed cases because cases in some districts are more likely to settle than others.
36. Eric R. Claeys, Private Law Theory and Corrective Justice in Trade Secrecy, 4 J. Tort L., no. 2, art. 2 (2011), http://www.degruyter.com/view/j/jtl.2011.4.2/jtl.2011.4.2.1115/jtl.2011.4.2.1115.xml?-format=INT (arguing that the normative interest in a trade secret makes the most sense as a usufructuary property interest) [hereinafter Claeys, Private Law Theory].
37. Mark A. Lemley, Where to File Your Patent Case, 38 AIPLA Q.J. 401, 405 & tbl.2 (2010) (finding both districts to be among the most favored for patent lawsuits). Note, however, that because we count only cases with merits decisions, rather than all cases filed, a district's share of cases in our data set may not match their share of filed cases because cases in some districts are more likely to settle than others.
38. There is an argument that classification might help to cope with the problem of empirical uncertainty. I examine this argument in Part III below and explain why it does not work for trade secrecy.
39. William M. Landes & Richard A. Posner, The Economic Structure of Intellectual Property Law 4 (2003) ("Today it is acknowledged that analysis and evaluation of intellectual property law are appropriately conducted within an economic framework that seeks to align that law with the dictates of economic efficiency. ")
40. Mark A. Lemley, Where to File Your Patent Case, 38 AIPLA Q.J. 401, 405 & tbl.2 (2010) (finding both districts to be among the most favored for patent lawsuits). Note, however, that because we count only cases with merits decisions, rather than all cases filed, a district's share of cases in our data set may not match their share of filed cases because cases in some districts are more likely to settle than others.
41. Michael Risch, Why Do We Have Trade Secrets?, 11 Marq. Intell. Prop. L. Rev. 1, 50 n.235 (2007)
42. Robert G. Bone, A New Look at Trade Secret Law: Doctrine in Search of Justification, 86 Calif. L. Rev. 241 (1998) [hereinafter Bone, A New Look];
43. Robert G. Bone, A New Look at Trade Secret Law: Doctrine in Search of Justification, 86 Calif. L. Rev. 241 (1998) [hereinafter Bone, A New Look];
44. Mark A. Lemley, Where to File Your Patent Case, 38 AIPLA Q.J. 401, 405 & tbl.2 (2010) (finding both districts to be among the most favored for patent lawsuits). Note, however, that because we count only cases with merits decisions, rather than all cases filed, a district's share of cases in our data set may not match their share of filed cases because cases in some districts are more likely to settle than others.
45. Mark A. Lemley, Where to File Your Patent Case, 38 AIPLA Q.J. 401, 405 & tbl.2 (2010) (finding both districts to be among the most favored for patent lawsuits). Note, however, that because we count only cases with merits decisions, rather than all cases filed, a district's share of cases in our data set may not match their share of filed cases because cases in some districts are more likely to settle than others.
46. Alan Hyde, Working in Silicon Valley: Economic and Legal Analysis of a High-Velocity Labor Market 50-52 (2003) (discussing six reasons why technology companies in Silicon Valley are better off sharing information).
47. James J. Anton & Dennis A. Yao, Start-Ups, Spin-Offs, and Internal Projects, 11 J.L. Econ. & Org. 362, 362 (1995) (noting that many start-ups are created by former employees of established firms).
48. William M. Landes & Richard A. Posner, The Economic Structure of Intellectual Property Law 4 (2003) ("Today it is acknowledged that analysis and evaluation of intellectual property law are appropriately conducted within an economic framework that seeks to align that law with the dictates of economic efficiency. ")
49. Vincent Chiappetta, Myth, Chameleon or Intellectual Property Olympian? A Normative Framework Supporting Trade Secret Law, 8 Geo. Mason L. Rev. 69, 111-13 (1999)
50. Michael Risch, Why Do We Have Trade Secrets?, 11 Marq. Intell. Prop. L. Rev. 1, 50 n.235 (2007)
51. Mark A. Lemley, Where to File Your Patent Case, 38 AIPLA Q.J. 401, 405 & tbl.2 (2010) (finding both districts to be among the most favored for patent lawsuits). Note, however, that because we count only cases with merits decisions, rather than all cases filed, a district's share of cases in our data set may not match their share of filed cases because cases in some districts are more likely to settle than others.
52. Michael Risch, Why Do We Have Trade Secrets?, 11 Marq. Intell. Prop. L. Rev. 1, 50 n.235 (2007)
53. Trade secret owners might file just to establish a reputation as fighters, but this is an expensive strategy to pursue.
54. Chris Carr & Larry Gorman, The Revictimization of Companies by the Stock Market Who Report Trade Secret Theft Under the Economic Espionage Act, 57 Bus. Law. 25, 48 (2001) (reporting the results of an empirical study using event study methodology that shows a statistically and economically significant decline in stock market price after reporting trade secret theft under the Economic Espionage Act).
55. Michael Risch, Why Do We Have Trade Secrets?, 11 Marq. Intell. Prop. L. Rev. 1, 50 n.235 (2007)
56. also Unif. Trade Secrets Act §§ 3-4 (amended 1985), 14 U.L.A. 633-34, 642 (2005) (providing for disgorgement and other damages for trade secret violations, including attorney's fees when misapropriation claims are made in bad faith).
57. Michael Risch, Why Do We Have Trade Secrets?, 11 Marq. Intell. Prop. L. Rev. 1, 50 n.235 (2007)
58. Avery Katz, The Effect of Frivolous Lawsuits on the Settlement of Litigation, 10 Int'l Rev. L. & Econ. 3, 17-19 (1990) (presenting an asymmetric information model of frivolous litigation).
59. Mark A. Lemley, Where to File Your Patent Case, 38 AIPLA Q.J. 401, 405 & tbl.2 (2010) (finding both districts to be among the most favored for patent lawsuits). Note, however, that because we count only cases with merits decisions, rather than all cases filed, a district's share of cases in our data set may not match their share of filed cases because cases in some districts are more likely to settle than others.
60. This is known as Arrow's Information Paradox. See Kenneth J. Arrow, Economic Welfare and the Allocation of Resources for Invention, in The Rate and Direction of Inventive Activity: Economic and Social Factors 609, 614-16 (1962) (describing the features of information as a commodity and the resulting difficulties in creating a market for information).
61. Robert G. Bone, A New Look at Trade Secret Law: Doctrine in Search of Justification, 86 Calif. L. Rev. 241 (1998) [hereinafter Bone, A New Look];
62. Mark E.A. Danielson, Economic Espionage: A Framework for a Workable Solution, 10 Minn. J.L. Sci. & Tech. 503, 505-06 (2009) (noting the reluctance of firms to admit that trade secrets have been stolen and offering various reasons for this, including concerns about signaling vulnerability to information breach and admitting inability to secure sensitive information).
63. William M. Landes & Richard A. Posner, The Economic Structure of Intellectual Property Law 4 (2003) ("Today it is acknowledged that analysis and evaluation of intellectual property law are appropriately conducted within an economic framework that seeks to align that law with the dictates of economic efficiency. ")
64. Data Gen. Corp. v. Grumman Sys. Support Corp., 36 F.3d 1147, 1165-67 (1st Cir. 1994) (describing a licensing agreement in which the licensee was limited to using the licensor's proprietary information for explicitly stated purposes).
65. Mark A. Lemley, Where to File Your Patent Case, 38 AIPLA Q.J. 401, 405 & tbl.2 (2010) (finding both districts to be among the most favored for patent lawsuits). Note, however, that because we count only cases with merits decisions, rather than all cases filed, a district's share of cases in our data set may not match their share of filed cases because cases in some districts are more likely to settle than others.
66. Mark A. Lemley, Where to File Your Patent Case, 38 AIPLA Q.J. 401, 405 & tbl.2 (2010) (finding both districts to be among the most favored for patent lawsuits). Note, however, that because we count only cases with merits decisions, rather than all cases filed, a district's share of cases in our data set may not match their share of filed cases because cases in some districts are more likely to settle than others.
67. And if those policies do not, then there is no other reason to enjoin-or so I argue.
68. Mark A. Lemley, Rational Ignorance at the Patent Office, 95 Nw. U. L. Rev. 1495, 1501 (2001) ("The overwhelming majority of [patent] lawsuits settle or are abandoned before trial. ").
69. Michael Risch, Why Do We Have Trade Secrets?, 11 Marq. Intell. Prop. L. Rev. 1, 50 n.235 (2007)
70. Robert G. Bone, A New Look at Trade Secret Law: Doctrine in Search of Justification, 86 Calif. L. Rev. 241 (1998) [hereinafter Bone, A New Look];
71. Michael Risch, Why Do We Have Trade Secrets?, 11 Marq. Intell. Prop. L. Rev. 1, 50 n.235 (2007)
72. Robert G. Bone, A New Look at Trade Secret Law: Doctrine in Search of Justification, 86 Calif. L. Rev. 241 (1998) [hereinafter Bone, A New Look];
73. Michael Risch, Why Do We Have Trade Secrets?, 11 Marq. Intell. Prop. L. Rev. 1, 50 n.235 (2007)
74. I discuss this point a bit more in Part III(B)(1).
75. In addition, Professor Jeanne Schroeder has offered a Hegelian account of trade secret law. Jeanne L. Schroeder, Unnatural Rights: Hegel and Intellectual Property, 60 U. Miami L. Rev. 453, 466 (2006).
76. William P. Kratzke, Normative Economic Analysis of Trademark Law, 21 Memphis St. U. L. Rev. 199, 223 (1991) (arguing that free riders can create value and foster competition).
77. James W. Hill, Trade Secrets, Unjust Enrichment, and the Classification of Obligations, 4 Va. J.L. & Tech., art. 2, paras. 44-47 (1999), http://www.vjolt.net/vol4/issue/home_art2.html. See generally Hanoch Dagan, Unjust Enrichment (1997) (presenting a positive theory of unjust enrichment that connects it to the "core social values" of the community in which it is applied). I hasten to add that my discussion in this Part focuses on Hill's particular application of Dagan's theory and not on Dagan's theory itself.
78. James W. Hill, Trade Secrets, Unjust Enrichment, and the Classification of Obligations, 4 Va. J.L. & Tech., art. 2, paras. 44-47 (1999), http://www.vjolt.net/vol4/issue/home_art2.html. See generally Hanoch Dagan, Unjust Enrichment (1997) (presenting a positive theory of unjust enrichment that connects it to the "core social values" of the community in which it is applied). I hasten to add that my discussion in this Part focuses on Hill's particular application of Dagan's theory and not on Dagan's theory itself.
79. James W. Hill, Trade Secrets, Unjust Enrichment, and the Classification of Obligations, 4 Va. J.L. & Tech., art. 2, paras. 44-47 (1999), http://www.vjolt.net/vol4/issue/home_art2.html. See generally Hanoch Dagan, Unjust Enrichment (1997) (presenting a positive theory of unjust enrichment that connects it to the "core social values" of the community in which it is applied). I hasten to add that my discussion in this Part focuses on Hill's particular application of Dagan's theory and not on Dagan's theory itself.
80. And, I must say, a bit confusing in parts.
81. generally Ronald Dworkin, Law's Empire 49-113 (1986) (describing an interpretivist approach)
82. generally John Rawls, A Theory of Justice 17-22 (rev. ed. 1999) (describing the concept of the "original position").
83. generally John Rawls, A Theory of Justice 17-22 (rev. ed. 1999) (describing the concept of the "original position").
84. James W. Hill, Trade Secrets, Unjust Enrichment, and the Classification of Obligations, 4 Va. J.L. & Tech., art. 2, paras. 44-47 (1999), http://www.vjolt.net/vol4/issue/home_art2.html. See generally Hanoch Dagan, Unjust Enrichment (1997) (presenting a positive theory of unjust enrichment that connects it to the "core social values" of the community in which it is applied). I hasten to add that my discussion in this Part focuses on Hill's particular application of Dagan's theory and not on Dagan's theory itself.
85. Robert G. Bone, A New Look at Trade Secret Law: Doctrine in Search of Justification, 86 Calif. L. Rev. 241 (1998) [hereinafter Bone, A New Look];
86. Eric R. Claeys, Private Law Theory and Corrective Justice in Trade Secrecy, 4 J. Tort L., no. 2, art. 2 (2011), http://www.degruyter.com/view/j/jtl.2011.4.2/jtl.2011.4.2.1115/jtl.2011.4.2.1115.xml?-format=INT (arguing that the normative interest in a trade secret makes the most sense as a usufructuary property interest) [hereinafter Claeys, Private Law Theory].
87. Eric R. Claeys, Private Law Theory and Corrective Justice in Trade Secrecy, 4 J. Tort L., no. 2, art. 2 (2011), http://www.degruyter.com/view/j/jtl.2011.4.2/jtl.2011.4.2.1115/jtl.2011.4.2.1115.xml?-format=INT (arguing that the normative interest in a trade secret makes the most sense as a usufructuary property interest) [hereinafter Claeys, Private Law Theory].
88. John Locke, The Second Treatise of Civil Government, in Two Treatises of Government 133, 134 (Thomas I. Cook ed., Hafner Publishing Co. 1947) (1690) ("Whatsoever then he removes out of the state that nature hath provided and left it in, he hath mixed his labour with, and joined to it something that is his own, and thereby makes it his property. ").
89. For example, despite being anchored in natural property rights closely associated with Lockean theory, late nineteenth century trademark law only required use of the mark in trade to satisfy the appropriation requirement. See Robert G. Bone, Hunting Goodwill: A History of the Concept of Goodwill in Trademark Law, 86 B.U. L. Rev. 547, 562-67 (2006) (outlining the development of trademark law in the nineteenth century).
90. Robert G. Bone, A New Look at Trade Secret Law: Doctrine in Search of Justification, 86 Calif. L. Rev. 241 (1998) [hereinafter Bone, A New Look];
91. Eric R. Claeys, Private Law Theory and Corrective Justice in Trade Secrecy, 4 J. Tort L., no. 2, art. 2 (2011), http://www.degruyter.com/view/j/jtl.2011.4.2/jtl.2011.4.2.1115/jtl.2011.4.2.1115.xml?-format=INT (arguing that the normative interest in a trade secret makes the most sense as a usufructuary property interest) [hereinafter Claeys, Private Law Theory].
92. Eric R. Claeys, Private Law Theory and Corrective Justice in Trade Secrecy, 4 J. Tort L., no. 2, art. 2 (2011), http://www.degruyter.com/view/j/jtl.2011.4.2/jtl.2011.4.2.1115/jtl.2011.4.2.1115.xml?-format=INT (arguing that the normative interest in a trade secret makes the most sense as a usufructuary property interest) [hereinafter Claeys, Private Law Theory].
93. Eric R. Claeys, Private Law Theory and Corrective Justice in Trade Secrecy, 4 J. Tort L., no. 2, art. 2 (2011), http://www.degruyter.com/view/j/jtl.2011.4.2/jtl.2011.4.2.1115/jtl.2011.4.2.1115.xml?-format=INT (arguing that the normative interest in a trade secret makes the most sense as a usufructuary property interest) [hereinafter Claeys, Private Law Theory].
94. Eric R. Claeys, Private Law Theory and Corrective Justice in Trade Secrecy, 4 J. Tort L., no. 2, art. 2 (2011), http://www.degruyter.com/view/j/jtl.2011.4.2/jtl.2011.4.2.1115/jtl.2011.4.2.1115.xml?-format=INT (arguing that the normative interest in a trade secret makes the most sense as a usufructuary property interest) [hereinafter Claeys, Private Law Theory].
95. Eric R. Claeys, Private Law Theory and Corrective Justice in Trade Secrecy, 4 J. Tort L., no. 2, art. 2 (2011), http://www.degruyter.com/view/j/jtl.2011.4.2/jtl.2011.4.2.1115/jtl.2011.4.2.1115.xml?-format=INT (arguing that the normative interest in a trade secret makes the most sense as a usufructuary property interest) [hereinafter Claeys, Private Law Theory].
96. Eric R. Claeys, Private Law Theory and Corrective Justice in Trade Secrecy, 4 J. Tort L., no. 2, art. 2 (2011), http://www.degruyter.com/view/j/jtl.2011.4.2/jtl.2011.4.2.1115/jtl.2011.4.2.1115.xml?-format=INT (arguing that the normative interest in a trade secret makes the most sense as a usufructuary property interest) [hereinafter Claeys, Private Law Theory].
97. Eric R. Claeys, Private Law Theory and Corrective Justice in Trade Secrecy, 4 J. Tort L., no. 2, art. 2 (2011), http://www.degruyter.com/view/j/jtl.2011.4.2/jtl.2011.4.2.1115/jtl.2011.4.2.1115.xml?-format=INT (arguing that the normative interest in a trade secret makes the most sense as a usufructuary property interest) [hereinafter Claeys, Private Law Theory].
98. also Rohm & Haas Co. v. Adco Chem. Co., 689 F.2d 424 (3d Cir. 1982) (focusing on the wrongfulness of the appropriation in determining whether trade secret law had been violated).
99. Eric R. Claeys, Private Law Theory and Corrective Justice in Trade Secrecy, 4 J. Tort L., no. 2, art. 2 (2011), http://www.degruyter.com/view/j/jtl.2011.4.2/jtl.2011.4.2.1115/jtl.2011.4.2.1115.xml?-format=INT (arguing that the normative interest in a trade secret makes the most sense as a usufructuary property interest) [hereinafter Claeys, Private Law Theory].
100. Robert G. Bone, A New Look at Trade Secret Law: Doctrine in Search of Justification, 86 Calif. L. Rev. 241 (1998) [hereinafter Bone, A New Look];
101. Charles Tait Graves, Trade Secrets as Property: Theory and Consequences, 15 J. Intell. Prop. L. 39, 46 n.8 (2007) (grounding trade secrecy in property rights)
102. Indeed, the use of property language evokes the International News Service v. Associated Press misappropriation tort, which does not depend on secrecy. See Int'l News Serv. v. Associated Press, 248 U.S. 215, 240 (1918).
103. It is conceivable that expected benefits might just equal expected costs, but that is highly unlikely and not what I am claiming here. The point is rather that empirics are too thin to support a conclusion that benefits equal, exceed, or fall below costs. There might well be situations involving non-actuarial risks, where we simply cannot predict what will happen. In such cases, we might assign equal probabilities to all contingencies, but doing so simply expresses our lack of information.
104. Bayesian decision making is not the only way to make decisions. Still, the alternatives are only as good as their empirical inputs. See generally José M. Bernardo & Adrian F.M. Smith, Bayesian Theory 443-88 (2000) (describing some non-Bayesian decision-making theories).
105. Obviously, the confidence level itself must be justified.
106. George L. Priest, What Economists Can Tell Lawyers About Intellectual Property: Comment on Cheung, in 8 Research in Law & Economics 19, 22-23 (John Palmer & Richard O. Zerbe, Jr. eds., 1986) (arguing that the ability of economists to draw conclusions about welfare effects is also plagued by lack of normative consensus on the optimal scope of IP protection).
107. William M. Landes & Richard A. Posner, The Economic Structure of Intellectual Property Law 4 (2003) ("Today it is acknowledged that analysis and evaluation of intellectual property law are appropriately conducted within an economic framework that seeks to align that law with the dictates of economic efficiency. ")
108. And I take it as obvious that if a property rights regime is optimal, the IP regime would certainly include the core rights of copyright and patent, and trade secret law would at best complement those core rights.
109. Robert P. Merges, Justifying Intellectual Property 13-20 (2012) (drawing on Kant, Locke, and Rawls to construct the normative foundations of IP law).
110. I say "in theory" because, in practice, we cannot entirely ignore social costs even when legal rights are justified on nonconsequentialist grounds. However, the existence of a nonconsequentialist justification supports putting the burden on those who would impose limits to demonstrate that the social costs are severe enough to justify limits. In any event, empirical uncertainty should be much less troubling for a nonconsequentialist approach.
111. generally 1 Donald S. Chisum, Chisum on Patents OV (2013) (outlining the considerations Congress took into account when enacting the Patent Act); 1 Melville B. Nimmer & David Nimmer, Nimmer On Copyright OV (2013) (outlining the considerations Congress took into account when enacting the Copyright Act).
112. generally Sharon K. Sandeen, The Evolution of Trade Secret Law and Why Courts Commit Error When They Do Not Follow the Uniform Trade Secrets Act, 33 Hamline L. Rev. 493, 502-21 (2010) (describing the history of the UTSA).
113. Michael Risch, An Empirical Look at Trade Secret Law's Shift from Common to Statutory Law, in Intellectual Property and the Common Law 151, 173-74 (Shyamkrishna Balganesh ed., 2013) (finding significant reliance on the common law in UTSA jurisdictions, but not necessarily in a way that displaces the UTSA).
114. Richard A. Posner, Economic Analysis of Law § 22.7 (9th ed. 2014) (discussing how inefficient rules will be litigated more frequently than efficient ones, increasing the likelihood they will be replaced with more efficient rules).
115. Robert G. Bone, A New Look at Trade Secret Law: Doctrine in Search of Justification, 86 Calif. L. Rev. 241 (1998) [hereinafter Bone, A New Look];
116. Robert Cooter & Lewis Kornhauser, Can Litigation Improve the Law Without the Help of Judges?, 9 J. Legal Stud. 139, 140 (1980) (concluding that the common law efficiency hypothesis does not support the idea that the legal system will blindly evolve to the best state or continuously improve itself).
117. Robert G. Bone, A New Look at Trade Secret Law: Doctrine in Search of Justification, 86 Calif. L. Rev. 241 (1998) [hereinafter Bone, A New Look];
118. Robert G. Bone, A New Look at Trade Secret Law: Doctrine in Search of Justification, 86 Calif. L. Rev. 241 (1998) [hereinafter Bone, A New Look];
119. Eric R. Claeys, Private Law Theory and Corrective Justice in Trade Secrecy, 4 J. Tort L., no. 2, art. 2 (2011), http://www.degruyter.com/view/j/jtl.2011.4.2/jtl.2011.4.2.1115/jtl.2011.4.2.1115.xml?-format=INT (arguing that the normative interest in a trade secret makes the most sense as a usufructuary property interest) [hereinafter Claeys, Private Law Theory].
120. Robert G. Bone, A New Look at Trade Secret Law: Doctrine in Search of Justification, 86 Calif. L. Rev. 241 (1998) [hereinafter Bone, A New Look];
121. Daniel A. Farber, Uncertainty, 99 Geo. L.J. 901, 914-19 (2011) (describing the precautionary principle and applying it to catastrophic losses where the risk of occurrence is highly uncertain)
122. Stephen M. Gardiner, A Core Precautionary Principle, 14 J. Pol. Phil. 33, 45-54 (2006) (constructing and defending a "Rawlsian core precautionary principle" for use in environmental policymaking). There are variations on this principle, such as!-maximin, which calls for taking an!-weighted combination of the best and worst case scenarios under each option.
123. Daniel A. Farber, Uncertainty, 99 Geo. L.J. 901, 914-19 (2011) (describing the precautionary principle and applying it to catastrophic losses where the risk of occurrence is highly uncertain)