15 J. Intell. Prop. L. 39 (Fall 2007)

Charles Tait Graves

Introduction

There is perpetual tension in trade secret law over the breadth of the information a creative employee can freely take from job to job. The court that determines the metes and bounds of such information in each case must choose, consciously or not, between two oscillating poles. These poles-one of property rights and one of relational duties owed by subordinates to their principals-are the subject of a persistent philosophical debate among legal scholars about the proper underpinnings of trade secret jurisprudence. They are not binary opposites but, instead, represent an overlapping mix of policy preferences that trade secret law has never resolved.
Taking one side or the other matters. The property rights approach asks whether information is a trade secret through an objective comparison of a well-defined claim against generally known, available material. A relational approach, by contrast, is more likely to treat information as legally protectable when an employee has learned the information under a confidentiality agreement, regardless of whether the information is in the public domain. A split between these conflicting approaches has arisen in many, sometimes subtle ways over the decades. The split's most recent form is the debate over the preemptive effect of the Uniform Trade Secrets Act against alternative tort claims based upon non-secret information.
The scholarly debate about whether trade secrets are property and the on-the-ground conflicts between employer and employee are, therefore, more closely linked than is evident in the law review commentary thus far. This Article will review the major theories pertaining to whether or not trade secrets are property rights, examine the practical consequences of taking each side, and conclude that a property conception best serves the interests of promoting employee mobility and the freedom to use information in the public domain. The thesis of this Article is that conceiving trade secrets primarily as property rights rather than relational obligations better balances the interests of employers and departing employees faced with trade secret accusations. Specifically, a property-based conception of trade secret rights balances the interests of the employer-which provides the infrastructural nexus for creative work and, thus, deserves some return for that investment-with the interests of the workforce and the wider economy that benefits from the formation of new, creative enterprises.
This conclusion may be unexpected, because commentators concerned about the expanding reach of intellectual property laws generally oppose efforts to propertize information. Because the policies behind trade secret law derive in part from the hierarchical, pre-industrial master/servant relationship, however, the alternative to a property-based conception shifts power decidedly to the former employer and away from the former employee. A relational theory of *42 trade secret law emphasizes not the boundaries of the information at issue but the asserted disloyalty of the employee, who is alleged to have owed a one-way duty of fidelity to the employer.
Property, then, is a normative concept that can have important consequences for trade secret law. This Article will describe five litigation contexts where viewing trade secrets primarily as property rights can make a difference, including the fast-developing disputes over Uniform Trade Secrets Act preemption. It will also offer the first definition of a “public domain” for trade secret law that is consistent with the emerging theories of the public domain in other areas of intellectual property. In summary, this Article offers the following propositions:
· Theories of trade secret law tend to underemphasize employee interests;
· Courts tend to issue different trade secret rulings depending on whether they follow a property rights approach or an employer-centric, relational approach;
· The scholarly debate about whether trade secret law reflects property rights therefore has practical consequences for departing employees;
· A property theory of trade secret rights is imperfect but defensible and best balances the interests of employers and mobile employees;
· By contrast, trade secret theories premised on contract, unfair competition, or personhood are more likely to lead to a power imbalance between employers and employees;
· Finally, defining the public domain for trade secret law remains uncertain because of the conflict between the property and relational approaches.
Conclusions this sweeping cannot be asserted without supplying a philosophical basis that is more convincing than the alternative models others have offered in recent years. This is especially true given the uncertainty expressed by some scholars about the validity of trade secret law as an independent body of law in the first place. This Article will consider alternatives offered by commentators based on contract law, unfair competition tort theory, and personhood approaches.
To reach these propositions, and for purposes of a thought experiment, this Article will also reverse the traditional, dominant perspective, which addresses the validity of trade secret law from the standpoint of the owner of a potential secret. For too long, commentators from all perspectives-from Law and Economics to advocates for the public domain-have analyzed trade secret questions largely *43 in the abstract, as a matter of defining a company's rights against third-party outsiders. This approach is too limited because virtually all trade secret disputes involve former employees. Something of a Copernican reversal is needed: Once we consider problems from a new perspective, we more readily recognize the balance of competing interests that is at stake in the debates over trade secrets as property rights.
This Article has three parts. The first part is practical: it will explain why a property rights conception can make a difference in the outcome of a trade secret dispute between a former employer and employee. This part will explore areas of trade secrets where courts reach inconsistent results depending on their use of relational or property concepts (whether explicit or implicit). This discussion of conflicts in the case law comes before the theoretical discussion that is at the heart of this Article, because it is only with an understanding of how these cases unfold that the theoretical discussion will be compelling. Part of the contribution of this Article is to locate and parse trade secret cases whose differing results appear to be driven by incompatible underlying theories.
The second part is an overview and critique of the scholarly debate about whether trade secrets are property. This part will both explore non-property theories in light of the case law discussed beforehand and offer a balance between employer and employee under a limited property conception. The third and final part seeks to define the public domain for trade secret law, with an analysis of how the property rights debate plays directly into the difficulties currently facing that project.