Managing the Legal Nexus Between Intellectual Property and Employees

Managing the Legal Nexus Between Intellectual Property and Employees

Domestic and Global Contexts

Elgar Law and Entrepreneurship series

Edited by Lynda J. Oswald and Marisa Anne Pagnattaro

The explosion in intellectual capital coincides with a growing understanding of the importance of human capital to the firm. This book examines the pressing legal issues that arise at the intersections of intellectual property law, employment law, and global trade, such as the use of employment contracts to protect intellectual property, ownership of intellectual property created by the employee, officer liability issues relating to infringement, post-employment confidentiality and non-compete agreements, and inadvertent or deliberate misappropriation or theft of trade secrets.

Chapter 6: Employee misappropriation: using Section 337 to combat trade secret theft

Marisa Anne Pagnattaro and Stephen Kim Park

Subjects: business and management, international business, law - academic, intellectual property law, international economic law, trade law, labour, employment law


The protection of trade secrets continues to be a vexing global challenge. Although it is difficult to quantify the value of intangible intellectual property assets, including trade secrets, they can represent as much as 85 percent of a corporation’s value. Preventing disclosures of trade secrets is of critical importance in the maintenance of corporate value. In fact, the number of U.S. companies doing business in China reporting that intellectual property theft causes “material damage to China operations rose by 12 percentage points, to 34 percent. The percentage of those who reported material damage to global operations also rose by 4 percent, to 14 percent.” According to the House of Representatives Intelligence Committee, U.S. companies suffered estimated losses of over $300 billion in 2012, due to the theft of trade secrets, with a large share of those losses being due to Chinese cyber espionage. A wide range of companies, including General Motors, Dow Chemical, Cargill, Boeing, and DuPont, are all significantly affected by the loss of trade secrets in the global context. For global employers, protecting trade secrets from employee disclosure is a common problem. Many times, rogue employees play a crucial role in the misappropriation of trade secrets. This was particularly evident in the recent prosecutions of former DuPont employees who were convicted for selling trade secrets to a Chinese competitor.

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