The Law and Theory of Trade Secrecy
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The Law and Theory of Trade Secrecy

A Handbook of Contemporary Research

Edited by Rochelle C. Dreyfuss and Katherine J. Strandburg

This timely Handbook marks a major shift in innovation studies, moving the focus of attention from the standard intellectual property regimes of copyright, patent, and trademark, to an exploration of trade secrecy and the laws governing know-how, tacit knowledge, and confidential relationships.
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Chapter 3: Trade Secrecy, Innovation and the Requirement of Reasonable Secrecy Precautions

Robert G. Bone


Robert G. Bone* Trade secret law is the ugly duckling of intellectual property. It relies on secrecy to promote innovation even though secrecy impedes sequential creativity. It allows reverse engineering to facilitate dissemination even though the risk of reverse engineering prods trade secret owners to conceal information more aggressively and to shift their research from products to processes that can be kept from public view. This chapter focuses on one of these puzzling features, the requirement that a trade secret owner implement reasonable secrecy precautions to protect its secret (the RSP requirement). By making it more costly for a trade secret owner to sue, the RSP requirement limits trade secret rights and bolsters access. But it also creates incentives to strengthen secrecy safeguards, which makes access more difficult. The RSP requirement is codified in the Uniform Trade Secrets Act (UTSA), which most states have adopted in one form or another.1 The UTSA recognizes two requirements for information to qualify as a protectable trade secret: (1) the information must be secret in fact and have economic value as a result; and (2) the information must be ‘the subject of efforts that are reasonable under the circumstances to maintain its secrecy’.2 The puzzle lies with the second requirement. Why should the law force a trade secret owner to invest in access restrictions, fences, signs, * G. Rollie White Excellence in Teaching Professor, University of Texas School of Law. I would like to thank Oren Bracha, Rochelle Dreyfuss and the participants in the NYU...

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