Download This PaperShould Dissimilar Uses of Trade Secrets Be Actionable
University of Pennsylvania Law Review Online Vol. 167: 78, 2019
13 Pages Posted: 4 Nov 2019 Last revised: 18 Dec 2020
Date Written: October 24, 2019
Abstract
Joseph Fishman and Deepa Varadarajan challenge the current approach for determining misappropriation in trade secret law — which assesses whether a defendant’s end use is “substantially derived” from the plaintiff ’s trade secrets. They argue the law should instead take into account the plaintiff’s and defendant’s end uses for the allegedly infringing information. They suggest that if the defendant’s end use is highly dissimilar from the plaintiff’s, the law should not, as a general matter, prohibit it. They draw this proposed framework from copyright law, which doesn't typically penalize using insubstantial amounts of information to undertake a totally different endeavor, and which has a robust fair use defense.
This Response shows that the article’s thesis — that trade secret law should imitate copyright law’s willingness to permit substantially dissimilar uses of content — conflicts with trade secret law’s fundamental purpose: to protect the integrity of secret information.
In copyright law, the risk of disclosure of secret information is not the focus. Except in the rarer cases where the author has not yet published, the plaintiff's work has already been publicly disclosed and disseminated. Losses resulting from dissimilar or fair uses of a copyrighted work, such as lost sales or declining reputation, may be economically costly or inconvenient for the author. But they do not threaten the fundamental protections copyright law affords.
In contrast, in the trade secret context, permitting even drastically dissimilar uses of secret information threatens the fundamental protections trade secret law affords. When a defendant's use results in public disclosure of the trade secret, this obviously must be actionable, regardless of whether it is the same or a different type of use. To channel the Supreme Court,"[w]ith respect to a trade secret, the right to exclude others is central to the very definition of the property interest."
To their credit, the authors recognize the risk of secrecy-destruction as a major limitation on their proposal, writing that "[e]ven groundbreaking adapters" should still be accountable if they "disclose the secret in ways likely to destroy its value." But I don't think this carve-out for "disclosing" uses will work. And if it does work, it will gut the authors’ proposal. The reason is that it is virtually impossible to identify uses of trade secrets that do not threaten disclosure of the original trade secret. Even if the defendant uses the trade secret to make a totally different product, there is always a chance the trade secret will inadvertently be disclosed and thereby eliminate plaintiff’s market advantage. For example, what if defendant's security precautions are poor, and others can access the information through defendant?
What is more, the Response reveals, trade secret law already has a doctrine that addresses many of the harms with which the authors are concerned: the exclusion of protection for information that constitutes merely the defendant's "general knowledge, skill, and experience." Whereas Fishman and Varadarajan have turned to copyright law for help, I think it makes more sense to focus on improving the doctrines we already have. Improving existing doctrines will do more to ameliorate concerns about hindering innovative new uses, while maintaining trade secret law’s fundamental goals.
Keywords: trade secrets, intellectual property law
Suggested Citation: Suggested Citation
