In a recent article Edwin Hettinger considers various rationales
for recognizing intellectual property. [Edwin C. Hettinger, "Justifying
Intellectual Property," Philosophy & Public Affairs 18,
no. I (Winter 1989): 31-52.] According to Hettinger, traditional
justifications for property are especially problematic when applied
to intellectual property because of its nonexclusive nature. Since
possessing and using intellectual objects does not preclude their
use and possession by others, there is, he says, a "strong
prima facie case against the wisdom of private and exclusive intellectual
property rights" (p. 35). There is, moreover, a presumption
against allowing restrictions on the free flow of ideas (p. 51).
After rejecting several rationales for intellectual property,
Hettinger finds its justification in an instrumental, or "utilitarian,"3
argument based on incentives (p. 47).4 Respecting rights in ideas
makes sense, he says, if we recognize that the purpose of our
intellectual property institutions is to promote the dissemination
and use of information (p. 49) To the extent that existing institutions
do not achieve this result, they should be modified.5 Skeptical
about the effectiveness of current legal arrangements, Hettinger
concludes that we must think more imagina-tively about structuring
our intellectual property institutions - in particular, patent,
copyright, and trade secret law - so that they increase the availability
and use of intellectual products. He ventures several possibilities
for consideration: eliminating certain forms of trade secret protection,
shortening the copyright and patent protection periods, and public
funding and ownership of intellectual objects (p. 49).
Hettinger's approach to justifying our intellectual property institutions
rests on several problematic assumptions. It assumes that all
of our intellectual property institutions rise or fall together
- that the rationale for trade secret protection must be the same
as that for patent and copyright protection.6 This assumption,
I will try to show, is unwarranted. While it may be true that
these institutions all promote social utility or well-being, the
web of rights and duties understood under the general heading
of "intellectual property rights" reflects a variety
of more specific rationales and objectives.7 Second, Hettinger
assumes that the rights commonly referred to as "intellectual
property rights" are best understood on the model of rights
in tangible and real property. He accepts the idea, implicit in
the termi-nology, that intellectual property is like tangible
property, only less corporeal (p. 31). This assumption leads him
to focus his search for the justification of intellectual property
on the traditional arguments for pri-vate property. I will try
to show the merits of an alternative approach to thinking about
rights in ideas - one that does not depend on the analogy with
tangible property and that recognizes the role of ideas in defining
personality and social relationships.
The combined effect of these assumptions is that trade secret
law comes in for particularly serious criticism. It restricts
methods of acquiring ideas (p. 35); it encourages secrecy (p.
36); it places unacceptable restrictions on employee mobility
and technology transfer (p. 52); it can stifle competition (p.
50); it is more vulnerable to socialist objections (p. 52). In
light of these deficiencies, Hettinger recommends that we consider
the possibility of "eliminating most types of trade secrets
entirely and letting patents carry a heavier load" (p. 49).
He believes that trade secrets are undesirable in ways that copyrights
and patents are not (p.36). Without disagreeing with Hettinger's
recommendation that we re-evaluate and think more imaginatively
about our intellectual property institutions, I believe we should
have a clearer understanding of the various rationales for these
institutions than is reflected in Hettinger's article. If we unbundle
the notion of intellectual property into its constituent rights,8
we find that different justifications are appropriate for different
clusters of rights.9 In particular, we find that the rights recognized
by trade secret law are better understood as rooted in respect
for individual liberty, confidential relationships, common morality,
and fair competition than in the promotion of innovation and the
dissemination of ideas. While trade secret law may serve some
of the same ends as patent and copyright law, it has other foundations
which are quite distinctive.10 In this article, I am primarily
concerned with the foundations of trade secret principles. However,
my general approach differs from Hettinger's in two fundamental
ways. First, it focuses on persons and their relation-ships rather
than property concepts. Second, it reverses the burden of justification,
placing it on those who would argue for treating ideas as public
goods rather than those who seek to justify private rights in
ideas. Within this alternative framework, the central questions
are how ideas may be legitimately acquired from others, how disclosure
obligations arise, and how ideas become part of the common pool
of knowledge. Before turning to Hettinger's criticisms of trade
secret principles, it will be useful to think more broadly about
the rights of individuals over their undisclosed ideas. This inquiry
will illustrate my approach to thinking about rights in ideas
and point toward some of the issues at stake in the trade secret
area.
If a person has any right with respect to her ideas, surely
it is the right to control their initial disclosure. 11 A person
may decide to keep her ideas to herself, to disclose them to a
select few, or to publish them widely. Whether those ideas are
best described as views and opinions, plans and intentions, facts
and knowledge, or fantasies and inventions is immate-rial. While
it might in some cases be socially useful for a person to be generous
with her ideas, and to share them with others without restraint,
there is no general obligation to do so. The world at large has
no right to the individual's ideas.12 Certainly, specific undertakings,
relationships, and even the acquisition of specific information
can give rise to disclosure obligations. Typically, these obligations
relate to specific types of information pertinent to the relationship
or the subject matter of the undertaking. A seller of goods must
disclose to potential buyers latent defects and health and safety
risks associated with the use of the goods. A person who under-
takes to act as an agent for another is obliged to disclose to
the principal information she acquires that relates to the subject
matter of the agency. Disclosure obligations like these, however,
are limited in scope and arise against a general background right
to remain silent.
The right to control the initial disclosure of one's ideas is
grounded in respect for the individual. Just as a person's sense
of herself is intimately connected with the stream of ideas that
constitutes consciousness, her public persona is determined in
part by the ideas she expresses and the ways she expresses them.
To require public disclosure of one's ideas and thoughts - whether
about "personal" or other matters - would distort one's
personality and, no doubt, alter the nature of one's thoughts.13
It would seriously interfere with the liberty to live according
to one's chosen life plans. This sort of thought control would
be an invasion of privacy and personality of the most intrusive
sort. If anything is private one's undisclosed thoughts surely
are.14 Respect for autonomy, respect for personality, and respect
for privacy lie behind the right to control disclosure of one's
ideas, but the right is also part of what we mean by freedom of
thought and expression. Fre-quently equated with a right to speak,
freedom of expression also implies a prima facie right not to
express one's ideas or to share them only with those we love or
trust or with whom we wish to share.15 These observations explain
the peculiarity of setting up the free flow of ideas and unrestricted
access as an ideal. Rights in ideas are desirable insofar as they
strengthen our sense of individuality and undergird our social
relationships. This suggests a framework quite different from
Hettinger's, one that begins with a strong presumption against
requiring disclosure and is in favor of protecting people against
unconsented-to acquisitions of their ideas.16 This is the moral
backdrop against which trade secrecy law is best understood.
Within this framework, a critical question is how people lose
rights in their ideas. Are these rights forfeited when people
express their ideas or communicate them to others? Surely this
depends on the circumstances of disclosure. Writing down ideas
in a daily journal to oneself or recording them on a cassette
should not entail such a forfeiture. Considerations of individual
autonomy, privacy, and personality require that such expressions
not be deemed available for use by others who may gain access
to them.17 Likewise, communicating an idea in confidence to another
should not render it part of the common pool of knowledge. Respect
for the individual's desire to limit the dissemination of the
idea is at stake, but so is respect for the relationship of trust
and confidence among the persons involved. If A confides in B
under circumstances in which B gives A reason to believe she will
respect the confidence, A should be able to trust that B will
not reveal or misuse the confidence and that third parties who
may intentionally or accidentally discover the confidence will
respect it.18 The alternative possibility is that by revealing
her ideas to B, A is deemed to forfeit any right to control their
use or communication. This principle is objectionable for a couple
of reasons. First, it would most certainly increase reluctance
to share ideas since our disclosure decisions are strongly influenced
by the audience we anticipate. If we could not select our audience,
that is, if the choice were only between keeping ideas to ourselves
and sharing them with the world at large, many ideas would remain
unexpressed, to the detriment of individual health as well as
the general good.
Second, the principle would pose an impediment to the formation
and sustenance of various types of cooperative relationships -
relationships of love and friendship, as well as relationships
forged for specific purposes such as education, medical care,
or business. It might be thought that only ideas of an intimate
or personal nature are important in this regard. But it is not
only "personal" relationships, but cooperative relationships
of all types, that are at stake. Shared knowledge and information
of varying types are central to work relationships and communities
- academic departments and disciplines, firms, teams - as well
as other organizations. The possession of common ideas and information,
to the exclusion of those outside the relationship or group, contributes
to the group's self-definition and to the individual's sense of
belonging. By permitting and protecting the sharing of confidences,
trade secret principles, among other institutions, permit "special
communities of knowledge" which nurture the social bonds
and cooperative efforts through which we express our individuality
and pursue common purposes. FN19
Of course, by disclosing her idea to B, A runs the risk that B
or anyone else who learns about the idea may use it or share it
further. But if B has agreed to respect the confidence, either
explicitly or by participating in a relationship in which confidence
is normally expected, she has a prima facie obligation not to
disclose the information to which she is privy.FN20 Institutions
that give A a remedy against third parties who appropriate ideas
shared in confidence reduce the risk that A's ideas will become
public resources if she shares them with B. Such institutions
thereby support confidential relationships and the cooperative
undertakings that depend on them.
Yet another situation in which disclosure should not be regarded
as a license for general use is the case of disclosures made as
a result of deceit or insincere promises. Suppose A is an entrepreneur
who has created an unusual software program with substantial sales
potential. Another party, B, pretending to be a potential customer,
questions A at great length about the code and other details of
her program. A's disclosures are not intended to be, and should
not be deemed, a contribution to the general pool of knowledge,
nor should B be permitted to use A's ideas.FN21 Respect for A's
right to disclose her ideas requires that involuntary disclosures
- such as those based on deceit, coercion, and theft of documents
containing expressions of those ideas - not be regarded as forfeitures
to the common pool of knowledge and information. in recognition
of A's right to control disclosure of her ideas and to discourage
appropriation of her ideas against her wishes, we might expect
our institutions to provide A with a remedy against these sorts
of appropriation. Trade secrets law provides such a remedy.
Competitive fairness is also at stake if B is in competition with
A. Besides having violated standards of common morality in using
deceit to gain access to A's ideas, B is in a position to exploit
those ideas in the marketplace without having contributed to the
cost of their development. B can sell her version of the software
more cheaply since she enjoys a substantial cost advantage compared
to A, who may have invested a great deal of time and money in
developing the software. Fairness in a competitive economy requires
some limitations on the rights of firms to use ideas developed
by others. in a system based on effort, it is both unfair and
ultimately self-defeating to permit firms to have a free ride
on the efforts of their competitors.FN22
Respect for personal control over the disclosure of ideas,
respect for confidential relationships, common morality, and fair
competition all point toward recognizing certain rights in ideas.
Difficult questions will arise within this system of rights. If
A is not an individual but an organization or group, should A
have the same rights and remedies against B or third parties who
use or communicate information shared with B in confidence? For
example, suppose A is a corporation that hires an employee, B,
to develop a marketing plan. If other employees of A reveal in
confidence to B information they have created or assembled, should
A be able to to restrain B from using this information to benefit
herself (at A's expense)? Does it matter if A is a two-person
corporation or a corporation with 100,000 employees? What if A
is a social club or a private school?
Hettinger seems to assume that corporate A's should not have such
rights - on the grounds that they might restrict B's employment
possibilities. It is certainly true that giving A a right against
B if she reveals information communicated to her in confidence
could rule out certain jobs for B. However, the alternative rule
- that corporate A's should have no rights in ideas they reveal
in confidence to others - has problems as well.
One problem involves trust. if our institutions do not give corporate
A's certain rights in ideas they reveal in confidence to employees,
A's will seek other means of ensuring that competitively valuable
ideas are protected. They may contract individually with employees
for those rights, and if our legal institutions do not uphold
those contracts, employers will seek to hire individuals in whom
they have personal trust. Hiring would probably become more dependent
on family and personal relationships and there would be fewer
opportunities for the less well connected. Institutional rules
giving corporate A's rights against employees who reveal or use
information given to them in confidence are a substitute for per-sonal
bonds of trust. While such rules are not cost-free and may have
some morally undesirable consequences, they help sustain cooperative
efforts and contribute to more open hiring practices.
Contrary to Hettinger's suggestion, giving corporate A's rights
in the ideas they reveal in confidence to others does not always
benefit the strong at the expense of the weak, or the large corporation
at the expense of the individual, although this is surely sometimes
the case.FN23 Imagine three entrepreneurs who wish to expand their
highly successful cookie business. A venture capitalist interested
in financing the expansion naturally wishes to know the details
of the operation - including the prized cookie recipe - before
putting up capital. After examining the recipe, however, he decides
that it would be more profitable for him to sell the recipe to
Cookie Co. a multinational food company, and to invest his capital
elsewhere. Without money and rights to prevent others from using
the recipe, the corporate entrepreneurs are very likely out of
business. Cookie Co. which can manufacture and sell the cookies
much more cheaply, will undoubtedly find that most of the entrepreneurs'
customers are quite happy to buy the same cookies for less at
their local supermarket.
To a large extent, the rights and remedies mentioned in the
preceding discussion are those recognized by trade secret law.
As this discussion showed, the concept of property is not necessary
to justify these rights. Trade secret law protects against certain
methods of appropriating the confidential and commercially valuable
ideas of others. It affords a remedy to those whose commercially
valuable secrets are acquired by misrepresentation, theft, bribery,
breach or inducement of a breach of confidence, espionage, or
other improper means.FN24 Although the roots of trade secret principles
have been variously located, respect for voluntary disclosure
decisions and respect for confidential relationships provide the
best account of the pattern of permitted and prohibited appropriations
and use of ideas. FN25 As Justice Oliver Wendell Holmes noted
in a 1917 trade secret case, "The property may be denied
but the confidence cannot be."FN26 Trade secret law can also
be seen as enforcing ordinary standards of morality in commercial
relationships, thus ensuring some consistency with general social
morality.FN27 It may well be true, as Hettinger and others have
claimed, that the availability of trade secret protection provides
an incentive for intellectual labor and the development of ideas.
The knowledge that they have legal rights against those who "misappropriate"
their ideas may encourage people to invest large amounts of time
and money in exploring and developing ideas. However, the claim
that trade secret protection promotes invention is quite different
from the claim that it is grounded in or justified by this tendency.
Even if common law trade secret rights did not promote intellectual
labor or increase the dissemination and use of information, there
would still be reasons to recognize those rights. Respect for
people's voluntary disclosure decisions, respect for confidential
relationships, standards of common morality, and fair competition
would still point in that direction.
Moreover, promoting the development of ideas cannot be the whole
story behind trade secret principles, since protection is often
accorded to information such as customer data or cost and pricing
information kept in the ordinary course of doing business. While
businesses may need incentives to engage in costly research and
development, they would certainly keep track of their customers
and costs in any event. The rationale for giving protection to
such information must be other than promoting the invention, dissemination,
and use of ideas. By the same token, trade secret principles do
not prohibit the use of ideas acquired by studying products available
in the marketplace. If the central policy behind trade secret
protection were the promotion of invention, one might expect that
trade secret law, like patent law, which was explicitly fashioned
to encourage invention, would protect innovators from imitators.
The fact that Congress has enacted patent laws giving inventors
a limited monopoly in exchange for disclosure of their ideas without
at the same time eliminating state trade secret law may be a further
indication that trade secret and patent protection rest on different
grounds.FN28 By offering a limited monopoly in exchange for disclosure,
the patent laws implicitly recognize the more fundamental right
not to disclose one's ideas at all or to disclose them in confidence
to others.FN29
If we see trade secret law as grounded in respect for voluntary
disclosure, confidential relationships, common morality, and fair
competition, the force of Hettinger's criticisms diminishes somewhat.
The problems he cites appear not merely in their negative light
as detracting from an ideal "free flow of ideas," but
in their positive role as promoting other important values.
a. Restrictions on Acquiring Ideas. Hettinger is critical,
for example, of the fact that trade secret law restricts methods
of acquiring ideas. But the prohibited means of acquisition -
misrepresentation, theft, bribery, breach of confidence, and espionage
- all reflect general social morality. Lifting these restrictions
would undoubtedly contribute to the erosion of important values
outside the commercial context.
How much trade secrecy laws inhibit the development and spread
of ideas is also open to debate. Hettinger and others have claimed
that trade secrecy is a serious impediment to innovation and dissemination
because the period of permitted secrecy is unlimited. Yet, given
the fact that trade secret law offers no protection for ideas
acquired by examining or reverse-engineering products in the marketplace,
it would appear rather difficult to maintain technical secrets
embodied in those products while still exploiting their market
potential. A standard example used to illustrate the problem of
perpetual secrecy, the Coke formula, seems insufficient to establish
that this is a serious problem. Despite the complexity of modern
technology, successful reverse-engineering is common. Moreover,
similar technical advances are frequently made by researchers
working independently. Trade secret law poses no impediment in
either case. Independent discoverers are free to exploit their
ideas even if they are similar to those of others.
As for nontechnical information such as marketing plans and business
strategies, the period of secrecy is necessarily rather short
since implementation entails disclosure. Competitor intelligence
specialists claim that most of the information needed to understand
what competitors are doing is publicly available.FN30 All of these
considerations suggest that trade secret principles are not such
a serious impediment to the dissemination of information.
b. Competitive Effects. Hettinger complains that trade
secret principles stifle competition. Assessing this claim is
very difficult. On one hand, it may seem that prices would be
lower if firms were permitted to obtain cost or other market advantages
by using prohibited means to acquire protected ideas from others.
Competitor access to the Coke formula would most likely put downward
pressure on the price of "the real thing." Yet, it is
also reasonable to assume that the law keeps prices down by reducing
the costs of self-protection. By giving some assurance that commercially
valuable secrets will be protected, the law shields firms from
having to bear the full costs of protection. It is very hard to
predict what would happen to prices if trade secret protection
were eliminated. Self-protection would be more costly and would
tend to drive prices up, while increased competition would work
in the opposite direction. There would surely be important differences
in morale and productivity. Moreover, as noted, any price reductions
for consumers would come at a cost to the basic moral standards
of society if intelligence-gathering by bribery, misrepresentation,
and espionage were permitted.
c. Restrictions on Employee Mobility. Among Hettinger's
criticisms of trade secret law, the most serious relate to restrictions
on employee mobility. In practice, employers often attempt to
protect information by overrestricting the postemployment opportunities
of employees. Three important factors contribute to this tendency:
vagueness about which information is confidential; disagreement
about the proper allocation of rights to ideas generated by employees
using their employers’ resources; and conceptual difficulties
in distinguishing general knowledge and employer-specific knowledge
acquired on the job. Courts, however, are already doing what Hettinger
recommends, namely, limiting the restrictions that employers can
place on future employment in the name of protecting ideas.FN31
Although the balance between employer and employee interests is
a delicate one not always equitably struck, the solution of eliminating
trade secret protection altogether is overbroad and undesirable,
considering the other objectives at stake.
d. Hypothetical Alternatives. Hettinger's discussion of
our intellectual property institutions reflects an assumption
that greater openness and sharing would occur if we eliminated
trade secret protection. He argues that trade secret principles
encourage secrecy. He speaks of the "free flow of ideas"
as the ideal that would obtain in the absence of our intellectual
property institutions. This supposition strikes me as highly unlikely.
People keep secrets and establish confidential relationships for
a variety of reasons that are quite independent of any legal protection
these secrets might have. The psychology and sociology of secrets
have been explored by others. Although much economic theory is
premised on complete information, secrecy and private information
are at the heart of day-to-day competition in the marketplace.
In the absence of something like trade secret principles, I would
expect not a free flow of ideas but greater efforts to protect
information through contracts, management systems designed to
limit information access, security equipment, and electronic counterintelligence
devices. I would also expect stepped-up efforts to acquire intelligence
from others through espionage, bribery, misrepresentation, and
other unsavory means. By providing some assurance that information
can be shared in confidence and by protecting against unethical
methods of extracting information and undermining confidentiality,
trade secret principles pro-mote cooperation and security, two
important conditions for intellectual endeavor. In this way, trade
secret principles may ultimately promote intellectual effort by
limiting information flow.
We may begin thinking about information rights, as Hettinger
does, by treating all ideas as part of a common pool and then
deciding whether and how to allocate to individuals rights to
items in the pool. Within this framework, ideas are conceived
on the model of tangible property.FN32 Just as, in the absence
of social institutions, we enter the world with no particular
relationship to its tangible assets or natural resources, we have
no particular claim on the world's ideas. In this scheme, as Hettinger
asserts, the "burden of justification is very much on those
who would restrict the maximal use of intellectual objects"
(p. 35).
Alternatively, we may begin, as I do, by thinking of ideas in
relation to their originators, who may or may not share their
ideas with specific others or contribute them to the common pool.
This approach treats ideas as central to personality and the social
world individuals construct for themselves. Ideas are not, in
the first instance, freely available natural resources. They originate
with people, and it is the connections among people, their ideas,
and their relationships with others that provides a baseline for
discussing rights in ideas. Within this conception, the burden
of justification is on those who would argue for disclosure obligations
and general access to ideas.
The structure of specific rights that emerges from these different
frameworks depends not only on where the burden of justification
is located, but also on how easily it can be discharged.FN33 It
is unclear how compelling a case is required to overcome the burden
Hettinger sets up and, consequently, difficult to gauge the depth
of my disagreement with him.FN34 Since Hettinger does not consider
the rationales for trade secret principles discussed here, it
is not clear whether he would dismiss them altogether, find them
insufficiently weighty to override the presumption he sets up,
or agree that they satisfy the burden of justification.
One might suspect, however, from the absence of discussion of
the personal and social dimension of rights in ideas that Hettinger
does not think them terribly important, and that his decision
to put the burden of justification on those who argue for rights
in ideas reflects a fairly strong commitment to openness. On the
assumption that our alternative start-ing points reflect seriously
held substantive views (they are not just procedural devices to
get the argument started) and that both frameworks require strong
reasons to overcome the initial presumption, the resulting rights
and obligations are likely to be quite different in areas where
nei-ther confidentiality nor openness is critical to immediate
human needs. Indeed, trade secrecy law is an area where these
different starting points would be likely to surface.
The key question to ask about these competing frameworks is which
is backed by stronger reasons. My opposition to Hettinger's allocation
of the burden of justification rests on my rejection of his conception
of ideas as natural resources and on different views of how the
world would look in the absence of our intellectual property institutions.
In contrast, my starting point acknowledges the importance of
ideas to our sense of ourselves and the communities (including
work communities) of which we are a part. It is also more compatible
with the way we commonly talk about ideas. Our talk about disclosure
obligations presupposes a general background right not to reveal
ideas. If it were otherwise, we would speak of concealment rights.
To use the logically interesting feature of nonexclusiveness as
a starting point for moral reasoning about rights in ideas seems
wholly arbitrary.
Knives, forks, and spoons are all designed to help us eat.
In a sense, however, the essential function of these tools is
to help us cut, since without utensils, we could still consume
most foods with our hands. One might be tempted to say that since
cutting is the essential function of eating utensils, forks and
spoons should be designed to facilitate cutting. One might even
say that insofar as forks and spoons do not facilitate cutting,
they should be redesigned. Such a modification, however, would
rob us of valuable specialized eating instruments.
Hettinger's train of thought strikes me as very similar. He purports
to examine the justification of our various intellectual property
institutions. However, he settles on a justification that really
only fits patent and, arguably, copyright institutions. He then
suggests that other intellectual property rights be assessed against
the justification he proposes and redesigned insofar as they are
found wanting. In particular, he suggests that trade secret principles
be modified to look more like patent principles. Hettinger fails
to appreciate the various rationales behind the rights and duties
understood under the heading "intellectual property,"
especially those recognized by trade secret law.
I agree with Hettinger that our intellectual property institutions
need a fresh look from a utilitarian perspective. FN35 The seventeen-year
monopoly granted through patents is anachronistic given the pace
of technological development today. We need to think about the
appropriate balance between employer and employee rights in ideas
developed jointly. Solutions to the problem of the unauthorized
copying of software may be found in alternative pricing structures
rather than in fundamental modifications of our institutions.
Public interest considerations could be advanced for opening access
to privately held information in a variety of areas. As we consider
these specific questions, however, I would urge that we keep firmly
in mind the variety of objectives that intellectual property institutions
have traditionally served.FN36 If, following Hettinger's advice,
we single-mindedly reshape these institutions to maximize the
short-term dissemination and use of ideas, we run the risk of
subverting the other ends these institutions serve.