Monday, 10 December 2012

December issue -- and trade secrets: a perfect storm?

The December issue of the Journal of Intellectual Property Law & Practice (JIPLP) is available in full online to its electronic subscribers. However, the list of contents of the current edition is accessible to everyone -- and if you aren't a subscriber but do want to read a specific item, you can purchase short-term access instead.

This month's editorial is the latest in a line of guest editorials by members of the JIPLP editorial board. The author is Neil J. Wilkof, who writes as follows:
"Trade secrets: a perfect storm of unavoidable neglect?

My physics friends tell me that one of the great research challenges is trying to conceptualize and explain dark energy and dark matter. We ‘know’ that dark energy and dark matter are both out there, and together they comprise most of the universe. But because we cannot directly perceive them, our current ability to explain them empirically is limited.

There is something akin to the dark energy/dark matter problem in IP, namely the treatment of trade secrets. We cannot gainsay the centrality of trade secrets. As we were most recently reminded in the February 2012 report by John E Jankowski published by the National Science Foundation, Business Use of Intellectual Property Protection Documented in NSF Survey (NSF 12–307), trade secrets may be the most used of all IP rights, as reported by people in business. Similar findings have been reported over a period of years across different locations. The challenge has been and remains: how can we study and research the subject in a professionally robust manner?

Based on anecdotal evidence, it is our decided view that trade secrets are under-emphasized, in comparison with the other IP rights, whether by IP practitioners, IP academics or in managerial education. Indeed, the situation surrounding trade secrets may well be even less encouraging than with respect to dark energy and dark matter. For the latter, numerous physics professionals are at least involved in trying to shed light on these subjects. To the contrary, there is a palpable lack of attention that is devoted to trade secrets. As a result, there appears to be a serious disconnect between how trade secrets are viewed on the ground as a business matter and how trade secrets are approached by persons most likely to be engaged with them at either the IP professional, research or educational level.

At the level of the IP professional, trade secrets lie outside the bounds of one's usual scope of activity. There are no registrations or other filings to be made in order to establish the right, nor any international treaties or other arrangements that establish at least a minimum framework for how trade secret rights are created and protected. With respect to transactions that involve a trade secret, it is extremely difficult to come up with documentation that adequately describes what kind of trade secret rights are involved. When the valuable trade secrets are based on the company's know-how or tacit knowledge of key employees, the task becomes even more daunting. As a result, from the vantage of the IP professional, there is often a huge element of faith in any transaction involving trade secrets.

At the level of the treatment of trade secrets by the legal Academy, perhaps the most important reason for the lack of attention is the problem of categories: trade secrets do not seem to fall within any of the ‘classic’ subject-matters that comprise IP. Rarely, it would seem, do we find an ‘Overview of IP course’ that treats trade secrets on an equal footing, if at all, with patents, copyright and trade marks. Indeed, influential articles continue to be published on whether trade secrets should be treated at all as a form of intellectual property. Perhaps they are better conceived as a sub-category of such legal rights as commercial tort, fiduciary obligation, unfair competition, contract law or local statutory law. Disputes at the theoretical level about the nature of patents, copyright or trade marks are one thing, but when the self-contained underlying subject-matter of trade secrets is itself to dispute, its attractiveness as a focus of IP academic inquiry is significantly diminished.

It may seem a bit misplaced to consider the treatment of trade secrets by management education (most notably MBA and Technology Management programs). But, in truth, given the finding about the centrality of trade secrets for the business community, inclusion of management education as a part of our discussion is understandable. After all, management education research is most distinguishable from the field of economics by the fact that the former focuses on imparting tools to deal with the actual management of assets, including intangible assets such as IP. Trade secrets, however, pose a particular challenge in this regard because trade secrets do not allow a compact description or ready frame of reference. Moreover, the focus on case studies and empirical results makes research about trade secrets especially difficult. In this context, the desire to conduct research in this area is often ultimately abandoned due to the practical difficulties that such studies pose.

The upshot is that none of the major moving parts that must contribute to our understanding of the theory and practice of trade secrets is contributing in a substantial manner. Whether this perfect storm of neglect of trade secrets can be changed is an important but so far unrealized aspiration".

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