Monday 6 April 2009

Trade Secrets: Front and Center?

Permit me to add a few additional thoughts to the post of 3 April by Jeremy Phillips, "Research circles: new and useful"? Jeremy reported on what Jonathan Murray of GE Healthcare describes as a new innovation model called "a research circle." I found Jeremy's skeptical conclusion to be of most interest, in which he observed that "I hadn't realised that the concept was new, and it's certainly not inventive. The real challenge, though, isn't conjuring up the 'research circle' as a new model but in creating the right atmosphere of trust and respect that will enable it to function successfully, not just when it's achieving positive results but when the collaboration is doing no more than eliminating the negatives."

One view of the Open Circle

I would like to push Jeremy's comment further. In my view, one of the biggest failures of the legal education of IP is that it has largely ignored the "trust and respect" scheme of trade secrets as an integral part of IP thinking. This means that IP legal education focuses on the "traditional" forms of IP protection--patents, trademarks and copyright--which can be roughly characterized by disclosure and transparency, elaborate statutory schemes and international structures, and, in part, systems of registration. As such, the focus is proprietary in the purest sense in that these rights are presumably good against the entire world (at least as bound by the relevant territory) and the relationship between parties is morally neutral. If anything goes wrong between the parties, they look first to contract and in a lesser degree to tort to seek remedy.

In such a world, there is no sustained place for trade secrets (or whatever synonym you choose to call it) protection, which is characterized by lack of public disclosure and the centrality of trust between discrete persons, where the right can be lost forever by either disclosure or independent invention, where there are only rudimentary forms of statutory protection and virtually no international structures. In a word, trade secrets is a form of protection of human invention and creation which is in many ways diametrically opposed to the traditional IP rights.

The neglect of trade secrets carries over into MBA and management education, despite the fact that the best evidence that we have seems to show that trade secrets may be no less important than the traditional IP rights as a way of protecting inventions and creations. Anyone on the ground knows this, but those few courses that attempt to genuinely integrate IP into an MBA setting for the most part are driven by the categories of analysis and discourse borrowed from the law school treatment of IP. Indeed, my own MBA teaching experience shows that the students find my treatment of trade secrets and trust to be the most unexpected, and in many ways, most useful part of the course.

Seen in this light, it less perhaps less surprising that the report on "a research circle" seems to have neglected an emphasis on the trust aspect of innovation and development. Without any meaningful legal discourse on IP and trust in legal eduction, and only sporadic treatment of the subject in MBA education, it will take a rare person indeed to successfully integrate the concept into the analytical structures that he or she may have learned in law or business school. There is hope, however. The current economic crisis may well force both legal and management education to a long, hard look at themselves. If so, one result may be that the treatment of the trade secret and trust paradigm will be front and center in such curricular changes.

Trade secrets: secret no longer?

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