Private Law Theory

ABSTRACT
The standard economic account of trade secret law focuses on providing incentives for creating new inventions. The incentive-to-invent theory, however, provides little explanation for why the key doctrinal features of trade secret law are structured the way that they are. For example, providing ex ante incentives to invent does not easily explain the requirement that an inventor must take measures to preserve secrecy even after the invention has been created. Nor does it explain why trade secret misappropriation, unlike patent and copyright infringement, requires ‘improper’ conduct by the defendant for liability. In this Article, I give a different theory of trade secret law. In this account, the primary economic purpose of trade secret law is not to preserve the incentive to invent, but to dissuade the possessor of a secret idea from using unreasonable and inefficient self-help countermeasures to protect the secret. As the Article will explain, this anti-countermeasure principle provides an overarching theory to explain the key structural features of trade secret law, in a manner that the incentive-to-invent theory does not.

Chiang, Tun-Jen, The Economic Structure of Trade Secret Law (August 31, 2024).