Bone, Robert G. --- "Trade Secrecy, Innovation and the Requirement of Reasonable Secrecy Precautions" [2011] ELECD 544; in Dreyfuss, C. Rochelle; Strandburg, J. Katherine (eds), "The Law and Theory of Trade Secrecy" (Edward Elgar Publishing, 2011)

Book Title: The Law and Theory of Trade Secrecy

Editor(s): Dreyfuss, C. Rochelle; Strandburg, J. Katherine

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781847208996

Section: Chapter 3

Section Title: Trade Secrecy, Innovation and the Requirement of Reasonable Secrecy Precautions

Author(s): Bone, Robert G.

Number of pages: 31

Extract:

3 Trade secrecy, innovation and the
requirement of reasonable secrecy
precautions
Robert G. Bone*


Trade secret law is the ugly duckling of intellectual property. It relies on
secrecy to promote innovation even though secrecy impedes sequential
creativity. It allows reverse engineering to facilitate dissemination even
though the risk of reverse engineering prods trade secret owners to conceal
information more aggressively and to shift their research from products
to processes that can be kept from public view. This chapter focuses on
one of these puzzling features, the requirement that a trade secret owner
implement reasonable secrecy precautions to protect its secret (the RSP
requirement). By making it more costly for a trade secret owner to sue, the
RSP requirement limits trade secret rights and bolsters access. But it also
creates incentives to strengthen secrecy safeguards, which makes access
more difficult.
The RSP requirement is codified in the Uniform Trade Secrets Act
(UTSA), which most states have adopted in one form or another.1 The
UTSA recognizes two requirements for information to qualify as a
protectable trade secret: (1) the information must be secret in fact and
have economic value as a result; and (2) the information must be `the
subject of efforts that are reasonable under the circumstances to maintain
its secrecy'.2 The puzzle lies with the second requirement. Why should the
law force a trade secret owner to invest in access restrictions, fences, signs,



* G. Rollie White Excellence in Teaching Professor, University of Texas
School of Law. I would ...