Blog Editors

Recent Posts

Analyzing Tech Regulation: Shapiro's Critique and Policy Recommendations

UPCOMING EVENT: Automated Decision-Making Technology and Artificial Intelligence

Free Speech and Trademark Law Clash in Vidal v. Elster

Using Technical Solutions to Address Issues in Privacy Law: A Talk by Professor Zubair Shafiq

An Introduction to Venture Capital

Archive

A General History of Western Trade Secret Law from the Time of Preliterate Society to Today - Pt. 1

Posted By Dominick Severance, Jan 22, 2013

Preliterate Society

Pre-literate societies are not structured to support a trade secret regime since they do not have written laws and formal government to adjudicate claims. Mark C. Suchman, Invention and Ritual: Notes on the Interrelation of Magic and Intellectual Property in Preliterate Societies, 89 Colum. L. Rev. 1264, 1272 (1989). In the absence of legislation, inventors used complex rituals tied to spiritual notions of magic to protect their intellectual property. Id. at 1283. So delimited, "magic" encompassed any activity that society construed as being essential to the success of a technique but that had no objective function in the physical mechanics of the process itself. Id. at 1272. In this way, an employer protected his secrets by incorporating magic to make the information more difficult to copy. Id. at 1283.

Roman Empire

By the height of the Roman Empire, government was an established part of people’s lives. Although the laws were written down and easily accessible to most, historians have been unable to find any law that directly pertains to trade secrets in the Roman legal code. A. Arthur Schiller, Trade Secrets and Roman Law; The Actio Servi Corrupti, 30 Colum. L. Rev. 837, 838 (1930). In the 1930 edition of the Columbia Law Review, Arthur Schiller wrote an article inferring that private causes of action relating to slaves gave the Roman judiciary a method by which to try commercial trade secret cases. Id.

Schiller supported his claim by first citing actio servi corrupti, a law that protected a master from any loss his slave might suffer in value due to committing a wrong, such as copying business accounts, at the behest of an outsider. Id. at 839. Schiller wrote that “No reason exists for anyone to entice a slave to copy accounts unless he intends to use the copy; accounts are only valuable to a businessman, and that businessman a competitor. Thus it is seen that the Roman law knew ‘enticement to communicate business secrets’ and that the remedy for such instigation was the actio servi corrupti.” Id. at 843. Schiller points out there were similar laws protecting an employer from an employee who divulged secret information under the reasoning that an employer is a master/father and the employee is the servant/son. Id. at 844. Schiller concluded by saying, “If, as the writer believes, various private causes of action were available in satisfying commercial needs, the state was acting in exactly the same fashion as it does at the present day.” Id. at 845.

In 1996, Alan Watson wrote that Schiller extrapolated too far in his analysis and application of Roman law. Alan Watson, Trade Secrets and Roman Law: the Myth Exploded, 11 Tul. Eur. & Civ. L.F. 19, 24 (1996). Watson reviewed the ancient Latin texts and stated that it was in fact possible for the Roman judiciary to use actio servi corrupti to implement trade secret law commercially. Id. Watson believed, however, that since there was no direct evidence the Roman judiciary actually used the law in that manner, Watson did not feel comfortable saying that the Romans actually had laws to protect trade secrets. Id.

Medieval Guilds

The craft guild was a formal association of specialized master artisans whose authority was backed by political sanction. S.R. Epstein, Craft Guilds, Apprenticeship, and Technological Change in Preindustrial Europe, 58 Jour. Econ. History 684, 685 (1998). Masters took on apprentices under a long-term agreement wherein the master promised to teach the apprentice all his secrets in formal training that usually ran for seven years. Id. at 688. The law also protected the master’s exposure of trade secrets to the apprentice by granting him two causes of action; one against a runaway apprentice who did not finish his committed number of years and another against a competitor trying entice an apprentice away. Id. at 691. Guilds enforced compliance with their rules regarding trade secrets through statutory penalties backed up with a combination of compulsory membership and boycott. Id.

Inherent in apprentice agreements was that the requirement that the apprentice protect his master’s secrets. Id. After the apprenticeship, however, the law allowed the former apprentice to use the knowledge he had acquired and did not have to refrain from using his former master’s secrets for his own gain. Id. Membership in the guild was still compulsory and, therefore, the guild still had authority over the former apprentice. In that way, even though the former apprentice was free, he was still liable for adhering to the requirements of the guild and its regulations regarding trade secrets. Id.

Industrial, Early America

The duty of employees to protect trade secrets was first established in the United States in the influential 1868 Massachusetts case, Peabody v. Norfolk, 98 Mass. 452 (1868). The court ruled that the employee’s duty to protect his employer’s trade secrets was now grounded in express contract as well as traditional confidential relationships like that of attorney and client. Id. The employee, however, only had to protect discrete, tangible things like recipes or drawings from disclosure. Id. The court considered extending the employer’s right to intangible information but determined that such a grant would run afoul of the ideology of free labor. Id. at 444.

By 1910, the courts had rapidly expanded the trade secret doctrine in four ways. First, the courts turned the focus of trade secret litigation from a breach of trust to misappropriation of property. Id. at 494. Second, the courts began implying the duty to protect trade secrets for all employees, holding that employees voluntarily assumed and were compensated for whatever loss of mobility that was imposed by trade secret protection. Id. at 494. And, third, the courts finally allowed intangible goods to be protected, even extending to information such as negative knowledge (knowing what doesn’t work) and compilations of publicly available facts. Id. at 494. Fourth, and finally, courts began granting injunctive relief based on the theory of inevitable disclosure. Id. at 507. This last point is highly controversial and will be covered in greater detail in Pt. II.