The Law and Politics of Trade Secrecy

Dinkel, Christopher P.

doi:https://doi.org/10.21985/n2-j24n-1c53

Work

The Law and Politics of Trade Secrecy

Public

Download PDF

In this dissertation, I provide insight into different aspects of the law and politics of trade secrecy at four levels of analysis. Part I examines trade secrecy from an international and comparative perspective. It encompasses Chapters 2 and 3 and focuses on (#1) international law and (#2) comparative national policy. Part II, which includes Chapters 3 and 4, examines trade secrecy in the U.S. domestic context and focuses on (#3) U.S. judicial decisions and (#4) U.S. public opinion. More specifically, in Chapter 2, I utilize a corpus I gathered of the trade secret provisions of 180 preferential trade agreements and describe the evolution of international trade secret law from 1992–2019. In Chapter 3, I ask why countries enact large increases in legal protections for trade secrets in their domestic policy. Using data on the trade secret protection levels of a sample of 17 Organisation for Economic Co-operation and Development (OECD) and 20 OECD-trading-partner countries from Lippoldt & Schultz (2014), I find support for an emulation mechanism of policy diffusion and empirically show that countries that were less developed, countries with civil-law legal systems, and countries with more market-liberalization-oriented governments were statistically more likely to implement large increases in trade secret protections on average, all else equal. In Chapter 4, I examine how U.S. judges’ biographical characteristics—particularly their educational backgrounds—affect plaintiffs’ likelihoods of success in obtaining a preliminary injunction in trade secret misappropriation cases. Using data from all cases before Article III federal judges with a Defend Trade Secrets Act (DTSA) claim filed in U.S. federal court in the first year after the passage of DTSA in 2016 from Levine & Seaman (2018), I empirically demonstrate that the assignment of a case to a judge who possesses a B.S. degree increases the average probability by more than 35% of a party being granted a preliminary injunction by that judge if the party requests one. I argue that this outcome is likely due to a pro-IP socialization effect in the judges’ educational backgrounds that leads them to be more likely to evaluate the legal factors involved in making a preliminary injunction decision in favor of the purported trade secret owner. Finally, in Chapter 5, I examine what politically-salient preferences the U.S. public holds regarding employee noncompete agreements, which companies use to protect trade secrets. Using a conjoint experiment I embedded in a nationally-representative survey I conducted of the U.S. public, I find that in certain areas, the U.S public’s views generally reflect states’ current legal rules. For instance, the U.S. public prefers that an employer’s use of a noncompete be justified on the basis of protecting any types of confidential information, rather than simply customer lists or employee training investments. I also find no empirical evidence that the U.S. public supports an exemption from the use of a noncompete based on an employee’s earnings level. However, I do find some results that suggest that recent legislative reform efforts limiting the use of employee noncompetes find support in some areas among the U.S. public, including that the public prefers that (1) an employer be required by law to pay a departing employee subject to a noncompete at least some compensation during the noncompete period—specifically, 50% of the employee’s base salary rather than no compensation, (2) physicians be exempted from noncompetes, and (3) noncompetes include a shorter maximum duration—in particular one year over three years and two years over three years. Through these chapters in my dissertation, I shed light into an understudied yet highly politically and legally salient issue for countries, judges, firms, and the public alike.

Creator