Comments on Trade Secret Sharing in High Velocity Labor Markets

Abstract

This essay is an edited and supplemented version of comments made during the 2008 AALS Annual Meeting Section on Law & Economics panel. The comments relate to information sharing in high velocity labor markets such as Silicon Valley, as discussed by presenter Alan Hyde.

The essay discusses four topics. First, it agrees with the principle that trade secret law does generally not provide an independent incentive to generate secret information.

Second, it asserts that trade secret law in California is strong when applied to valuable information, and that "information sharing" in high velocity markets is likely primarily tangential to core technologies.

Third, the essay situates the high velocity labor market analysis into a broader theoretical framework, namely that of protection cost minimization. Under this theory, an explanation for information sharing in Silicon Valley is that the information shared is not valuable enough to warrant more protection or to justify litigation costs.

Fourth, it explores avenues for future research, including the role of non-competition agreements in information sharing policy.

Keywords: trade secrets, employee mobility, high velocity, labor market

JEL Classification: D21, E24