Working Knowledge: Trade Secrets, Restrictive Covenants in Employment, and the Rise of Corporate Intellectual Property, 1800-1920
University of California, Irvine School of Law
Loyola-LA Public Law Research Paper No. 2001-2
The invention of trade secret doctrine in the mid-nineteenth century enabled employers to enjoin revelation of secret information by current or former employees. At the same time, courts expanded the permissible uses of post-employment covenants not to compete so as to prevent dissemination of knowledge. These doctrinal developments thus defined the bounds of permissible entrepreneurship. Equally as significant, these doctrines both generated and reflected a profoundly new perspective on the nature and control of workplace knowledge.
This article examines the origins and development of the law of trade secrets and restrictive covenants through study of cases and treatises and through the study of corporate practices. Drawing on the archives of the Du Pont company, this article examines the ways in which a firm that was unusually aware of the value of employee intellectual property used law to achieve its goal of protecting its own secrets while learning new developments from others. The article analyzes how courts, firms, and workers attempted to reconcile the perceived demands of industrialization and the realities of factory work with the ideology of freedom of contract, and the corporate control of ideas with the ideology of free labor. Both the doctrine and the practice reflected the contestability during the nineteenth century of the inalienable attributes of self that lay at the foundation of the discourse of free labor. Drawing the line between what knowledge the firm could own and that which remained the possession of every free person was, in that context, an extraordinarily difficult task. The article concludes that the persistence today of the multifactored, fact-based reasonableness inquiry for restrictive covenants and of standardless, factual tests for the existence and the remedying of the misappropriation of trade secrets is evidence that the value choices at the heart of these legal issues remain as wrenching today as they were when courts first created the doctrines that set employee freedom to switch jobs on a collision course with the corporate control of intellectual property.
Number of Pages in PDF File: 89
JEL Classification: B10, J24, J62Accepted Paper Series
Date posted: March 22, 2001
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