We investigate whether strengthened legal protection of trade secrets increases the likelihood of a firm being acquired. Stronger protection can make a firm more attractive for acquisition due to better safeguarding of trade secrets, but it may also increase information asymmetries that...

This entry in the online Global Dictionary of Competition Law defines the term trade secret: information that has commercial value to an organization due to its secrecy, is not known outside of the organization, and the continuing secrecy of which the organization has taken reasonable measures...

Like other forms of intellectual property (IP), trade secret value may arise from two primary sources. The first is proprietary competitive advantage gained through use of the IP coupled with the right to exclude others from such use. The second is by monetizing IP directly through licensing to...

A large proportion of the US workforce is covered by non-compete agreements (NCAs), but recently their use has become one of intense policy debate, with the FTC recently proposing to ban them. In this paper, we examine what effect such a policy change might be expected to have on innovation, and...

Non-compete clauses (NCCs) limiting the mobility of workers have been found to be rather widespread in the US, a flexible labour market with large turnover rates and a limited coverage of collective bargaining. This paper explores the presence of such arrangements in a rigid labour market, with...

Almost every business owns proprietary information that adds value and provides a competitive advantage because the information is not known to the business's competitors. Trade secret law protects such information from theft or unauthorized disclosure. Because one of the principal policies...

As the knowledge economy expanded and concerns about trade secret misappropriation mounted in the digital age, federal policymakers undertook efforts to reinforce trade secret protection a decade ago. These efforts came to fruition with passage of the Defend Trade Secrets Act of 2016 (DTSA)....

We study whether firms value court enforceability of their workers’ noncompete agreements (NCAs), leveraging a 2020 Washington law that made NCAs unenforceable for workers earning less than a threshold of $100k per year (indexed to inflation), covering approximately 79% of Washing-ton workers....

In examining the staggered recognition of the Inevitable Disclosure Doctrine (IDD) as an exogenous shock to trade secret protection, we demonstrate that firms display lower stock returns following the recognition in a difference-in-differences (DID) design. Cross-sectional regression results...

Do contracts influence behavior independent of the law governing their enforceability? We explore this question in the context of employment noncompetes, using nationally representative data for 11,500 labor force participants. We show that noncompetes are associated with reductions in employee...

For over three centuries, Anglo-American courts have assessed employee noncompete agreements under a Rule of Reason. Despite longstanding precedent, some now advocate banning all such agreements. These advocates contend that employers use superior bargaining power to impose such “contracts of...

Family firms are known for their reluctance to invest in research and development. We show that strengthened trade secret protection is associated with higher R&D investment by family firms. More specifically, we show that the association between the strength of trade secret protection through...

Extant work in strategic management has focused on the role of various legal levers when managing human capital. Companies use such levers to improve employee retention and prevent leakage of knowledge to rivals. Specifically, noncompete agreements (NCAs), contracts that prevent employees from...

Trade secrecy law is a hybrid between intellectual property and unfair competition law. This makes the characterisation of trade secrecy law for the purpises of private international law difficult. This paper argues that neither the EU conflict of law rules for unfair competition law nor those...

We examine the effects of trade secret protection laws on firms’ internal transparency. By internal transparency, we refer to the extent to which information is integrated, distributed, and shared within the firm. We argue that stronger trade secret protection reduces firms’ proprietary...

Employee spinoffs may harm incumbent firm owners for two reasons: first, they increase competition in relevant product markets, potentially decreasing rents associated with market power. Second, the threat of an employee spinoff may prevent a firm owner from making costly, productivity-enhancing...

We study the effects of noncompete contracts in an environment where firms invest in training junior workers. After obtaining employer-provided training, trained workers can choose whether to remain loyal to their initial employer or switch to the competing employer. We evaluate the effects of...

Family firms are known for their reluctance to invest in research and development. We show that strengthened trade secret protection is associated with higher R&D investment by family firms. More specifically, we show that the association between the strength of trade secret protection through...

This paper discusses the overlap and interaction between patents and trade secrets in the United Kingdom, with relevant comparisons to United States law. It considers the use of trade secrets protection as an alternative or complement to patent protection

The USMCA, which was signed on November 30, 2018, contains a high-standard and comprehensive IP chapter and the most notable feature of the IP chapter in the USMCA, is that it includes a separate section for trade secrets in which strong standards of protection are set out. The United States is...

The scope of protection in the United States is broad. Under the applicable federal statute, 35 U.S.C. § 1836, et seq. (DTSA) and the Uniform Trade Secrets Act (UTSA) on which most state statutes are based, any information may be protectable as a trade secret as long as that information (1) is...

Switzerland is a Member State of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which specifically protects undisclosed information (Article 39(2)). Confidential/undisclosed information is protected by a variety of provisions across the Swiss legal...

A trade secret is protectable when it (1) relates to and is capable of application in trade or industry; (2) has the necessary quality of secrecy or confidence, is not in the public domain and is known only to a restricted number of persons; and (3) has economic value to the proprietor (e.g.,...

The law of confidence is capable of encompassing all information that any party has an interest in keeping confidential. While confidential information generally comprises information of a commercial nature (e.g., a company’s internal guidelines and policies), it also includes information of a...

As such, the relations with regard to information are governed by the Federal law of 27.07.2006 “On information, information technologies and information protection” (“the Information Law”).Section 7, Article 2 of the Information Law provides for a “confidentiality of information”...

Trade Secret law in Mexico has undergone the most significant change of the last 25 years as of November 5, 2020, when the new Law for the Protection of Industrial Property (FLPIP) was enacted to replace the former Industrial Property Law (1994) in the context of the entry into force of the also...

In Japan, confidential information is protectable irrespective of whether the information is technical or commercial, subject to certain conditions. Specifically, the Unfair Competition Prevention Act (UCPA) protects “trade secrets,” which are defined as technical or business information...

Indian courts by means of various case laws have allowed the protection of trade secrets/confidential information through the provision of appropriate remedies. To seek such remedies, one has to generally prove:That the information itself has the necessary quality of confidence about it; That...

This report summarizes China’s legal regime for enforcing trade secret rights and the remedies provided for trade secret right holders to combat misappropriation through, e.g., judicial civil action, administrative action, and criminal prosecution respectively before a people’s court, an...

Trade secret protection applies to confidential information that is generally technical in nature and which has a valuable commercial or industrial application.1 There are six non-exhaustive factors commonly analyzed by Canadian courts to determine if information is protectable as a trade...

A business secret is confidential knowledge or information that is capable of giving its holders a competitive advantage in the market.Protection of trade secrets in Brazil has historically not been associated with the notion of property since, technically speaking, unpatented information and...

Confidential information is protectable in Australia. There are different forms of confidential information recognized and different bases for protection. Providing the information has the necessary quality of confidentiality, it will be protectable irrespective of whether it is technical or...

I study the effect of noncompete agreements on low-earning workers using a noncompete ban in Austria. The ban increased treated workers’ annual job-to-job transition rate by 0.3 percentage points (a two percent increase). This effect was driven by within-industry job transitions. The reform...

Competitive job markets are critical to the success of the national economy, spurring innovation while boosting wages and labor equality. The moment is ripe for the new administration to foster competitive job markets by banning noncompete agreements (noncompetes). New empirical evidence shows...

Noncompete clauses in employment agreements are both common and controversial. An estimated 28 million Americans—nearly 20% of the U.S. workforce—are currently bound by a noncompete. The traditional view that noncompete agreements can facilitate increased productivity by encouraging...

In the modern data-driven economy, trade secrets are becoming a more important part of firms’ intellectual property strategies. For their part, governments worldwide have been introducing new legislation to broaden and toughen the protection for trade secrets citing estimates of the cost of...

We study the question: why do skilled services firms use non-compete agreements (NCAs), which prohibit workers from leaving firms and competing against them? We conduct a survey of physicians linking the use of NCAs to labor market outcomes and firm performance, and show that by deterring the...

This paper analyzes the optimal protection strategy for an innovator of a complex innovation who faces the risk of imitation by a competitor. We suppose that the innovation can be continuously fragmented into sub-innovations. We characterize the optimal mix of patent and trade secrets when the...