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Questions on trade secrets (Kinsella's "Against Intellectual Property")

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MaikU Posted: Sun, Aug 8 2010 12:54 PM

So I am finishing reading Kinsella's "Against Intellectual Property" and I have one big disagreement in this one particular issue (so far) of trade secret justification. I will quote some text from his book:


"Suppose employee A of company X has access to X’s
trade secrets, such as its secret formula for a soft drink. He
is subject to an employment agreement obligating him to
keep this formula secret. He then jumps to X’s competitor,
Y. Y wants to use the formula it learns from A to compete
with X. Under current law, so long as the secret formula
has not been made public, X can get a court order to stop
A from revealing the secret to Y. If A has already revealed
the secret to Y, X can also get an injunction to stop Y from
using or publicizing the formula.

Clearly, the injunction and damages against A are
proper because A is in violation of his contract with X.
More questionable is the injunction against Y, because Y
had no contract with X. In the context in which such situations
usually arise, however, where the competitor Y
wants the trade secret and knows the defecting employee is
in breach of contract, it could be argued that the competitor
Y is acting in conspiracy with or as an accomplice of
employee A to violate the (contractual) rights of trade
secret holder X.
This is because A has not actually
breached his trade secrecy agreement until he reveals trade
secrets to Y. If Y actively solicits A to do this, then Y is an
accomplice or co-conspirator in the violation of X’s rights.

Thus, just as the driver of the getaway car in a bank robbery,
or the mafia boss who orders an assassination, are
properly held liable for acts of aggression committed by
others with whom they conspire, third parties can, in narrowly
defined cases, be prevented from using a trade secret
obtained from the trade secret thief."


Bold text especially. I disagree with Kinsella. He contradicts (in my opinion) himself, because he earlier stated, that ideas are not ownable. Contracts only can prohibit the buyer from copying or using the idea (books for example), but not the third party, who maybe happens to acquire such information either by accident or borrowing this book. How there even can be this concept of "trade secret" thief, if ideas are not ownable, are not scarce and not tangible?

So if I happen to know a Coca-Cola secret formula from a guy, who works there, I can be forbidden from making a drink from such formulla, because I magically can be accused of conspiring and commiting a crime even if I didn't ask him about this formula? Or even if I asked about it, how even this can justify the prohibition? I don't get it.

At one side, I can use the information about fixing my carburetor (his own example) if I happen to read a book about it, but at other side, I am not allowed to use the very same type (at least to me it is the same) of information of making myself a drink from Coca-Cola's secret formula. Confused.

Or maybe Kinsella thinks, that information can be ownable only if it is kept secret? One, who publish the book, has no say when third party (who happens to acquire information written in book) use it in his own way (fixing his carburetor). But if one says that this particular information is "secret", then magically third parties can be excluded from using it, even if they acquired that information by accident etc.


It would be great if Kinsella himself could answer my questions, because maybe I just misunderstood his points. I hope he will see this thread.

(P.S. I don't want this discussion to be made into an old "IP is legit / not legit"  kinda thread. I am anti-IP and the advocates of IP please don't post in this thread, thank you.)

"Dude... Roderick Long is the most anarchisty anarchist that has ever anarchisted!" - Evilsceptic

(english is not my native language, sorry for grammar.)

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Mtn Dew replied on Sun, Aug 8 2010 2:02 PM

If I have a contract with you not to reveal that you're actually an agent of the Federal Reserve and comes to me and wants me to reveal dirt on you and I do - I've broken a contract and can be held liable. Both myself and are in trouble, and rightly so. A contract is a contract, even if the contract says I can't reveal an idea or thought.

Let's say I am the first person to figure out that the sun is the center of the solar system. Even most  IP advocates say that's not something that can be patented. But if a company comes to me and pays me $10,000,000 not to reveal my findings and I do it anyway, I'm in trouble.

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The problem is not with the employee, that has breached the contract, but with the other party. But if we skip the whole IP aspect, it may become clearer.

Let's say there is a bank robbery. The thieves are obviously guilty of the crime and besides any other punishment/damages they have to suffer they shall not enjoy the money. If the thieves during their getaway lose their money and you happen to find it, you are not to blame and should be allowed to keep the money and use it at will. But if you were one of the accomplices, even if you didn't rob the bank, you should be forbidden from making use of them - besides being guilty of assisting the crime itself.

So if you indeed came into possession of Coca Cola's secret formula by accident or through no intention of your own, you should be able to enjoy it and use it, while the employee, that revealed it to you, should be sued for breach of contract via negligence or criminal intent with all consequences. But if you acted in conspiracy with the rogue employee, then you shall suffer the consequences as well, including not being allowed to use it.

That's at least how I read it.

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Merlin replied on Mon, Aug 9 2010 1:47 AM

That part struck me too. I pin it down to the faulty concept of criminal association. As discussed in the hitman thread, I do not believe in any such things as ‘criminal conspiracies’. Only he who does the damage is liable, and no one else, even if the guy acted on specific instructions of the latter party.

The Regression theorem is a memetic equivalent of the Theory of Evolution. To say that the former precludes the free emergence of fiat currencies makes no more sense that to hold that the latter precludes the natural emergence of multicellular organisms.
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Then we may have to revisit the hitman discussion. :)

However, the copyright/owning ideas question at least should be answered - the crime lies in a breach of contract (and potentially a conspiracy, if the concept is accepted), but no breach of "IP rights".

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