Trade Secrets and Antitrust Laws
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Description
The antitrust treatment of trade secrets has remained largely hidden. There has been little separate focus on the competition problems that trade secrets may present, even though trade secret protection was raised as a defense in early antitrust litigation. The U.S. federal antitrust agencies’ Intellectual Property Licensing Guidelines treat trade secrecy the same way they treat other forms of intellectual property. Antitrust commentary focused on trade secrets is scarce. In a sense, the antitrust metes and bounds circumscribing the use of trade secrets are as elusive as trade secrets themselves. There is no inherent reason for trade secrets to have escaped antitrust scrutiny. The core of a trade secret is the competitive significance of undisclosed information, so the possession and use of trade secrets would seem bound to raise antitrust questions. For example, can dominant firms be forced to disclose trade secret information to rivals? Those who have such information frequently license its use to others. What restrictions can be placed on a licensee’s use of such information, particularly when the licensee is a competitor of the licensor, or on the licensee’s sales of products that embody trade secrets? The purpose of this chapter is to reveal the competition issues that trade secrecy protection raises. This inquiry shows that although the antitrust treatment of trade secrets fits generally into the debate over the proper antitrust treatment of intellectual property rights, the arguments for according deference to the use of confidential trade secret information are somewhat different, and far weaker, than the arguments for according such deference to the holders of either patents or copyrights. The chapter begins with the fundamental issues for antitrust analysis of trade secrets: What is a trade secret and what consequence should flow from a firm’s decision to choose the trade secret regime when it wants to protect information? The next section maps the state of the law dealing with antitrust and trade secrets, beginning with the early history (which predates the Sherman Act), and then discusses how the courts have dealt with licensing issues under Section 1 of the Sherman Act and with exclusionary conduct under Section 2. The final section sets out and applies a more general framework for antitrust analysis of trade secrets, proposing three guiding principles: (1) trade secrets should receive no deference or presumptions when raised as a defense to anticompetitive conduct; (2) antitrust courts, when assessing the economic consequences of trade secret protections, should be mindful of the legal properties of trade secrets; (3) antitrust courts should respect – but not expand – the bargain that trade secret protection provides to its holders to incentivize investment in the production of information.
Source Publication
The Law and Theory of Trade Secrecy: A Handbook of Contemporary Research
Source Editors/Authors
Rochelle C. Dreyfuss, Katherine J. Strandburg
Publication Date
2011
Recommended Citation
First, Harry, "Trade Secrets and Antitrust Laws" (2011). Faculty Chapters. 612.
https://gretchen.law.nyu.edu/fac-chapt/612
