Vanderbilt Law Review


Jon Chally

First Page



Trade secret law must efficiently protect that which can be considered a trade secret. Were the law to provide too little protection, information protected as a trade secret would not be created. Were the law to provide too much protection, competition would be unnecessarily stifled. Only efficient protection, meaning neither too little nor too much, appropriately addresses the unique nature of trade secrets as intellectual property. Such a conclusion becomes increasingly necessary given the rising import of trade secret law in the spectrum of intellectual property.

"It is the policy of the law, for the advantage of the public, to encourage and protect invention and commercial enterprise." With this, the first sentence in Peabody v. Norfolk, states began to recognize that the law must protect commercial secrets to insure that those secrets will be developed. Despite the threats of preemption by the federal patent scheme, state trade secret law remains essential to providing incentives for innovation. In addition, courts have noted that trade secret law exists to institute a form of commercial morality, to impose certain ethical standards on business relationships. Absorbed by this potential of mandating morality, courts have molded trade secret law in ways that frustrate the notion that trade secret law should provide efficient incentives to create.

The ultimate focus of this Note is to identify the truly efficient nature of the protection afforded by state trade secret law. Further, this Note seeks to identify the importance of efficient intellectual property protection. This Note contends that courts should abandon those aspects of trade secret law more recently grafted onto its efficiency underpinnings with hopes of mandating commercial morality.

Part II first identifies the need for promoting efficient outcomes through intellectual property laws. Part II continues by discussing the extent to which the two most relevant forms of protection granted to commercially valuable ideas, trade secret law and patent law, create efficient outcomes. Part III identifies the current state of trade secret law. Finally, Part IV presents a form of trade secret law that appropriately promotes the law's efficient outcomes.