What's it worth to keep a secret?

Gavin C. Reid, Nicola Searle, Saurabh Vishnubhakat

Research output: Contribution to journalArticle

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Abstract

This article is the first major study of protection and valuation of trade secrets under federal criminal law. Trade secrecy is more important than ever as an economic complement and substitute for other intellectual property protections, particularly patents. Accordingly, U.S. public policy correctly places a growing emphasis on characterizing the scope of trade secrets, creating incentives for their productive use, and imposing penalties for their theft. Yet amid this complex ecosystem of legal doctrine, economic policy, commercial strategy, and enforcement, there is little research or consensus on how to assign value to trade secrets. One reason for this gap is that intangible assets in general are notoriously difficult to value, and trade secrecy by its opaque nature is ill-suited to the market-signaling mechanisms that offer at least some traction in other forms of valuation. Another reason is that criminal trade secret law is relatively young, and the usual corrective approaches to valuation in civil trade secrecy are not synonymous with the greater distributive concerns of criminal law. To begin to fill this gap, we examine over a decade of trade secret protection and valuation under the U.S. Economic Espionage Act of 1996. From original data on EEA prosecutions, we show that trade secret valuations are lognormally distributed as predicted by Gibrat’s Law, with valuations typically low on the order of $5 million but reaching as high as $250 million. There is no notable difference among estimates from various valuation methods, but a difference between high and low estimates on one hand and the sentencing estimates on the other. These findings suggest that the EEA has not been used to its full capacity, a conclusion buttressed by recent Congressional actions to strengthen the EEA.
Original languageEnglish
Pages (from-to)116-161
Number of pages46
JournalDuke Law and Technology Review
Volume13
Issue number1
Publication statusPublished - 29 Mar 2015

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EEA
secrecy
criminal law
economic espionage
patent protection
market mechanism
Law
federal law
larceny
intellectual property
prosecution
Economic Policy
doctrine
Values
penalty
assets
public policy
incentive
act
economics

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Reid, G. C., Searle, N., & Vishnubhakat, S. (2015). What's it worth to keep a secret? Duke Law and Technology Review, 13(1), 116-161.
Reid, Gavin C. ; Searle, Nicola ; Vishnubhakat, Saurabh. / What's it worth to keep a secret?. In: Duke Law and Technology Review. 2015 ; Vol. 13, No. 1. pp. 116-161.
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Reid, GC, Searle, N & Vishnubhakat, S 2015, 'What's it worth to keep a secret?', Duke Law and Technology Review, vol. 13, no. 1, pp. 116-161.

What's it worth to keep a secret? / Reid, Gavin C.; Searle, Nicola; Vishnubhakat, Saurabh.

In: Duke Law and Technology Review, Vol. 13, No. 1, 29.03.2015, p. 116-161.

Research output: Contribution to journalArticle

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Reid GC, Searle N, Vishnubhakat S. What's it worth to keep a secret? Duke Law and Technology Review. 2015 Mar 29;13(1):116-161.