3 ms·

We'd throw people in jail for stealing your car, why not for stealing very valuable trade secrets?

by rhino369 12y ago

hueving 12y ago
A car is rivalrous. A trade secret is not.
- tedunangst 12y ago
  How is a secret not rivalrous? If everybody knows it, it's not a secret.
  - dredmorbius 12y ago
    Value-through-exclusivity doesn't mean that the entity itself is rivalrous. Take my car, and now you have my car and I don't. Take my trade secret, and now both of us have it. I haven't lost the knowledge itself. The value may well have declined, however. That very point was made by Thomas Jefferson on patents: "If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me." http://www.businessinsider.com/thomas-jefferson-on-patents-2011-7?op=1 http://www.businessinsider.com/thomas-jefferson-on-patents-2...
    - tedunangst 12y ago
      I think "stealing a trade secret" is a reasonable shorthand for "stealing the exclusivity, thereby reducing the value, of a trade secret".
      - dredmorbius 12y ago
        A fair point, though there's more to it than that. There are a lot of things which go into creating value for a company. Trade secrets are one of many factors. Execution, connections, business relationships, location (or locations for retail establishments), and more, all come into play. Taking two well-known examples, the real value for both Coke and KFC is far less in the specific product forumulations of both companies -- those are effectively McGuffins. Rather it's in Coke's set of contracts with bottlers, distributers, retailers, and restaurants (many of which will carry _either_ Coke, _or_ Pepsi, but not both), etc. There are even "open source" colas whose recipies are published, but which don't have the market reach of the majors. For KFC, it's more a matter of retail outlets and supply chains -- having a global branding campaign, advertising and marketing, real estate in specified locations, and relationships with suppliers such that ingredients and product are supplied to these. Yes, there are companies which do rely to a much greater extent on trade secrets, and there's some case to be made for some level of protection over these, particularly in tech. Michael Wolf's "Burn Rate" or ... I'm trying to remember the author and book, about the "Go" PDA who had their idea arguably poached by Microsoft. But in truth, execution and capitalization matter a tremendous amount, and exclusive knowledge of a specific concept, not so much.
- tikhonj 12y ago
  I agree with this view of most intellectual "property", but it doesn't apply here. In the case of finance, trade secrets absolutely are rivalrous. Strategies have limited capacities, so if anyone else is trading using your strategy you're going to be making less money. This is exacerbated by how markets are largely anonymous and distributed: nobody is trading with a given firm specifically, so somebody using your long-maintained strategy doesn't face any disadvantages against you. Moreover, being secret is the only protection strategies can meaningfully have. Copyright can't cover the strategy itself, just the code to implement it, and patents by definition require divulging how it works. And even if you could somehow enforce a patent on a trading strategy, other people would still be able to trade against it, making the whole idea a non-starter. At the same time I still don't think prison is a good answer to this sort of crime—but I don't think it's a good answer to car theft or most other sorts of crime either. But that's a function of deep issues I have with the justice system, a story best left for another time.

We'd throw people in jail for stealing your car, why not for stealing very valuable trade secrets?

hueving 12y ago

A car is rivalrous. A trade secret is not.

tedunangst 12y ago
How is a secret not rivalrous? If everybody knows it, it's not a secret.
- dredmorbius 12y ago
  Value-through-exclusivity doesn't mean that the entity itself is rivalrous. Take my car, and now you have my car and I don't. Take my trade secret, and now both of us have it. I haven't lost the knowledge itself. The value may well have declined, however. That very point was made by Thomas Jefferson on patents: "If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me." http://www.businessinsider.com/thomas-jefferson-on-patents-2011-7?op=1 http://www.businessinsider.com/thomas-jefferson-on-patents-2...
  - tedunangst 12y ago
    I think "stealing a trade secret" is a reasonable shorthand for "stealing the exclusivity, thereby reducing the value, of a trade secret".
    - dredmorbius 12y ago
      A fair point, though there's more to it than that. There are a lot of things which go into creating value for a company. Trade secrets are one of many factors. Execution, connections, business relationships, location (or locations for retail establishments), and more, all come into play. Taking two well-known examples, the real value for both Coke and KFC is far less in the specific product forumulations of both companies -- those are effectively McGuffins. Rather it's in Coke's set of contracts with bottlers, distributers, retailers, and restaurants (many of which will carry _either_ Coke, _or_ Pepsi, but not both), etc. There are even "open source" colas whose recipies are published, but which don't have the market reach of the majors. For KFC, it's more a matter of retail outlets and supply chains -- having a global branding campaign, advertising and marketing, real estate in specified locations, and relationships with suppliers such that ingredients and product are supplied to these. Yes, there are companies which do rely to a much greater extent on trade secrets, and there's some case to be made for some level of protection over these, particularly in tech. Michael Wolf's "Burn Rate" or ... I'm trying to remember the author and book, about the "Go" PDA who had their idea arguably poached by Microsoft. But in truth, execution and capitalization matter a tremendous amount, and exclusive knowledge of a specific concept, not so much.
tikhonj 12y ago
I agree with this view of most intellectual "property", but it doesn't apply here. In the case of finance, trade secrets absolutely are rivalrous. Strategies have limited capacities, so if anyone else is trading using your strategy you're going to be making less money. This is exacerbated by how markets are largely anonymous and distributed: nobody is trading with a given firm specifically, so somebody using your long-maintained strategy doesn't face any disadvantages against you. Moreover, being secret is the only protection strategies can meaningfully have. Copyright can't cover the strategy itself, just the code to implement it, and patents by definition require divulging how it works. And even if you could somehow enforce a patent on a trading strategy, other people would still be able to trade against it, making the whole idea a non-starter. At the same time I still don't think prison is a good answer to this sort of crime—but I don't think it's a good answer to car theft or most other sorts of crime either. But that's a function of deep issues I have with the justice system, a story best left for another time.