TPP's Forgotten Danger: Stronger Trade Secrets Protection, With Criminal Penalties For Infringement

from the quid-without-a-quo dept

Since the release of the TPP text back in November, commentators have naturally tended to concentrate on the bigger, more obvious problems -- things like the corporate sovereignty chapter, the extension of Big Pharma's monopolies to scientific data, and copyright provisions -- that Techdirt has been exploring for years. But there's one area that has received relatively little attention, perhaps because for most people it's an obscure topic that seems rather unimportant. It concerns the issue of trade secrets, which Techdirt wrote about in the context of TPP in October 2014. There, we concentrated on the risk that it would chill investigative reporting and corporate whistleblowing, but a new column in The Globe and Mail by Dan Breznitz, professor of Innovation Studies at the Munk School of Global Affairs at the University of Toronto, looks at the economic impact of TPP's trade secrets measures. First, he notes that copyright and patents are based on a social bargain: The side that wishes to be granted a patent needs to disclose new and useful information to society at large, and in return we (the people) give it an exclusive right for a limited time, preventing others from using it without permission. In other words, we grant it a temporary monopoly. But trade secrets are quite different: [W]e (the people) give rights to prevent others from using any information without any disclosure and without any time limitation or otherwise -- as long as it remains undisclosed (in other words, secret). In so doing, we give a quid that covers potentially wide-ranging types of information, without receiving any quo in return. Since society gets almost nothing out of this other bargain, the remedy available for the disclosure of secret business information is limited: Currently, the remedy is available only against those who breached the contract or trust, but not against others who obtained the information. Once the information has been disclosed publicly, the person who disclosed it might be held liable, but everyone else is free to use it. As Breznitz points out, TPP changes all that, offering a much wider scope for protection, and much more serious penalties for breaches of trade secrets: Article 18.78 [of the TPP text] adopts a potentially very broad concept of a trade secret, a very wide range of activities that might constitute a breach and a very broad potential class of persons who might be liable. Worse, it also calls for criminalization. The potential risk for would-be entrepreneurs to start a business in anything that even remotely relates to their past job are now enormous. In other words, like much everything else in TPP, the proposed changes work to the advantage of big, established companies -- and against the interests of start-ups and entrepreneurs: The resulting chill [caused by TPP's trade secrets rules] in entrepreneurship alone would cost the U.S. and Canadian economies significantly higher orders of magnitude in terms of lost growth, jobs and welfare than any positive benefits that the TPP might bring. Even more disturbing, Articles 18.74 and 18.75 profoundly expand the enforcement measures, including significant provisional ex parte proceedings [with only one side present], and narrow the discretion of the courts. Those provisions apply to all intellectual property rights, including trade secrets. These extra-potent tools would be used not only where they are appropriate, but also where they aren’t -- such as to stifle competition and innovation. That's a bold claim, but, if true, suggests that TPP could be an extremely bad deal for the US. At the very least, it deserves some serious research to investigate the issue. However, given the absurdly-truncated time span available for studying the TPP text, that research is unlikely to be conducted, which means that the US could end up entering blindly into an agreement whose net economic and social effects will be decidedly negative.

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Filed Under: infringement, tpp, trade secrets