Lecture 2 - Part 2: Trade secrets and conflict of interest

Question 1

What is a trade secret?

Answer 1

Formula, pattern, device or complication of information used to give an advantage over competitors

Question 2

What are the three main groups for justifying trade secret protection?

Answer 2

1) Property rights
2) Fair competition
3) Confidentiality

Question 3

What does the property rights group say in relation to justifying information?

• What did the Wexler v Greenberg case find?
• What are the utilitarian reasons for recognising intellectual property rights?

Answer 3

Trade secrets are regarded as intellectual property, that can be said to belong to an owner.
Wexler v Greenberg case: Found that info is a TS only if
- The information is in fact a genuine trade secret and
- The user of the info has violated a legal confidentiality obligation
Utilitarianism reasons - society benefits from the willingness of companies to innovate (with legal protection)

Question 4

What does the fair competition group say in relation to trade secrets?

• What did the Associated Press v International News Services case find
• What are non-competition agreements?

Answer 4

Companies are at a competitive disadvantage when information they have expended their resources into developing become available to competitors at no cost.

Employees have the right to compete with a former employer
- Associated case: Found that: intellectual productions becomes free for common use after voluntary communication to others and if a company has acquired something at a substantial cost in order to earn a profit, a competitor has no right to misappropriate it for the purposes of making his own profit

Question 5

What is the confidentiality argument for trade secret protection?

Answer 5

Employees who disclose trade secrets are violating the obligation of confidentiality:
- the obligation of confidential continues after employees leave one job for another

Question 6

What is a conflict of interest

Answer 6

When a personal interest comes into conflict with an obligation to service the interests of others

Question 7

What are the FORMS of conflicts of interest?

Answer 7

1) Actual and potential - actual is when a personal interest leads a person to act against the interests of an employer, whereas potential is where there is the possibility that a person will fail to fulfil an obligation, even if the person has not done so
2) Personal and impersonal: Impersonal conflict - if a lawyers has interest that conflicts with client, this will be personal. If lawyer represents two clients who have conflicting interest - this will be impersonal.
3) Individual and organisational conflicts of interest

Question 8

What are the four KINDS of conflicts of interest that

Answer 8

1) Biased judgement - involves the use of bribes and kickbacks to induce a person to make a decision or take a specific course of action
2) Direct competition: engagement with employer is a conflict of interest (applicable if judgement impairment by another interest, and quality of work)
3) Misuse of position (e,g bank manager referring loans to wife contracting business)
4) violation of confidentiality (e.g.accountants and lawyers)

Question 9

What are the seven ways to manage COIs

Answer 9

1) Avoidance
2) Objective
3) Disclosure
4) Competition
5) Rules and policies
6) Independent judgement
7) Structural changes