I am firm believer that trade secrets should be viewed more centrally as part of anyone's bundle of IP rights. I want to consider one aspect that has practical as well as doctrinal significance, namely, whether one can contract around trade secrets law (similar, e.g., to the question that arises under copyright law whether one cannot contract away the right to reverse engineer).In trade secret law, [the question] comes up in three significant contexts: efforts to contract around the requirement of secrecy itself, whether in business disputes or in restrictive employment covenants, efforts to ban reverse engineering by contract, and the question of whether a confidential relationship can be implied absent a contract.
The rationale for not allowing one to contract away a trade secret right: The law relating to trade secrets reflects a balance of public and private interests in the encouragement of innovation, the preservation of ethics and the maintenance of a free marketplace of ideas and movements of labor. The balance should not be upset in any given transaction by private understandings between the parties."
Parties may also be prevented from opting out of particular rules of trade secret law, at least to the extent they rely on trade secret rather than contract remedies."
The issue of whether one can contract around trade secrets is a "big thing". The question is what is the ultimate enforceability of the contract around. The underlying difficulty is always the same--if there is a broad right to "contract around" the trade secret right, why exactly should trade secrtes be placed in same pantheon as patents, copyright and trade marks.
We don't have trade secrets laws as distinct from general equitable laws of confidentiality, and there is no great clamour for an extra set of rules. Confidential information is not a type of intellectual property but can be licensed in a similar way. As for "contracting around", an English court is unlikely to protect by contract (ie in a confidentiality agreement) information that does not have any inherent confidentiality. When it comes to non-compete clauses, the courts have set limits (or at least principles governing the limits) on what is acceptable in an employment context and in a sale of business context, respectively.
In USA court hold a party to a contract to an undertaking of confidentiality even if the information is not secret. As a matter of practice, we encounter from time to time "confidential" agreements under English law that include a clause that purports to obligate a party to maintain confidentiality of information and the like without a secrecy limitation to the obligation. We have often wondered how an English court would enforce such a provision where the "disclosure" was not of confidential information. As for the differences between the US, Israel, and other countries, with respect to the treatment of trade secrets that the legal treatment of the subject differs materially from country to country.The EU antiturst authorities give less deference to trade secret claims than their US counterparts because the European Union has no conception of trade secrets as property rights.
