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Protecting “What Not to Do” as a Negative Trade Secret

October 5, 2022 Articles
Daily Journal

“Negative trade secrets”—i.e., secret know-how about what does not work—are generally protectable in California, but in practice have proven challenging for courts and litigants to discern.  While a trade secret is a company’s intellectual property, an employee’s “general knowledge, skill, and experience acquired in his or her former employment” is not.  The Ret. Grp. v. Galante, 176 Cal. App. 4th 1226, 1237 (2009).  The concept of “negative trade secrets” sits uncomfortably between these two categories.

Consider Thomas Edison’s (possibly apocryphal) quote about his lightbulb experiments: “I haven’t failed, I’ve just found 10,000 ways that won’t work.”  Imagine that Thomas Edison’s assistant quit and joined a competitor.  It’s easy to understand the value of knowing those 10,000 failed attempts; that “negative know-how” would allow the competitor to start on attempt 10,001.  But it’s much harder to understand how courts can protect these failed attempts as negative trade secrets.  Can a court really hold Edison’s assistant liable for not re-attempting what he knows won’t work?  Must he re-try all 10,000 prior failures?  Such an outcome would seem to contradict California’s public policy goals favoring innovation and employee mobility. 

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