How to Change Jobs and Embrace Inefficiency

By James Pooley
May 23, 2018

In the wake of Uber’s blockbuster trade secrets lawsuit, prompted by its hiring of the manager of a competitor’s self-driving car program, one of the company’s lawyers published an article complaining about the law that protects “negative information” stored in a person’s head. It was crazy, he argued, to force employees to feign amnesia and to deliberately repeat mistakes made in their last job, in the name of protecting confidential information.

As you may recall, a few months ago I wrote positively about negative trade secrets, invoking Edison’s string of failed experiments that led him to a working light bulb. That kind of information in the hands of a competitor would allow it to catch up without the effort, investment and risk faced by the original innovator. So it makes a lot of sense that the law protects against disclosure of the failures, mistakes and dead ends of research.

But how can we provide that protection in fast-growing industries where employees often leave to work for the competition? How can they be expected to apply their well-earned skill but to remain silent when they see their new team going down what they know is a hopeless path? And even if they are careful never to signal with an eye roll or grimace, won’t the former employer sue them anyway once it sees a competing product? Wouldn’t it be more fair – and more efficient – to just allow them to use whatever “negative” information they remember, so long as they don’t take records with them?

I don’t think so. Protecting knowledge of failed experiments encourages companies to invest in deep, long-term and risky research, since they know others can’t easily catch up. And there is other social value in the “inefficiency” of requiring competitors to do their own homework. That’s because they probably won’t follow the same path. What the first company considered a “failure,” when encountered by the second company, may provoke a new and unique insight. Indeed, this is how a lot of innovation happens, and it’s why some organizations deliberately set up competing teams to pursue identical objectives.

The same principle that recognizes value in redundancy of effort can apply to individuals as well as companies. Rather than lamenting the prospect of wasted re-work, departing employees can look forward to a new environment to apply their skills. They can challenge the assumption of past “failures” by taking a fresh look at the process of discovery, searching for new ways to tackle old problems.

But while that sounds fine in the abstract, the practical challenge remains: how does someone take his or her accumulated experience to a competitor without getting sued? And from another perspective, how do you hire someone with experience and skill, to make sure that’s all you’re getting? Here are a few suggestions.

First, recognize the risk that is wrapped inside the opportunity. Is this new position likely to put the employee in an ethical hot seat? If everyone has asked the right questions in the interviews and has been honest about what challenges the new company is facing, you can also identify the risk of having addressed the same or similar problems for the competitor. If so, are these issues critical to the expected work assignment, or merely incidental?

Second, discuss the nature of the risk at a high level, without getting into the specifics of the previous assignment, but identifying the areas where there may be some concern about applying prior knowledge of what doesn’t work. You should both agree that no one will ask for, or provide direction from, that learning. But if the discussion leads to real anxiety about whether confidentiality can be managed this way, it may make sense to temporarily steer clear of any project that looks like it will cover the same ground as the previous job. In any event, you should establish an understanding that all of the work to be done will be firmly grounded on general knowledge and skill.

Third, you should directly address what is that knowledge and skill, and how you expect it to add value in the new position. To be especially safe, the employee might also want to prepare by brushing up on the state of the art in the relevant field of work, so that they can think, speak and act comfortably from that platform.

Even in highly competitive industries we can enjoy the benefits of labor mobility while still respecting the value of “negative” trade secrets. All it takes is a healthy respect for risk and a willingness to start over in the pursuit of something better.

The Author

James Pooley

James Pooley is a former Deputy Director of the World Intellectual Property Organization (WIPO). Having returned to Silicon Valley, Mr. Pooley established a private law practice where he specializes in high-level litigation counseling and strategy.

For more than 35 years, Jim has represented clients as lead trial counsel and strategic advisor in high-stakes patent and trade secret disputes. His broad litigation experience, combined with his service as an international diplomat and business executive, make him uniquely qualified to handle today’s global IP challenges. Jim testified before the Senate Judiciary Committee on the Defend Trade Secrets Act, and has worked with congressional staff on the legislation. His most recent book is Secrets: Managing Information Assets in the Age of Cyberespionage, available here.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 9 Comments comments.

  1. Anon May 23, 2018 7:58 am

    Mr. Pooley,

    What you are arguing for – without using the actual words – is a form of indentured servitude to the thralls of Big Corp.

  2. Mack D May 23, 2018 8:00 am

    Imagine if the US had been subject to negative information law when it brought German (Nazi) scientists to the US to aid in the development of nuclear weapons and biological warfare instead of allowing them to be tried for war crimes?

  3. xtian May 24, 2018 9:41 am

    @Anon – No, what he is arguing for is that the employee, who was paid by the employer, used employer equipment, resources, and time, shouldn’t be allowed to take his experience at his first employer and give it to a a competitor of the 1st employer.

  4. Anon May 24, 2018 11:35 am

    xtain – Yes, my statement stand – especially when one considers that “experience” belongs to the individual and NOT to the Corp. There is no small difference between any immediate work product and experience. Mr. Pooley is indeed a gifted advocate, and (once again) advocates well – I just have an issue with the substance of what he is advocating.

  5. Night Writer May 25, 2018 7:56 am

    This is horrible. Trade secrets are the opposite of patents and tend to destroy a person’s ability to move from job to job. Patents make public what the person did; thus, enabling the person to move to a different job and the old employee keep the property the employee created.

    Tech dirt dumbos, you there? I still challenge one of you to debate this issue with me.

  6. Night Writer May 25, 2018 7:59 am

    @4 Anon

    Well said.

    @3 Xtian–this would turn all tech workers into slaves.

    I would bet that the people pushing trade secrets are getting lots of money from Google.

  7. angry dude May 25, 2018 9:59 am

    Night Writer@6

    I am pushing trade secrets and got no money from Google

    trade secrets are …well .. secrets, so nobody really knows what exactly is stolen and from whom and by whom… it’s hidden inside tech gadgets or in the cloud

    Those NDAs and non-competes SV corps want their employees to sign aren’t worth sh1t – not with China anyway

    China can steal their best employees and all valuable know-how

    At least with patents they could protect US markets
    With trade secrets – no way, not in a globalized economy with people allowed to move to a highest bidder in any country – unless congress critters pass some law to physically chain best engineers to their SV corporate masters

    And forget about “ethics” with trade secrets – people will always try to monetize whatever knowledge they acquired and you can’t blame them for doing that

    SV wanted it – they got it

  8. Gene May 25, 2018 10:45 am

    xtian, rewrite your post like this:

    “No, what he is arguing for is that the employee, who provided value to his employer beyond what the employee was paid, and who provided a profitable return on his employer’s investment in plant, equipment, and resources, shouldn’t be allowed to take his own mind, solutions, ideas, and ever use them again elsewhere.”

  9. Night Writer May 25, 2018 5:20 pm

    @7 angry dude

    I think people that are going to run companies would want trade secrets for short-term gain.

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