Engineering Ethics: Trade Secrets

Patents protect property, not knowledge

US Patent Law was designed by Congress and enacted in 1790 to “promote the progress of useful Arts.” The language of the law is very practical. That is, Congress wasn’t intending to codify some sort of moral belief about the rights of inventors. They were trying to create an incentive structure that balanced the pubic interest in disclosure of knowledge with the private interest in keeping knowledge secret to gain competitive advantage.

This is why Congress requires patent applicants to reveal the mechanism, actions, or practice of their “art”. The disclosure allows others to learn how the new invention works, and in return the patent holder has an exclusive right to commercial exploitation of the patent — at least for a limited time.

(Use of the term “art” seems archaic now, but keep in mind that prior to the industrial revolution, the word “art” was used as if it was synonymous with “technique,” and technology meant, “the study of technique”. Thus, the space between art and technology was not so great as it seems today).

The burden of patent enforcement typically falls on the patent holder, which means that holding a patent is no guarantee of a monopoly in practice. Patent holders must be willing to defend their rights by suing those who infringe upon the patent.

Because such lawsuits are expensive, and in any case patent will eventually expire, some inventors choose not to apply for a patent because they want to avoid disclosure of their knowledge. When intellectual property (e.g., valuable knowledge, like an invention — see Patrick Henry on Protecting Intellectual Property) is not held in a patent, it is called a trade secret. The recipe for Coca-cola, or Kentucky Fried Chicken, are both famously secrets.

As long as the inventor can keep the knowledge of how to replicate the invention a secret from other inventors or businesses (see Michael Morisy… trade secrets” exemption to Freedom of Information Act requests), then they might be able to extract higher prices from the market for their invention by limiting competition.

However, it is typically the case that, when a business founded upon an invention grows to a large scale, a number of other suppliers, consultants, or stakeholders will gain knowledge of the secret. Engineers working as employees for a company are often faced with a conflict of interest once they’ve learned the company secrets.

The engineer might have an incentive to leave employment and use the secret knowledge to start a competing company. This incentive conflicts with their current employer’s interests, because employers would never have disclosed the secret knowledge if they expected the engineer to use it in competition with, instead of the service of, the employer.

This is exactly what is alleged to have happened when Uber hired an engineer away from Waymo, who eventually left to start his own self-driving truck company after being accused of stealing Waymo’s trade secrets.

For this reason, professional engineers are bound by a code of ethics that proscribes certain actions that are damaging to the profession, the public, or the employers and client whom the engineers serve.

When an engineer is working as an employee, the work product of the engineer belongs to the employer. (Note that this is NOT true of students working at a University, unless the students are actually producing work as employees. The work students do for class is their own property).

Engineers are not prohibited from disclosing patented knowledge, because it has already been made public. However, trade secrets are not disclosed and consequently not protected by the same laws. A professional engineer may not disclose the trade secrets that belong to their employers — not even after the engineering is no longer employed.

Why?

Because it is unethical. (There are also conditions under which this is illegal. Sometimes, it’s called industrial espionage).

Only those things that the owner of the knowledge has actively identified as protected qualify as trade secrets. For example, it is not unethical to disclose knowledge that a employer has not identified as secret.

Dr. Michael Loui explains: