A Contract by Any Other Name is Still a Contract: Examining the Effectiveness of Trade Secret Clauses to Protect Databases

46 Pages Posted: 21 Feb 2008

See all articles by Sharon K. Sandeen

Sharon K. Sandeen

Mitchell Hamline School of Law; Hanken School of Economics

Abstract

Due to the limits on the scope of copyright protection that are expressed in Feist Publications v. Rural Telephone Service, database owners have advocated in recent years for legislation to provide increased protection for their compilations. Taking a cue from the software industry, the database industry has also engaged in private ordering, i.e., the practice of using contracts to bolster the limited protection that copyright law provides. This article focuses on a particular type of contractual provision often found in terms of use agreements: the trade secret clause. It examines whether and to what extent such clauses are effective. After first noting the well-established legal principle that trade secrets cannot be created by contract, it details the practical, policy, and legal distinctions between a claim for breach of contract and a claim for trade secret misappropriation and notes the need of courts to treat each cause of action separately. Because information that is distributed over the Internet is unlikely to constitute a trade secret, it concludes with the observation that the use of trade secret law to protect widely-disseminated information is an ill-conceived strategy.

Keywords: private ordering, trade secrets, preemption, Feist, copyright, database protection, contract law, trade secret clauses, terms of use agreements

Suggested Citation

Sandeen, Sharon K., A Contract by Any Other Name is Still a Contract: Examining the Effectiveness of Trade Secret Clauses to Protect Databases. IDEA: The Journal of Law and Technology, Vol. 45, No. 119, 2005, Available at SSRN: https://ssrn.com/abstract=1095833

Sharon K. Sandeen (Contact Author)

Mitchell Hamline School of Law ( email )

875 Summit Ave
St. Paul, MN 55105-3076
United States

Hanken School of Economics ( email )

P.O. Box 479
FI-00101 Helsinki, 00101
Finland

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