Control is a Double-Edged Sword, and One Edge is Sharper

Abstract

In her book Talent Wants to Be Free, Orly Lobel suggests a new, behavioral-economics, paradigm to employment intellectual property (EIP) law. Lobel describes a dynamic model to EIP control mechanisms such as non-competes, trade secrets and invention assignments, and argues that loosening them will create positive externalities to employers that will make such a shift economically justified. I first discuss the content of the book and the journey Lobel is guiding us through trying to emphasize the important notions in it and taking them a step forward towards a more "radical" suggestion. I argue that the utilitarian debate over EIP controls cannot capture all the sensibilities of the legal aspects of human capital, and that a new legal framework should not be constructed according to an aggregate of positive and negative externalities, rather than upon moral/natural-law grounds that have an economic justification as well. I argue that although Lobel's new model to EIP controls is very convincing and appealing to employers as well as to employees, there is a solid economical (as well as moral) ground for a dramatic change in the legal framework of EIP, regardless of the employers' point of view. I examine this argument with a case study of the survival of the music industry albeit the turbulences it went through at the beginning of the technological era with the emergence of file sharing and other forms of piracy, and will present an economic model that supports the moral grounds for a legal paradigm shift.

Keywords: Talent Wants to Be Free, Non competes, innovation assignment, trade secrets, employment law