Trade Secrecy's Information Paradox

Christopher Buccafusco*, Jonathan S. Masur** & Deepa Varadarajan***

Trade secret law is meant to encourage socially beneficial behaviors by permitting firms to protect their investments in the creation of valuable information. In theory, the ability to protect valuable information will make firms more likely to create that information in the first instance. But the law can also be used to shield socially harmful behaviors from public oversight. Firms can assert trade secret protection to prevent journalists, watchdogs, and criminal defendants from learning whether they are engaged in dangerous, wrongful, or biased activity. Ideally, trade secret law should sort socially beneficial uses from socially harmful ones, permitting only the former while screening out the latter. However, the problem for trade secret law is that, in a variety of contexts, it is incredibly difficult to know whether the underlying information is beneficial or harmful to society, and thus whether the information should be disclosed, without first disclosing and scrutinizing it. This is trade secrecy’s information paradox: it is hard to know whether a trade secret should be protected without first revealing it. This information paradox implicates numerous social interests, including the environment, public health, criminal law, and the success of the regulatory state. It is at the heart of recent concerns about potentially biased bail and sentencing algorithms, environmentally harmful fracking chemicals, and disparate hiring practices. Yet as is the case with many paradoxes, trade secrecy’s information paradox cannot easily be solved, at least with any politically feasible set of tools. Unlike other areas of intellectual property, traditional tools (i.e., doctrinal and costly screens) will do little to sort socially harmful trade secrets from socially beneficial ones—leaving piecemeal, contextualized limits on trade secrecy the most viable path forward, at least for the foreseeable future.

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© 2025 Christopher Buccafusco, Jonathan S. Masur & Deepa Varadarajan. Individuals and nonprofit institutions may reproduce and distribute copies of this Article in any format at or below cost, for educational purposes, so long as each copy identifies the author, provides a citation to the Notre Dame Law Review, and includes this provision in the copyright notice.

*Duke Law School. We are incredibly indebted to Mikayla Brody and Jessa Goldman for their thoughtful and diligent research assistance. For helpful comments and advice, we thank Stefan Bechtold, Michael Burstein, Charles Tait Graves, Camilla Hrdy, Sonia Katyal, Mark Lemley, Christopher Morten, Arti Rai, Michael Risch, Rebecca Wexler, Felix Wu, and participants at the Intellectual Property Scholars Conference, and the Trade Secret Scholars Workshop.

**University of Chicago Law School. Masur thanks the David & Celia Hilliard Fund and the Wachtell, Lipton, Rosen & Katz Program in Behavioral Law, Finance & Economics for support.

***Georgia State University College of Law.