Machines as the New Oompa-Loompas: Trade Secrecy, the Cloud, Machine Learning, and Automation

In previous work, I wrote about how trade secrecy drives the plot of Roald Dahl’s novel Charlie and the Chocolate Factory, explaining how the Oompa-Loompas are the ideal solution to Willy Wonka’s competitive problems. Since publishing that piece, I have been struck by the proliferating Oompa-Loompas in contemporary life: computing machines filled with software and fed on data. These computers, software, and data might not look like Oompa-Loompas, but they function as Wonka’s tribe does: holding their secrets tightly and internally for the businesses for which these machines are deployed.
Computing machines were not always such effective secret-keeping Oompa Loompas. As this Article describes, at least three recent shifts in the computing industry — cloud computing, the increasing primacy of data and machine learning, and automation — have turned these machines into the new Oompa-Loompas. While new technologies enabled this shift, trade secret law has played an important role here as well. Like other intellectual property rights, trade secret law has a body of built-in limitations to ensure that the incentives offered by the law’s protection do not become so great that they harm follow-on innovation — new innovation that builds on existing innovation — and competition. This Article argues that, in light of the technological shifts in computing, the incentives that trade secret law currently provide to develop these contemporary Oompa-Loompas are excessive in relation to their worrisome effects on follow-on innovation and competition by others. These technological shifts allow businesses to circumvent trade secret law’s central limitations, thereby overfortifying trade secrecy protection. The Article then addresses how trade secret law might be changed — by removing or diminishing its protection — to restore balance for the good of both competition and innovation.

Jeanne C. Fromer

NYU Law Review

June 2019

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