Ian
> -----Original Message-----
> From: owner-lbo-talk at lists.panix.com
> [mailto:owner-lbo-talk at lists.panix.com]On Behalf Of Doug Henwood
> Sent: Saturday, May 29, 1999 9:24 AM
> To: lbo-talk at lists.panix.com
> Subject: IP and innovation
>
>
> [Interesting given the drift towards tighter control of intellectual
> property, thanks to the increasing privatization of research and U.S.
> government pressure internationally. And given the underlying
> philosophical
> justification of both, the supposedly fruitful link between
> private rewards
> and innovation.]
>
> "The Legal Infrastructure of High Technology Industrial
> Districts: Silicon Valley, Route 128, and Covenants Not to
> Compete"
>
> BY: RONALD J. GILSON
> Columbia Law School
> Stanford Law School
>
> Document: Available from the SSRN Electronic Paper Collection:
> http://papers.ssrn.com/paper.taf?abstract_id=124508
>
> Date: July 1998
>
> Contact: RONALD J. GILSON
> Email: Mailto:ronald.gilson at law.columbia.edu
> Postal: Columbia Law School
> 435 West 116th Street
> New York, NY 10027 USA
> Phone: (212)854-1655
> Fax: (212)854-7946
>
> ABSTRACT:
> Recent scholarship has argued that the comparative success of
> the Silicon Valley high technology industrial district and
> failure of Route 128 outside of Boston, resulted from different
> patterns of inter-firm employee mobility which, in turn, led to
> differing patterns of industrial organization: network
> organization as opposed to traditional vertical integration. The
> cause of the different patterns of employee mobility is said to
> be cultural differences between California and Massachusetts.
> This paper offers a different causal analysis. After reviewing
> the new economic geography's emphasis on inter-firm knowledge
> transfers as an agglomeration economy, I focus on the critical
> role of employee mobility -- the vehicle for inter-firm
> knowledge transfers -- in facilitating second-stage
> agglomeration economies: those that allow the district to
> transcend its original product cycle and reinvent itself. In
> this account, the legal rules governing employee mobility are a
> causal antecedent of the construction of each district's
> culture. In fact, California law prohibits the most effective
> means of protecting trade secrets embodied in tacit knowledge --
> a contractual post-employment covenant not to compete.
> Massachusetts law, in contrast, allows their enforcement.
> Consistent with the new economic geography's emphasis on path
> dependence, the paper shows that California's unusual legal
> regime dates back to the early 1870's, a serendipitous result of
> the historical coincidence between the codification movement in
> the United States and the problems confronting a new state in
> developing a coherent legal system. The paper concludes with a
> cautionary note concerning the implications of the analysis for
> three related subjects: the standard law and economic
> prescription to fully protect property rights in intellectual
> property; a disturbing recent line of cases concerning claims of
> "inevitable disclosure" that threatens to turn trade secret law
> into the judicial equivalent of a covenant not to compete; and
> the right strategy for policy analysts assessing reform of a
> region's legal system to encourage high technology industrial
> districts.
>
>
> JEL Classification: D2, K2, L5, R1
>