Are you speaking towards the employee or towards the quant firm? If the employee has no standing to claim value, then why does the underlying business get to?
Because they own the trade secret. For example, they have the legal right to license a trade secret; an employee does not. It's about legal ownership of intellectual property.
As a corollary, you may read a patent and now have the knowledge of a product. But you don't have the same legal right to create and sell that product. That right is protected by the patent owner.
Of course, that line of thinking involves the inevitable follow up: when is something a “copy” vs a “genuine invention”. If company has a patent on making widget A, how different does a previous employee who leaves and makes widget B have to be before it’s not considered a violation?
I am no expert here but my understanding is that the case law around this is much more well trodden in patent land than it is for noncompetes
You're right, but there are some nuances that I would expect a good law to address. My presumption is that trade secrets would have to be covered by confidentiality agreements, which are distinct from noncompetes. The threshold for infringement of intellectual property is a "preponderance of evidence"; i.e., it's "more likely than not" or "greater than 50%" so it's not a terribly high threshold to prove compared to other sorts of law.
If it's truly patented (different from a trade secret), you can't produce it, even if your invention is slightly different. For example, if I hold a patent on a "car" and you make a "car with a radio," you still can't produce it because it infringes on my patent. You can't make your product without covering the totality of my claim. That's why people try to make patent claims as broad as possible.
That’s not a very good example. A patent is available to read specifically because the discoverer has entered an agreement with the government to share the relevant information in return for exclusive use for a set period of time.
If they had not patented whatever it is they had, anyone could replicate the information/item in question with no penalty.
>anyone could replicate the information/item in question with no penalty
Sure, I suppose someone could develop/copy something in parallel with no knowledge. But that's not really the case in the discussion here as it comes to former employees.
If you worked for Company A which uses a proprietary algorithm for trading and somehow created the same for Company B later, would you really expect a jury to think the two are unrelated? As stated above, the threshold is "more likely than not" that your work for Company B is related to knowing the trade secrets of Company A. If you had never worked for Company A, maybe, but again that's not the case here because a noncompete would never enter the picture.
> Sure, I suppose someone could develop/copy something in parallel with no knowledge.
I mean that’s a tad disingenuous as to how it worked before patents. Patents were meant to dissuade others from copying inventions for a certain set period. It was much rarer to see independent development of the same technology (not that it didn’t happen).
We agree that it's a rare edge case. That's why the rationale of IP protection works. Before patents, important knowledge was lost because people didn't want to divulge it because they had no IP protection. Back then, everything was a trade/state secret.
I guess I'm not seeing the point made. If you agree it wasn't developed in parallel, you copied it from your previous employer. If it was their IP, you likely committed a civil wrong, and they can sue you. I can only see your point if you don't believe IP exists.
Obviously companies think it is worth a lot for certain employees to be quiet, so they pay accordingly. There is no "should" going on here, there is only what the two parties agree to.
They should pay him whatever he would make going somewhere else. Expecting someone to not work in their career field for 1-5 years and not get compensated for that is silly.
LOL - you have stumbled upon the pay grades for security and executive management directly ! they absolutely are paid more to participate but stay quiet. It is a daily requirement.
That's the point. If it's covered by an NDA and the state declares NDAs unenforceable, there are no NDA-covered "secrets." I can get hired, learn all your secrets, and then sell my employment to your competitors. That system doesn't really work.
In practice, trade secrets are protected by other mechanisms. Patents are one of them because, by definition, patents are public knowledge so they are no longer secret.