Contract + tort = property: the trade secret illustration.

Author:Cavanaugh, Matthew Edward
  1. INTRODUCTION 430 II. THESIS 430 III. ROADMAP 430 IV. ARITHMETIC LEGAL ANALYSIS 431 A. Hegel 431 1. Dialectics Are Sums 431 2. Philosophy of Right 432 3. Thesis: Property (One Person's Rights Alone) 433 4. Antithesis: Contract (Rights Distributed Among People) 434 5. Synthesis: "Wrong" (i.e., Crime and Tort; Enforces Distributed Rights) 434 6. So Property + Contract = "Wrong" 435 B. Criticism 435 C. Transition: Review of Contract, Tort, and Property 436 V. CONTRACT, TORT, AND PROPERTY: RIGHTS, DEFENDANTS, AND REMEDIES 436 A. Contract 436 1. Right Is to Performance 436 2. Plaintiff Has Rights Against the Other Party to the Contract 436 a. Voluntary Defendant 437 b. "Choice of Defendant" 437 3. What Defendant Behavior Violates Rights 438 4. Remedies Are Limited 438 a. Benefit of Bargain 438 b. No Penalties 439 c. No Punitive (or Emotional Distress or Pain and Suffering) Damages 439 d. Avoidability, Foreseeability, and Certainty 440 B. Tort 441 1. Right is to Be Free of Injuries That Others Cause 441 2. Plaintiff Has Rights Against Injurers (Involuntary Defendants) 441 a. Zone of Danger 442 b. Interaction Requirement 442 c. Some Plaintiff Choice 443 d. Employers, Other Drivers, Owners of Land, Etc. 443 3. What Defendant Behavior Violates Rights 443 4. Remedies Are Expansive 444 a. More Generous Than Contract 444 b. To Make Plaintiff Whole 444 c. Avoidability, Foreseeability, and Certainty Doctrines More Limited 445 C. Property 445 1. Rights Are to Exclusive Possession, Use, and Enjoyment 445 2. Plaintiff Has Rights "Against All the World" (Anyone Can Be Defendant) 445 3. Even Total Strangers Can Infringe or Trespass 446 4. What Defendant Behavior Violates Rights 447 5. Remedies Regardless of Plaintiff's Loss 447 a. To Exonerate Property Right 448 b. Nominal Damages Available 448 6. Summary and Transition 448 VI. TRADE SECRETS 449 A. Definition 449 1. Information 449 2. Independent Economic Value to Possessor 449 3. Because Not Generally Known 450 B. Property 450 1. Law Recognizes Trade Secrets as Property 450 2. Intellectual 451 C. How Owner Keeps Trade Secrets as Property: Reasonable Secrecy 451 1. Physical Protection of Information 451 2. Nondisclosure Agreements 452 D. How Defendant Infringes Owner's Legal Rights 452 1. Contract and Tort 453 2. Property Other Than Intellectual 453 a. Tangible 453 b. Intangible 454 3. Intellectual Property 454 a. Other Than Trade Secrets 454 b. Trade Secrets 455 i. By Breaching Nondisclosure Agreement 456 ii. Or by Tort 456 4. Transition and Synthesis 458 VII. TRADE SECRETS ARE SUM OF RELATED CONTRACT AND TORT RIGHTS, DEFENDANTS, AND REMEDIES 459 A. Trade Secrets Are Property, But 459 1. Infringement Requires Breach of Contract 459 2. Or Tortious Behavior 459 B. Remedies 460 1. Include Contract Remedies 460 2. And Tort Remedies 460 C. Trade Secrets 461 1. Are Property 461 a. Alienable 461 b. Need Not Exploit 461 2. But Also Sum of Tort and Contract 462 a. Rights and Defendants are Cumulative 462 b. Remedies are Cumulative 463 VIII. EXPLANATORY POWER 463 A. Rights and Defendants 463 B. Remedies 464 1. Assumpsit 464 2. Bailments 466 IX. CONCLUSION 466 I. INTRODUCTION

    For centuries, the substantive foundations of Anglo-American civil law have been the doctrinal trio of contracts, torts, and property. (1) Even at present, separate courses on these three basic bodies of civil law are the mainstay of the critical first year of American legal education. (2) Legal philosophers have debated and analyzed the nature of the three for almost as long. (3) This article describes a new way of evaluating the trio and their interrelationships, based on Hegel's famous dialectical method. This article suggests an arithmetic analysis, namely that property is the sum of tort and contract, and uses trade secrets, a type of intellectual property, as the paradigm. The rights, remedies, and available defendants in the three doctrines, as trade secret law illustrates, provide evidence that the analysis is sound, and the article concludes with practical consequences and examples the analysis implies.


    In the modern American legal system, the concept or doctrine of property is the arithmetic sum of the concepts or doctrines of contracts and torts; trade secret law is an excellent illustration of this principle.


    This article commences with an introduction to the use of Hegel's famous dialectical method as an arithmetic analysis of law. It reviews Hegel's assertion that the sum of property and contract is tort and crime, and then suggests a better dialectic that contract plus tort equals property. This article then reviews the doctrines of contract, tort, and property, focusing on the plaintiff's rights and remedies, and who can be defendants in each of the three doctrines. The article next reviews the law of one particular type of intellectual property, trade secrets, because this article uses trade secrets as a good example of how contract and tort total to property. This article then culminates in an explanation of how trade secrets illustrate that property is the sum of contract and tort, because property rights, remedies, and defendants are the total of contract and tort rights, remedies, and defendants. This article gives illustrations of how the thesis explains certain oddities from property law other than intellectual property, and the article then concludes.


    Recent decades have seen an explosion of various ways for academics and practitioners to analyze the law. Famous examples include economic analysis of law, (4) feminist analysis of law, (5) psychological (6) (and even psychoanalytic (7)) analysis of law, and so forth. This article is written in the spirit of mathematical analysis of law, suggesting that property is the arithmetic sum of contract and tort. Mathematical analysis of law is not new; influential German idealist philosopher Georg Wilhelm Friedrich Hegel was one of the first who used it, with his famous dialectical method. (8)

    1. Hegel

      1. Dialectics Are Sums

        While regarded as one of the world's greatest philosophers in all of history, scholars today principally remember him for his dialectical method. (9) The "Idea," Hegel's name for reality, develops or "unfolds," according to him, through an unending dialectical process. (10) He describes this process as beginning with a concept, any concept, which he called the thesis. (11) The concept immediately implies its opposite, or negation, which he naturally called the antithesis. (12) The thesis and its antithesis, being opposites, conflict with each other. (13) The conflict resolves itself through a creative process of compromise between the thesis and the antithesis. Hegel called the outcome the synthesis. (14) The synthesis is its own wholly new concept; i.e., the synthesis is a new thesis. (15) This new thesis immediately implies its own antithesis, these two synthesize to create another new thesis, and the process continues forever. (16)

        One of Hegel's most famous dialectics, that of existence, serves well as an example. Being is the thesis, but being implies its opposite, the absence of being, which is nothingness. Bringing the thesis, being, and its antithesis, nothing, together, results in the new concept of becoming (which Hegel calls the "unity" of being and nothingness), the synthesis. The synthesis, becoming, is the new thesis, which then implies its own negation, and on the process goes. (17)

        Hegel's concept of thesis and antithesis coming together and resulting in something new, while unquestionably brilliant, is nothing more than arithmetic addition (part of the elegant simplicity that makes his concept so remarkable). (18) In the mathematical process of addition, two values come together (unify) and result in a new value. (19)

      2. Philosophy of Right

        Hegel applied his dialectical theory to law (and much else) in his book Elements of the Philosophy of Right. In that work, Hegel described property as a function of individualism. A person, a human individual, makes herself complete, according to Hegel, by (among other things) possessing, enjoying, and using property. (20) Property rights are exclusive rights, in two senses: one, only a specific and relatively small group of persons (usually just one) owns any particular private property; and two, property rights are rights to exclude non-owners from possession and use of the particular property. (21)

      3. Thesis: Property (One Person's Rights Alone)

        One acquires property, according to Hegel, by involving the outside object (which thus becomes the property) with oneself, or conversely, by involving oneself with the object. (22) He believed that property helps define its owner, and helps the owner express himself as a person. (23) Hegel followed the lead of British philosopher John Locke, who earlier suggested a narrower version of Hegel's hypothesis, writing that a person obtains property by mixing the person's labor with the property (e.g., farming land to produce edible crops, etc.). (24) Hegel's broader theory would allow a person to become the owner of e.g., a tract of land, merely by choosing it and fencing it off. (25)

        Hegel's pure theory of property, as a dialectical thesis, involves only the owning person and the owned object. (26) The very essence of property as a concept is that it excludes everyone, and indeed, everything else. (27) For any given property, all other objects that could be property, and all other persons who could be owners, are by definition excluded from this particular owner/property relationship. (28) Here, Hegel followed the celebrated "state of nature" concept of Locke and other champions of the social contract, such as British philosopher Thomas Hobbes and French philosopher Jean-Jacques Rousseau, all of whom suggested that without law, a person can own property only by personally and physically seizing and defending the property. (29)

        Hegel's Philosophy of Right states, however, that any...

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