Against Intellectual Monopoly

prohibiting its
disclosure or use, but by blocking the mechanism by which the spillover occurs:
employees leaving to take up employment with a competitor or to form a competing
start-up. Such a covenant provides that, after the termination of employment for
any reason, the employee will not compete with the employer in the employer's
existing or contemplated businesses for a designated period of time - typically one
to two years - in a specified geographical region that corresponds to the market in
which the employer participates. 28
    In Massachusetts:
    Massachusetts law is generally representative of the approach taken toward postemployment covenants not to compete by the great majority of states. United States
law in this area largely derives from English law that developed the basic pattern of blanket enforcement of covenants not to compete given by the seller in
connection with the sale of a business, and the application of a rule of reason
to covenants associated with employment. Covenants not to compete would be
enforced against a departing employee if the covenant's duration and geographic
coverage were no greater than necessary to protect an employer's legitimate business interest, and not otherwise contrary to the public interest. This formulation is commonplace in Massachusetts covenant cases, and dates to the late nineteenth
century.29

    By way of contrast, in California:
    California law governing covenants not to compete is both unusual and radically different from that of Massachusetts. California Business and Professions Code section
16600 provides that "every contract by which anyone is restrained from engaging
in a lawful profession, trade, or business of any kind is to that extent void." The
courts have interpreted section 16600 "as broadly as its language reads.". . . Indeed,
California courts' application of choice of law rules underscores the seriousness with
which they view section 16600. Even if the employment agreement which contains
a postemployment covenant not to compete explicitly designates the law of another
state, under which the covenant would be enforceable, as controlling, and even if
that state has contacts with the contract, California courts nonetheless will apply
section 16600 on behalf of California residents to invalidate the covenant.30
    Contrary to many business pundits, the reader of this book will perhaps
not be surprised at the beneficial consequences of the Silicon Valley competitive environment. However, Saxenian, in her otherwise-informative book,
remarks, "The paradox of Silicon Valley was that competition demanded
continuous innovation, which in turn required cooperation among firms."31
We know that there are good economic reasons why it must be so: competition is the mechanism that breeds innovation, and sustained competitive
innovation, paradoxical as that may sound to those that do not understand
it, often is best implemented via cooperation among competing firms.
    While Route 128 companies spent resources to keep knowledge secret -
inhibiting and preventing the growth of the high-tech industry - in California this was not possible. And so, Silicon Valley - freed of the millstone of
monopolization - grew by leaps and bounds as employees left to start new
firms, rejoined old firms, and generally spread socially useful knowledge far
and wide.
Databases
    The case of databases is still an experiment in the making. Unusually enough,
the United States is, at least for now, on the right side of the divide. Databases
are compilations of facts, which is broad and generic enough to include
your personal list of people to whom you send valentine cards, the human
genome, the local Yellow Pages, and the mailing list of those damned spammers. Databases, it seems obvious, have become increasingly important for
private individuals, businesses, academic researchers, industrial R&D, and
unfortunately, also for national security.

    The experiment-in-the-making and the intense debate accompanying it
both began in 1996. On March 11, the European Union issued a directive
requiring member states to provide statutory protection of databases on
the basis of copyright, even if the database in question contained material
that was not itself under copyright. The European Union also tried to
force nonmember states to accept its directive. It did this by deciding that
E.U. protection would be extended to their citizens only if the nonmember
states