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74 N.Y.U. L. Rev. 575 (1999)
The Legal Infrastructure of High Technology Industrial Districts: Silicon Valley, Route 128, and Covenants Not to Compete

handle is hein.journals/nylr74 and id is 589 raw text is: NEW YORK UNIVERSITY LAW REVIEW VOLUME 74 JUNE 1999 NUMBER 3 THE LEGAL INFRASTRUCTURE OF HIGH TECHNOLOGY INDUSTRIAL DISTRICTS: SILICON VALLEY, ROUTE 128, AND COVENANTS NOT TO COMPETE RONALD J. GII.SON* In recent years, scholars and policymakers have rediscovered the concept of indus- trial districts-spatial concentrations offirms in the same industry or related indus- tries. In this Article, Professor Gilson examines te relationship between high- technology industrial districts and legal infrastructure by comparing the legal re- gimes of California's Silicon Valley and Massachusetts's Route 128. He contends that legal rides governing evmployee mobility influence the dynamics of high ted- nology industrial districts by either encouraging rapid employee movement between employers and to startups, as in Silicon Valley, or discouraging such movement, as in Route 128. Because California does not enforce post-employment covenants not to compete high technology firms in Silicon Valley gain from knowledge spillovers between finns. These knowledge spillovers have allowed Silicon Valley firms to thrive while Route 128 firms have deteriorated. Professor Gilson concludes with three cautionary notes. Firs4 the success of Silicon Valley firms suggests that per capita firm value will be greater where intellectual property protection is somewhat diluted, in contrast to tie traditional law and economics prescription that empha- sizes fidl protection of intellectual property. Second, the doctrine of inevitable dis- closure, as developed in recent trade secret cases, threatens to undermine the advantages conferred by Calfornia's legal regime and should be considered with * Charles J. Meyers Professor of Law and Business, Stanford University; Marc & Eva Stem Professor of Law and Business, Columbia University. I am grateful to Stanford Law School and the Columbia University School of Law/Sloane Foundation Project on Corpo- rate Governance for financial support, and to the Rockefeller Foundation, whose award of a residency at the Bellagio Study and Conference Center so greatly contributed to the completion of this Article. I also am grateful to Brian Hicks, Margaret McGinnis, Laura Menninger, Alex Gould, and Maria Ginzburg for their research assistance, and especially to Sean O'Connor for his outstanding assistance in constructing the history of the Califor- nia law on restraints of trade. Joseph Bankman, Victor Goldberg, Jeffrey Gordon, Alan Hyde, Sam Issacharoff, Michael Klausner, Josh Lerner, Lance Liebman, and participants at workshops at the University of California at Berkeley, University of Chicago, Columbia University, New York University, Stanford University, and University of Virginia Law Schools, the School of International and Public Affairs at Columbia University, and the Stanford Graduate School of Business provided helpful comments on an earlier draft. 575 Imaged with the Permission of N.Y.U. Law Review

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