Legal Foundation of Silicon Valley: Lessons for Asian Hi-Tech Districts

Abstract

Policy planners in Asia readily covet high technology districts and regional systems of innovation such as Silicon Valley. We examine the law's role, by way of covenants not to compete (競業禁止條項) in the development of Silicon Valley by reviewing the literature from 1999 through 2013. The research suggests that in certain high-tech districts such as Silicon Valley, there are greater gains in the innovation of a region by prohibiting CNCs. While we emphasize CNC law as the main legal determinant to Silicon Valley's success, the application of trade secret law and the inevitable disclosure doctrine are also factors that can aid or restrict the mobility and knowledge spillover of a region. Even with much explored, perspectives are lacking from a regional innovation systems analysis, and more so in the context of Asian nations. To tackle these gaps, three analytical frameworks are presented that entails labor law, law and economics, and law and innovation. And from within the law and innovation framework, research is introduced in the hope that future discussions on Asian regional innovation systems consider the legal foundation of Silicon Valley.

Comparing the ICT industries of Silicon Valley and Route 128: What has law got to do with it?

“…California, currently, is one of only two states that prohibit worker restraints (other being North Dakota) and is the only state with hi-tech clusters. For more details on California's law, refer to Gilson (1999), Trossen (2009) andTimberman (2014). Enforcement of CNCs find much support: the literature asserts securing human capital investments of firms (Rubin and Shedd, 1981;Gillian, 2001;Bar-Gill and Parchomovsky, 2009;Nicola, 2009) and the efficiency and benefits of CNC enforcement (Posner et al, 2004;Garmaise, 2009).…”

“…Knowledge spillover, then, occurs as workers transfer tacit knowledge gained from a previous job to a new job. Several studies suggest California's CNC law is a potent weapon for Silicon Valley firms to attract talent, and that it is an important factor in the innovation of Silicon Valley (Gilson, 1999;Bishara, 2006;Marx et al, 2010;Samila and Sorenson, 2011;Timberman, 2014).…”