A foundation of the modern intellectual property regime, and of the business strategy of innovative firms throughout the economy, is the right of firms to the intellectual property produced by their employees. Today’s corporate employer typically insists on contracts claiming the copyrights and patents to works produced both during and after a term of employment by employees and independent contractors. In addition, under the law of trade secrets, firms control current and former employees’ use of a wide range of unpatented information, and employers can buttress the protection offered by trade secret law through a noncompete or nondisclosure agreement preventing the employee from working in certain occupations or from using or disclosing certain knowledge. Through the contract of hiring, workers are deemed to sell not only their physical labor and its products but also their intellectual labor and its products, and sometimes even the products of intellectual labor done after the term of employment. In short, corporations own workplace knowledge.
In 1800, “ownership” of workplace knowledge was dramatically different. Most knowledge was not something that could be owned. American employers had very few legal rights to control the creative products of their employees or to protect themselves from competition by current or former employees. The law presumed that the employee-inventor owned his patents and the employee-author owned his copyrights. There was no law of trade secrets. Nor would courts readily enforce agreements that would circumvent these legal presumptions. Workers considered themselves at liberty to make the most of whatever knowledge they possessed. Most employers believed they had few ways to prevent the loss of information entailed in employee mobility because knowledge and skill were widely considered to be attributes of skilled craftsmen rather than assets of firms. Of course, there was a market for ideas, but inventors and authors (and not their employers) were envisioned as the primary entrepreneurs in that market.