Trade secrets is the correct way of protecting knowledge, afaic all copyright and patent laws need to be repealed and for a company to make money it has to show results while protecting its knowledge and processes. I don't see anything wrong with treating a product as a black box that takes inputs and produces outputs, I only care that it does what it says it does by comparing the outputs to the expected results.
Of course this theranos thing (this is the second time in my life I am hearing about it, the first time was also on
Early investors should be more careful than trusting that a 19 y.o. girl with no 30 years of experience in the field will deliver 'ground breaking results'. I think in most cases this expectation will end up in a failure.
Millions of dollars are gambled on a promise because the market is set up for this type of a gamble by the Fedrleral reserve bank, by the dismal economy of the USA and by the government implicit and often explicit promise to bail out failure.
So the real problem here is the loss of efficiency in the overall economy, not that the product was never delivered, it was always a pie in the sky, just like never falling housing or bond markets.