That's really the fundamental problem, at least from the facts as I understand them. Arrow didn't take basic steps to protect themselves in anticipation of untrustworthy behavior from a "trusted" partner. It just smells like a decision made by mutually enthusiastic engineers lacking the sharp teeth and "as long as it's not a crime" pseudo-scruples more common to a finance, legal, and/or business-first mindset. If I had a buck for every engineer who was perfectly willing to wonk out and overshare due to a handshake, verbal assurance, or friendly hello...
Competitive teardowns, or at least (shall we say) highly detailed inspections, occur in this industry regularly, so I don't think your #4 would have been effective. Still, actually handing over the recipes is quite the head-scratcher as it removes one of the biggest barriers to getting ripped off. Never share the secret sauce outside The Circle!
I find it ironic that on the Coaster tour at BGW, the one thing you are forbidden to photograph in the LNM maintenance basement is the mechanical system drawing on the wall. Understood, totally get it, but it dots the exclamation point on Arrow hand-delivering a lot more than that to a direct competitor 30 years ago... probably including a version of that very drawing.