What is the “inevitable disclosure” doctrine under trade secret law?

When employees’ responsibilities give them access to confidential information, their departure to work for a competitor can endanger their former employer’s trade secrets.  Under the “inevitable disclosure” doctrine, an employer may prevent a former employee who dealt with sensitive information from taking another job if the new job’s responsibilities would necessarily require the employee to disclose the employer’s trade secrets.  The doctrine applies even where the employer has no proof that the employee has misappropriated trade secrets or even threatened to do so.  Instead, the employer must show that the employee’s new responsibilities would be so similar to her work for the employer that she could not help but rely on the employer’s trade secrets. 

In a famous case, the U.S. of Appeals for the Seventh Circuit prevented a former high-level PepsiCo employee from accepting a new position at Quaker, which made Gatorade and thus competed with PepsiCo in the market for sports beverages.  PepsiCo offered proof that the former employee had knowledge of PepsiCo’s “Strategic Plan,” its “Annual Operating Plan,” and trade secrets relating to a “selling and delivery system” the former employee had piloted.  All that information was covered by a non-disclosure agreement.  The Seventh Circuit analogized PepsiCo to a “coach, one of whose players has left, playbook in hand, to join the opposing team before the big game.”  It thus affirmed an injunction barring the employee from joining Quaker for six months.  

While many states recognize some form of the inevitable disclosure doctrine, a handful including California have rejected it based on the burden to employees and the ability of non-competition agreements to provide an alternative form of protection.  The highest courts in several other states have not yet decided whether to recognize the inevitable disclosure doctrine.  Given the differences between jurisdictions, an employer who believes that a former employee’s new job threatens its trade secrets should consult experienced counsel about the applicable law and how best to enforce its rights. 

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