The inevitable disclosure doctrine permits an employer to stop a former employee from working for a competitor because the employee would inevitably reveal their former employer’s trade secrets. The doctrine works under the belief that it cannot be retrieved once a trade secret is disclosed. Therefore, if permitting a former employee to work for a competitor makes a disclosure inevitable, an employer should be able to stop it from occurring.
The inevitable disclosure doctrine permits courts to administer injunctions and permanent injunctive relief to stop an employee from working with a competitor where the employee’s new job duties will reveal the former employer’s trade secret or cause the employee to rely upon the former employer’s trade secret.
How Is the Inevitable Disclosure Doctrine Applied?
The courts generally consider the following elements to apply the inevitable disclosure doctrine:
- The type of competition between the former employer and new employer
- The worker’s new job duties
- Whether the worker will be relying on the former employer’s trade secret in the new role
- Whether an employee signed a non-disclosure agreement or non-competition agreement
What Is a Non-Disclosure Agreement?
A non-disclosure agreement (NDA) is a legal contract between two parties that decide not to disclose information covered by the agreement. This contract designates a confidential relationship between the parties. An NDA can also be referred to as a confidentiality agreement.
In general, an NDA’s objective is to safeguard susceptible information, assist the inventor in keeping the patent rights, and expressly outline what is deemed confidential information.
For instance, this could include test results, customer lists, software, passwords, system specifications, and other data. NDAs have served as a legal framework to uphold trust and contain crucial information leaking out to the public.
There are three distinct types of NDAs: the traditional mutual non-disclosure agreement, one-way confidentiality agreement, and confidentiality letter. They all have individual goals depending on the client’s needs.
Generally, NDA’s occur in employment and business cases. Employees may be directed to sign an NDA to safeguard the employer’s trade secrets and other secret business information. They are most typical for businesses entering into negotiations with other companies. They make a space for companies to transmit sensitive information without fearing that it will end up in the hands of their competitors. For instance, the protected data may include a marketing plan, a sales strategy, potential clients, a manufacturing method, and proprietary software.
Typically, the period for these agreements is restricted to as long as the confidential information is deemed valuable. Depending on the nature of the information exchanged, a shorter or reasonable amount of time, like one year, may be more enforceable by the courts. But, details like trade secrets may benefit from being kept confidential for a longer time. Therefore, setting a reasonable time can differ from contract to contract and the parties adhering to it. Yet, like most contracts, an NDA would be unenforceable if the contracted terms are unlawful.
What Is Included in a Non-Disclosure Agreement?
NDA can vary by state in terms of the format. But there are generally some representations that must be included in the agreement. These include:
- Determining the parties to the agreement;
- Specifying what constitutes confidential information in this case;
- Describing the various exclusions from confidentiality;
- Choosing the appropriate uses of the information to be revealed;
- Determining the reasonable periods and;
- Other miscellaneous provisions (state laws and lawyer fees).
A boilerplate NDA is a standardized legal record that can be reused in a new context without any significant modifications to the text.
NDAs can be different depending on the needs of the parties and state laws. If you have any questions or need guidance regarding an NDA for your particular issue, a lawyer can help with drafting and reviewing the agreement. This will also help ensure that the agreement is legally binding and enforceable.
Does There Need to Be Evidence that the Employee Will Disclose the Trade Secret Information?
Under the inevitable disclosure doctrine, the intent is not the problem. Rather, the inevitable disclosure doctrine holds that even if the worker has no intention of backstabbing their former employer, the knowledge they have acquired from their former employment will inherently give a new employer admission to trade secrets.
For instance, an employee working for Pepsi with an understanding of the company’s strategic business objectives was stopped from working in a comparable capacity at Quaker Oats, the maker of Gatorade. Although the employee had not stolen any information, their knowledge of Pepsi’s marketing and industry plans would inevitably play into their work on Gatorade’s marketing and business plans. It would be almost unthinkable for the worker to do their job at Quaker without using the trade secrets of Pepsi.
What Does an Employer Have to Show for Courts to Apply the Inevitable Disclosure Doctrine?
Employers must first establish trade secrets’ existence to apply the inevitable disclosure doctrine. If the employer cannot demonstrate they have a feasible trade secret, there is no reason to stress about the former worker revealing it. Once the employer has demonstrated the existence of a trade secret, the requirements for applying the inevitable disclosure doctrine differ from state to state.
- Some states demand you demonstrate a significant likelihood that disclosure of trade secrets will emerge.
- Some states need an additional showing of malicious intent or deception.
- Some states will not apply the inevitable disclosure doctrine at all.
Do All States Have the Inevitable Disclosure Doctrine?
No, not all states have accepted the inevitable disclosure doctrine. For instance, California, Louisiana, and Virginia have abandoned the doctrine, while other states have corroborated the doctrine. New York has only been used to sustain injunctive relief, but only when a non-compete clause is already in place or the employer can show misappropriation.
What Kinds of Remedies Are Available under the Inevitable Disclosure Doctrine?
The only remedy available to a former employer is a permanent injunction against the former worker. The inevitable disclosure doctrine does not allow the former employer to pay monetary damages or court fees.
Can My Employer Prevent Me from Accepting Any Job in the Same Industry?
Typically, the injunctions under the inevitable disclosure doctrine must only be as expansive as required. The courts try to offset the employee’s need to find work in the industry in which they are skilled with the employer’s need to defend its trade secrets. Frequently, former employees will be banned from certain activities in their new employment, but they will not be prohibited from the employment itself.
This also hinges on what jurisdiction the dispute arises from since some states reject the inevitable disclosure doctrine. Some states, such as New York and California, only support the employer from stopping an employee from accepting job duties within the same enterprise if a non-compete clause was in place.
Do I Need a Lawyer to Help Me Protect My Trade Secrets?
If you want to use the inevitable disclosure doctrine to stop an employee from disclosing trade secrets, or if you are an employee and are nervous you will be stopped from working in your industry, you should consult an intellectual property lawyer.
They will be able to describe your rights to your trade secrets and help you take the proper action. The inevitable disclosure doctrine can be very complicated and differs in its application from state to state. A lawyer will be able to explain the laws that apply in your state.