Inevitable Disclosure of Trade Secrets: Employee Mobility V. Employer's Rights

By Godfrey, Eleanore R. | The Journal of High Technology Law, January 2004 | Go to article overview

Inevitable Disclosure of Trade Secrets: Employee Mobility V. Employer's Rights


Godfrey, Eleanore R., The Journal of High Technology Law


I. INTRODUCTION

Trade secret law possesses increasing importance with the globalization of the economy and the increase in employee mobility. (2) State law, rather than federal law, governs trade secrets and most states follow the Uniform Trade Secrets Act (U.T.S.A.), created in 1979 by the National Conference of Commissioners on Uniform State Laws. (3) States, therefore, exhibit a high degree of consistency in their definitions of a trade secret, including the elements of which a trade secret is comprised. (4)

Despite the adoption of the U.T.S.A., the range of remedies available to the trade secret holder after misappropriation of his or her trade secret remains unclear. (5) Most commonly, a trade secret plaintiff will obtain injunctive relief, prohibiting the disclosure or use of the trade secret. (6) Where injunctions prohibiting the use or disclosure of the trade secret do not suffice to correct the misappropriation, courts grant injunctions preventing competition entirely, even in the absence of non-competition agreements. (7) Finally, some courts apply the doctrine of inevitable disclosure, which allows for an injunction against competition, even in the absence of actual misappropriation, based on the presumption that the defendant employee's new duties cannot be performed without disclosure of the plaintiff's trade secret. (8)

Courts remain inconsistent in defining the required elements of inevitable disclosure. (9) Some courts require a finding of bad faith on the part of the defendant or a showing of irreparable harm by the plaintiff before granting injunctive relief, while others merely require the inevitable disclosure or use of the plaintiff's trade secret. (10) Further complicating the situation, the standard for determining the inevitability of disclosure varies from jurisdiction to jurisdiction. (11) This note will examine and discuss the various approaches taken by the courts and suggest possible alterations to the doctrine of inevitable disclosure that would simplify its application.

II. GENERAL OVERVIEW OF TRADE SECRET LAW

Every one of the U.S. states offers some form of trade secret protection. (12) Trade secret law exists only as state law, and each state develops its own definitions and rules. (13) The Restatement (First) of Torts, published in 1939, provided the first uniform model of trade secret law. (14) The Restatement (First) of Torts defined a trade secret as "any formula, pattern, device or compilation of information which is used in one's business, and which gives him an opportunity to gain an advantage over competitors who do not know or use it." (15) The Restatement (First) of Torts provided the model for state trade secret law until the approval of the Uniform Trade Secrets Act in 1979 by the National Conference of Commissioners on Uniform State Law. (16)

Although each state creates its own trade secret laws, most states model their laws after the Uniform Trade Secrets Act. (17) According to the U.T.S.A., the term trade secret refers to information, including a formula, pattern, compilation, program, device, method, technique, or process, that derives independent economic value, actual or potential, from not being generally known to, and not being generally ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. (18) In other words, to qualify as a trade secret something must consist of information with economic value derived from the fact that it is not known or readily ascertainable, and the trade secret holder must take reasonable security measures to protect the trade secret. (19) A trade secret claim consists of three essential elements: qualification of the subject matter for trade secret protection, misappropriation of the trade secret by the defendant, and the exercise of reasonable security measures by the plaintiff. …

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Inevitable Disclosure of Trade Secrets: Employee Mobility V. Employer's Rights
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