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Protecting Trade Secrets: The Inevitable Disclosure Doctrine
When a former executive accepts a position with a competitor, how does the original company protect its trade secrets? One method is to invoke the doctrine of inevitable disclosure, which prohibits a former executive from competing when he or she cannot help but disclose or use the former employer's trade secrets to do so. Divulging these secrets, of course, would be in violation of the executive's continuing fiduciary duty to his or her former employer. Disclosure may be considered “inevitable” when the former executive accepts a nearly identical position with a direct competitor of the former employer, and will be called upon to use the former employer's trade secrets.
In some cases, the doctrine has been used to support a claim for injunctive relief predicated on an enforceable non-competition agreement. In others, it has been used to bolster a claim for injunctive relief based on misappropriation of trade secrets. Decisions by courts in New York reflect both approaches. A January 2003 decision by the Third Department in Marietta Corp. v. Fairhurst, 2002 WL 31898398 (3d Dep't, Jan. 2, 2003), reversed a trial court's decision that, had it stood, would have represented a sea change in the law, because the trial court issued an injunction based on the inevitable disclosure doctrine in the absence of either a non-compete or evidence of actual misappropriation of trade secrets.
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