The Inevitable Disclosure Doctrine: A Common-Sense Application that Considers the Rights of Trade Secret Holders and Employees

Abstract

Under the inevitable disclosure doctrine, a court may enjoin a person accepting employment with a direct competitor of a former employer to protect a trade secret. Most states that have adopted the doctrine do not limit its application. Such broad application of the doctrine can be harsh and unfair if the former employee lacked any intent to disclose a trade secret. Moreover, it encourages frivolous lawsuits by employers and discourages bargained-for non-compete agreements. Some states, notably California, citing these policy concerns, have declined to adopt the doctrine. This extreme approach is equally troublesome because it ignores that the protection of trade secrets is vital to society.

This article advocates for a common-sense application of the doctrine that considers its two competing policy interests: A person's right to work and the protection of trade secrets. States should adopt the doctrine, but limit its application to encourage the formation of noncompete agreements, discourage frivolous lawsuits, and protect a person's right to choose their profession and employer. This could be accomplished with a strict standing requirement, by barring an injunction against employment when it would harm public health or welfare, and by applying several factors to determine the equities of an injunction. This would correctly balance the competing policy interests of trade secret holders and their employees.

Keywords: inevitable disclosure doctrine, trade secrets, injunction against employment

JEL Classification: K29, K31, K41