Inevitable Disclosure Doctrine Held Inapplicable To Failed Business Transaction

An Illinois appellate court recently rejected applying the inevitable disclosure doctrine in a trade secret misappropriation spat arising out of a failed business transaction.

After first securing an executed confidentiality agreement, Destiny, the developer of a proprietary healthcare wellness program called "Vitality," shared details of it with Cigna, a healthcare insurer. The insurer decided instead to create a wellness product of its own called "Empower." Destiny sued Cigna for trade secret misappropriation and breach of contract, alleging circumstantial evidence and "inevitable disclosure." Cigna's summary judgment motion was granted, and the appeals court affirmed. Destiny Health, Inc. v. Connecticut Gen. Life Ins. Co., No 1-14-2530 (Ill. App. Court, 1st Dist., Aug. 21, 2015).

Status of the case. Because of a possible interest in "Vitality," Cigna was considering entering into a joint venture or partnership with Destiny, or making an offer to acquire the company. Destiny obtained a signed non-disclosure agreement, prohibiting use or misappropriation of Destiny's confidential information, and then allowed Cigna to take a "deep dive" into data relating to "Vitality." The insurer ultimately decided that "Vitality" was too expensive and lacked flexibility. Thereafter, with the assistance of others, Cigna created and began using "Empower." Claiming that Cigna inevitably misappropriated Destiny's intellectual property and breached the confidentiality agreement, the developer sued the insurer but to no avail.

Background facts. "Vitality" was used to motivate employees to engage in specific healthy activities and to be rewarded for doing so. After deciding not to use "Vitality," Cigna designed and developed "Empower" with some assistance from a different vendor. Both "Vitality" and "Empower" incentivize healthy activities by providing rewards. "Vitality" does not permit employers to change the activities or the points to be awarded for each whereas employers using "Empower" can customize both the activities and the awards. Soon after "Empower" was launched, Destiny sued in the Circuit Court of Cook County. Following several years of discovery, Cigna moved for summary judgment.

Arguments for granting Cigna's motion. The insurer maintained that Destiny provided it with no trade secrets and that, in creating "Empower," it used nothing learned from the developer. Cigna also asserted that Destiny cannot prove damages.

Several Illinois court...