Inevitable Disclosure Of Trade Secrets Is Not An Independent Cause Of Action In Georgia

In Holton v. Physician Oncology Servs., LP, No. S13A0012, 2013 WL 1859294 (Ga. May 6, 2013), the Georgia Supreme Court held that Georgia law does not recognize the inevitable disclosure doctrine as an independent cause of action for trade secret misappropriation. Whether the potential for a party's inevitable disclosure/use of trade secrets can be included within a broader claim for threatened trade secret misappropriation, however, remains an open question.

In Holton, the Georgia Supreme Court held that Georgia law does not recognize a "stand-alone claim for the inevitable disclosure of trade secrets." 2013 WL 1859294 at *1 (emphasis added). The Georgia Supreme Court's rejection of the inevitable disclosure doctrine in Holton was somewhat surprising because Georgia had previously been believed to have implicitly recognized the inevitable disclosure doctrine in the 1998 case of Essex Grp., Inc. v. Southwire Co., 269 Ga. 553, 501 S.E.2d 501, 502 (1998). Yet, the inevitable disclosure doctrine may still be viable in Georgia, despite Holton, because the Court simply eliminated an independent cause of action for inevitable disclosure. Consistent with Essex, Georgia law may still allow allegations of inevitable disclosure to support a broader claim for threatened trade secret misappropriation.

The "Inevitable Disclosure" Doctrine

The "inevitable disclosure" doctrine evolved in the employment context and began as a mechanism to prohibit a former employee from post-employment activities, even in the absence of a valid, enforceable non-competition agreement. The doctrine effectively prohibited a former employee from working in a new position that would require the former employee "inevitably" to disclose or use the trade secrets of the former employer in his new position.

Typically, the doctrine applied when (1) the former employee possesses a valuable trade secret; (2) the employee has joined a competitor in a functionally equivalent position; and (3) in working for the new employer, the employee could not be expected not to use the trade secret. See generally Milgrim on Trade Secrets § 5.02 (discussing basic elements of inevitable disclosure doctrine). Several states, including California, Florida and Virginia, have expressly rejected the "inevitable disclosure" doctrine. Until Holton, however, Georgia courts had not squarely addressed the inevitable disclosure doctrine.

Holton: The Facts

From 2009 until 2011, Mr. Holton served as vice president...