The "Inevitable Disclosure" Doctrine And The DTSA

• Published date: 30 January 2023
• Subject Matter: Employment and HR, Intellectual Property, Employee Rights/ Labour Relations, Trade Secrets
• Law Firm: Holland & Knight
• Author: Mr Steven Gordon

The "inevitable disclosure" doctrine permits the plaintiff in a trade secrets case to establish threatened misappropriation by showing that the defendant's new employment will inevitably lead the defendant to rely on the plaintiff's trade secrets. In the seminal case that articulated this doctrine, the court enjoined the defendant from working for the competitor because "there is a high degree of probability of inevitable and immediate . use of . trade secrets."¹

The doctrine is controversial because it potentially "requires a court to recognize and enforce a de facto noncompetition agreement to which the former employee is bound, even where no express agreement exists."³ Accordingly, "the inevitable disclosure doctrine treads an exceedingly narrow path through judicially disfavored territory."³

One federal court surveyed state trade secret laws in 2019 and concluded that 17 states appear to have adopted the inevitable disclosure doctrine in one form or another: Arkansas, Connecticut, Delaware, Florida, Indiana, Illinois, Iowa, Minnesota, Missouri, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Texas, Utah and Washington. It concluded that five states appear to have rejected the doctrine: California, Colorado, Louisiana, Maryland and Virginia.⁴ The other 28 states have not yet taken a position on the doctrine.

Since then, a Florida federal court has indicated that Florida has not adopted or declined to adopt the inevitable disclosure doctrine.⁵ And an Oregon federal court has opined that Oregon would be unlikely to adopt the doctrine.⁶

Given this division among the states on the inevitable disclosure doctrine, considerable attention has been focused on whether the federal Defend Trade Secrets Act (DTSA) adopts this doctrine. "[T]here is no judicial consensus on whether DTSA permits application of the inevitable disclosure doctrine" and so "many federal courts look to state law for guidance."⁷ No federal court has yet embraced the inevitable disclosure doctrine under the DTSA where application of that doctrine would contravene that state's trade secret law.

However, the DTSA does limit the scope of injunctive relief that it affords. The DTSA authorizes a court to "grant an injunction to prevent any actual or threatened misappropriation . provided the order does not prevent a person from entering into an employment relationship, and that conditions placed on such employment shall be based on evidence of threatened misappropriation and not merely...