1. The “inevitable disclosure” doctrine allows a plaintiff in a trade secrets case to prove threatened misappropriation by showing that a defendant’s new employment will inevitably lead them to rely on the plaintiff’s trade secrets.
2. The doctrine has been found to be controversial because it may enforce a noncompetition agreement on a former employee, even if no express agreement exists.
3. A federal court survey found that 17 states have adopted the inevitable disclosure doctrine, while 5 states have rejected it, and 28 states have not taken a position on the doctrine. 1. A Florida federal court has not adopted or declined to adopt the inevitable disclosure doctrine.
2. An Oregon federal court has indicated that Oregon would be unlikely to adopt the inevitable disclosure doctrine.
3. There is no judicial consensus on whether the federal Defend Trade Secrets Act (DTSA) permits application of the inevitable disclosure doctrine, and many federal courts look to state law for guidance.
4. The DTSA does not permit a federal court to enjoin a former employee from going to work for a competitor in an alleged inevitable disclosure situation, but it could potentially grant narrower relief.
5. One federal court concluded, based on statutory provisions and legislative history, that the inevitable disclosure doctrine does not apply to claims brought under the DTSA, but this conclusion is subject to question. 1) The DTSA limits injunctive relief to protect employee mobility and to coexist with, rather than override, state laws governing injunctions in trade secret misappropriation cases.
2) The DTSA prohibits injunctions that conflict with state laws prohibiting restraints on the practice of a lawful profession, trade, or business.
3) The DTSA requires injunctive relief to be based on evidence of threatened misappropriation, not just on the information the person knows, which is consistent with the inevitable disclosure doctrine.
4) The inevitable disclosure doctrine considers three factors when determining whether to grant injunctive relief based on threatened misappropriation: whether the employers are direct competitors, whether the employee’s new position is nearly identical to their old one, and whether the trade secrets are highly valuable to both employers. – The DTSA does not take a side in the debate over the inevitable disclosure doctrine.
– It does not embrace or reject “inevitable disclosure” as a means of proving threatened misappropriation.
– The DTSA precludes courts from imposing a de facto noncompete requirement on a former employee as a remedy for threatened or actual misappropriation of trade secrets.
– Various court cases provide examples of how the DTSA has been interpreted and applied in the context of trade secret misappropriation.
– The legislative history of the DTSA indicates that it was designed to strike a balance between the interests of trade secret owners and the mobility of employees.
– The DTSA also includes provisions for the ex parte seizure of property to prevent the dissemination of trade secrets.
https://www.hklaw.com/en/insights/publications/2023/01/the-inevitable-disclosure-doctrine-and-the-dtsa
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