June 12, 2016

Is the Inevitable Disclosure Doctrine Inevitable?

An important feature of the recently enacted Defense of Trade Secrets Act was that it left state trade secret law intact. This meant that states that had adopted the Inevitable Disclosure Doctrine could continue to apply it, and states that had not adopted the Doctrine (e.g., California Bayer Corp. v. Roche Molecular Sys., Inc., 72 F.Supp.2d 1111 (N.D. Cal. 1999), and Florida Del Monte Fresh Produce Co. v. Dole Food Co., Inc., 148 F.Supp.2d 1326 (S.D. Fla. 2001).) were not forced to adopt it. This Doctrine, established by the Seventh Circuit in PepsiCo, Inc. v. Redmond, 54 F.3d 1262, 1269 (7th Cir. 1995), allows a trade secret owner to prove a claim of trade secret misappropriation by demonstrating that the defendant’s new employment will inevitably lead him to rely on the plaintiff’s trade secrets.

It would appear that the Inevitable Disclosure Doctrine is but one way of proving a “threatend missapproiation” prohibited by Mo.Rev. State. 417.455 of the Missouri Uniform Trade Secrets Act. However the status of the Doctrine of Inevitable Disclosure in Missouri is unclear.  At least three cases discuss the Doctrine, and while they found it inapplicable under the particular circumstances, did not reject the Doctrine outright.  See, Lasco Foods,, Inc. v. Hall & Shaw Sales, Mktg. & Consulting, L.L.C., No. 4:08cv01683, January-February 2015 / 33 2009 WL 3834099, at *2 (E.D. Mo. Nov. 16,2009); Carboline Co. v. Lebeck, 990 F.Supp. 762, 767-68 (E.D. Mo. 1997), and H & R Block Eastern Tax Servs., Inc. v. Enchura, 122 F. Supp. 2d 1067, 1075 (W.D. Mo. 2000).

In H & R Block Eastern Tax Servs., Inc. v. Enchura, 122 F. Supp. 2d 1067, 1075 (W.D. Mo. 2000), the district court indicated that “inevitability alone is insufficient to justify injunctive relief; rather, demonstrated inevitability in combination with a finding that there is unwillingness to preserve confidentiality is required.” Other factors that might be analyzed in determining whether to apply the doctrine include:

  • whether the employee will have a decision making role at the new employment
  • whether the responsibilities at the respective jobs are similar
  • whether the employee will be developing new products
  • whether the employee was involved in the creation of the trade secrets at issue
  • whether the trade secrets are easily subject to memorization

It would seem that if in fact the disclosure of a trade secret could be shown to be inevitable, then relief under the Missouri Uniform Trade Secret Act (Mo.Rev. State. 417.455), which authorizes injunction again threatened misappropriation would be appropriate. Such an injunction would even appear to be appropriate under the Defense of Trade Secrets Act, which requires that “conditions placed on such employment shall be based on evidence of threatened misappropriation and not merely on the information the person knows” would also be appropriate. 18 USC 1936(b)(3)(A)(i)(I).