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Trade Secrets And The Inevitable Disclosure Doctrine

August 2016 Newsletter Article Within the law of trade secrets, the inevitable disclosure doctrine allows employers to petition courts for injunctive relief against former employees because of the threat of the misappropriation of trade secrets. A former employee may be enjoined when it is probable or inevitable that the employee will misappropriate his or her acquired knowledge by either improper means or disclosure. Under the doctrine, an employer must show that a former employee had access to trade secrets, and that the former employee's new position contains similar responsibilities, thus making it inevitable that he or she will use or disclose those trade secrets in the performance of any duties related to the new job. An employer may demonstrate the probability or inevitability of misconduct by multiple facts, including circumstances surrounding the former employee's termination and the employee's new hiring. It is crucial to remember that, under the doctrine, an employer need only show the threat of misconduct rather than any actual misconduct. In years past, Texas never formally recognized the doctrine but nonetheless seemed to apply it on an inconsistent basis. For example, in Rugen v. Interactive Business Systems, Inc., a Texas court upheld an injunction against an employee finding that, even in the absence of an enforceable employment agreement, "a former employee is precluded from using for his own advantage, and to the detriment of his former employer, confidential information or trade secrets acquired by or imparted to him in the course of employment." Texas finally adopted a version of the Uniform Trade Secrets Act (the "Act"), which became effective a little more than three years ago, in September of 2013. Prior to its enactment, there was no Texas case law which expressly adopted the inevitable disclosure doctrine. However, the Act apparently sanctions use of the inevitable disclosure doctrine in the state of Texas in 2016. Section 134A.003 permits the issuance of injunctive relief related to a threat of the misappropriation of trade secrets. Congress recently enacted the Defend Trade Secrets Act (DTSA) in May of 2016. While the DTSA provides a federal, civil cause of action for misappropriation of a trade secret, it does not preempt state law regarding trade secret protection, nor does it impact the law of non-compete agreements. While the inevitable disclosure doctrine is still recognized in some states even in the absence of a non-competition agreement, other states, such as Connecticut and Massachusetts, allow it to support a claim for injunctive relief as long as there is an enforceable non-competition agreement. It is important to enlist the assistance of an experienced business attorney, especially with the passing of fairly recently enacted legislation such as the Texas Trade Secrets Act in 2013 and the Defend Trade Secrets Act in 2016. At the Metcalf Adair Law firm, we can assist any employer in any business situation, including when an employee misappropriates trade secrets.

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