The inevitable disclosure doctrine is a concept rooted in common law that allows a plaintiff to prove trade secret misappropriation by “demonstrating that defendant’s new employment will inevitably lead him [or her] to rely on plaintiff’s trade secrets.” PepsiCo., Inc. v. Redmond, 54 F.3d 1262, 1269 (7th Cir. 1995). Thus, the defendant threatens misappropriation merely by holding the trade secreted information in his or her head while working for a direct competitor. States take varying approaches to this doctrine either fully allowing its use, allowing its use with limitations, or prohibiting its use.
When the federal Defend Trade Secrets Act (DTSA) came on the scene in 2016, several courts applied the inevitable disclosure doctrine to DTSA claims, relying on prior application of the doctrine under their applicable state laws. E.g., Fres-co Sys, USA, Inc. v. Hawkins, 690 F. App’x 72, 76 (3d Cir. 2017) (district court did not abuse its discretion by granting an injunction based on likelihood that former employee would use specialized and confidential knowledge in new employment; applying DTSA and Pennsylvania law); Molon Motor & Coil Corp. v. Nidec Motor Corp., 2017 WL 1954531, *4-5 (N.D. Ill. May 11, 2017) (allowing claim based on an inference that misappropriation occurred; applying DTSA and Illinois law); UCAR Tech. (USA) Inc. v. Yan Li, 2017 WL 6405620, *3 (N.D. Cal. Dec. 15, 2017) (dismissing allegations that rely on the inevitable disclosure doctrine because California law rejects the inevitable disclosure doctrine).
But as one Maine federal magistrate recently concluded, the doctrine arguably conflicts with DTSA’s plain language requiring an injunction to be “based on evidence of threatened misappropriation and not merely on the information the person knows.” 18 U.S.C. § 1836(b)(3)(A)(ii)(I) (emphasis added).
The case, IDEXX Labs, Inc. v. Graham Bilbrough, 2022 WL 3042966 (D. Maine August 2, 2022), involves two competing companies that make fecal antigen tests for veterinary products. During employment with IDEXX, Bilbrough worked as the director associate fellow in the corporate strategy group. There, Bilbrough acquired knowledge of IDEXX’s proprietary and trade secret information, including IDEXX’s strategic business assessments, prioritization planning, product development plans, and its research and development portfolio. After working with IDEXX for nearly 16 years, he started a role at the second company, Antech Diagnostics. In response, IDEXX filed suit, alleging that Bilbrough is working for Antech in a role that is substantively identical to his role at IDEXX and, therefore, “could not work on the Antech [fecal PCR tests] without disclosing and/or using Plaintiff’s trade secrets.” IDEXX seeks injunctive relief prohibiting the defendant from using IDEXX’s trade secret information in his employment with Antech and from working on Antech product offerings that are competitive with IDEXX.
IDEXX’s claim relied solely on the court applying the inevitable disclosure doctrine. A federal magistrate judge, however, recommended dismissal of IDEXX’s claims, finding the inevitable disclosure doctrine inconsistent with the plain language of the DTSA. Critically, the DTSA allows a court to grant an injunction only “to prevent any actual or threatened misappropriation” provided that the order does not “prevent a person from entering into an employment relationship, and that the conditions placed on such employment shall be based on evidence of threatened misappropriation and not merely on the information the person knows.” 18 U.S.C. § 1836(b)(3)(A)(ii)(I). By contrast, the inevitable disclosure doctrine allows a preliminary injunction on the theory that a person with certain information will necessarily use the information at some point in his or her new employment. According to the court, the DTSA language could not be reconciled with the doctrine and IDEXX’s claims must be dismissed. The court distinguished cases holding the opposite, i.e., applying the inevitable disclosure doctrine to DTSA claims, on the basis that those courts did not properly assess the doctrine under the DTSA separately from corresponding state law. The court then declined to consider whether IDEXX had a claim under Maine state law, instead directing IDEXX to state court. This remains a developing area of law and could affect the remedies future litigants have under the DTSA where they hope to rely heavily on the inevitable disclosure doctrine.