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F & F


California Court Rejects Inevitable Disclosure
posted by macgill on Tuesday September 17, @12:30PM
from the trade-secret-law-is-underreported dept.
News tait_graves writes: "In a majority of states, you can be enjoined from starting a new job because of what you know, even if you have done nothing wrong.

The doctrine of 'inevitable disclosure' in trade secret law allows an employer to stop a former employee from joining a competitor or starting a new business merely because the employee knows the former employer’s secrets. This is true even if the employee has no intention of revealing the secrets or swears that she will never reveal them. The former employer need only allege that because the former employee knows confidential information - something that is true for almost all skilled employees - she will 'inevitably' disclose that information in the future.

A majority of states grant injunctions based on inevitable disclosure without any evidence of wrongdoing. However, a California Court of Appeals just ruled that actual evidence of trade secret theft is required in order to get an injunction in California: a theory of inevitable disclosure isn’t enough.

In Schlage Lock Company v. Whyte, the court noted that the inevitable disclosure doctrine is a device used by former employers to bar their former employees from starting a new job, even in the absence of misconduct. The Schlage court emphatically stated:
    [W]e reject the inevitable disclosure doctrine. We hold this doctrine is contrary to California law because and policy because it creates an after-the-fact covenant not to compete restricting employee mobility.

The ruling is critically important for California employees -- especially in technology fields -- because it is the first state court ruling to reject the inevitable disclosure doctrine in a published opinion. Several federal courts in California have reached similar results, but their decisions do not bind state courts. Now, for the first time, California employers will not be able to use state courts to seek injunctions against former employees on contrived allegations about future misconduct. They will instead be restricted to legitimate lawsuits where there is evidence that a trade secret has actually been stolen.

Trade secret law is state law’s contribution to intellectual property restrictions, along with federal law governing copyright, patents and trademarks. It is perhaps the most abused area of intellectual property law, but also the least commented on. Its lax standards for establishing a "secret" and the ease by which former employers can obtain injunctions result in scores of lawsuits every year against employees who leave to join a competitor or start a new business. Such lawsuits restrict employees' right to seek the job of their choice. And all too frequently, trade secret law operates to restrict innovation by preventing the dissemination of information that is already in the public domain, trivial, or obvious to anyone knowledgeable in the field.

The Whyte decision marks an important victory in the ongoing battle against overbroad trade secret laws and in favor of employee mobility, and it hopefully will have ripple effects elsewhere."

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    California Court Rejects Inevitable Disclosure | Login/Create an Account | Top | 10 comments | Search Discussion
    The Fine Print: The following comments are owned by whoever posted them. We are not responsible for them in any way.
    Thank goodness (Score:0)
    by Anonymous Coward on Wednesday September 18, @12:53AM (#293)
    Finally, somebody in the justice system is thinking with their head. Good going.
    Re:Thank goodness (Score:0)
    by Anonymous Coward on Wednesday September 18, @02:30AM (#298)
    Usually they do. You just don't notice it.
    Courts doing the governments work (Score:1, Interesting)
    by Anonymous Coward on Wednesday September 18, @09:55AM (#301)
    I'm no legal expert, but is this not a typical case of a court doing the work of the government? Shouldn't the government make these kinds of decisions?
    Re:Courts doing the governments work (Score:0)
    by Anonymous Coward on Wednesday September 18, @11:02AM (#306)
    Of course government should make these decision's. bu the don't they leave it up to the courts to do the right thing. I guess creating good laws is a bit much to ask of them, or maybe there's no payolla in good legislation.
    Re:Courts doing the governments work (Score:0)
    by Anonymous Coward on Wednesday September 18, @11:08AM (#307)
    The courts _are_ the government (duh).
    Re:Courts doing the governments work (Score:0)
    by Anonymous Coward on Thursday September 19, @03:16AM (#312)
    The courts are not the government.
    The government _makes_ laws.
    The courts ensure that they are upheld.

    Those are two separate functions.
    In most countries judges are not democratically elected, and therefore do _not_ represent the "will of the people". They just check which law aplies in this case.

    And in this case I think it is the government that should have created a proper law.
    I don't think it is the job of a court to decide what is in the best interest of the people.
    (however much I agree with them on this one)
    Non-Compete (Score:0)
    by Anonymous Coward on Wednesday September 18, @10:24AM (#303)
    I would think cases based on this are extremely rare. In any case, shouldn't these companies have covered this in a non-compete agreement?
    Re:Non-Compete (Score:0)
    by Anonymous Coward on Wednesday September 18, @12:18PM (#309)
    Non-competes aren't legal in California.

    Humanity has the stars in its future, and that future is too important to be lost under the burden of juvenile folly and ignorant superstition. - Isaac Asimov

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