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."