Blog Posts

The Third Circuit Addresses the Defend Trade Secrets Act and Appears to Have Applied the Inevitable Disclosure Doctrine

07/11/2017

The Defend Trade Secrets Act (DTSA) states very clearly that an injunction issued pursuant thereto may not “prevent a person from entering into an employment relationship,” and that any conditions placed on a former employee’s employment in an injunction must be based on “evidence of threatened misappropriation and not merely on the information the person knows.” (Emphasis added). This language appears to bar injunctive relief under the DTSA based on the “inevitable disclosure doctrine,” which in some states permits a court to enjoin a former employee from working for a competitor—even in the absence of a signed non-compete agreement—if it can be established that the employee would “inevitably” (even if inadvertently) use his or her former employer’s trade secrets on behalf of a new employer. As a result, when the statute was first enacted, many commentators assumed that claims based on the inevitable disclosure doctrine would quickly be shot down. In practice, however, that does not appear to be the case. At the very least, some recent federal court decisions have sown confusion around this issue.

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