Benjamin Appelbaum, Attorney at Law

Trade secrets and the inevitable disclosure doctrine

New Jersey businesses that want to safeguard their intellectual property may be interested to hear about a May 2017 court decision that seems to suggest that companies can make inevitable disclosure claims under the Defend Trade Secrets Act. The case arose when a motor company's quality control overseer left to join a competitor and took trade secrets that he had downloaded with him. His old firm sued the new employer based on these actions.

The competitor countered by trying to have the complaint dismissed on the grounds that there was no evidence that it had actually used the information. The court, however, deemed the lawsuit valid based on the fact that the companies were in competition and that the employee held a similar job at the new firm.

The key takeaway from this DTSA suit is that it involves a common law doctrine known as inevitable disclosure. In other words, the court thought it reasonable that the employee might eventually share the trade secrets with the new employer. Traditionally, various legal commentators have promoted the idea that DTSA rules don't apply to inevitable disclosure cases because the DTSA expressly bars injunctions that stop people from accepting employment offers, but judges have used inevitable disclosure as grounds for such prohibitions.

Safeguarding trade secrets requires a a nuanced approach to litigation. Business owners who believe they are in the right might find that not all damaging actions constitute illegal infringement. Also, the kinds of intellectual property they own may affect their legal options for pursuing damages. Attorneys with intellectual property litigation experience may be able to help companies devise policies that are enforceable.

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Benjamin Appelbaum, Attorney at Law - Intellectual Property

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