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In the seminal case of PepsiCo Inc. v. Redmond, 54 F.3d 1262, 1269 (1995), the 7th U.S. Circuit Court of Appeals affirmed an injunction of a manager from working for a competitor for six months, where he was party to a confidentiality agreement but had no noncompetition agreement. Significantly, rather than finding that PepsiCo had to prove that he actually had misappropriated PepsiCo’s trade secrets, the court noted the manager’s knowledge of PepsiCo’s strategic business information and held that a “plaintiff may prove a claim of trade secret misappropriation by demonstrating that the defendant’s new employment will inevitably lead him to rely on the plaintiff’s trade secrets.” This principle has come to be known as the “inevitable disclosure doctrine.” Since then, the inevitable disclosure doctrine has developed erratically, so that, depending on the jurisdiction and the circumstances, it truly can be a double-edged sword. Companies are frequently vulnerable with respect to their high-level executives: The executive necessarily has access to the company’s trade secrets, but the executive’s access to strategic information unfortunately makes the executive attractive to competitors. The inevitable disclosure doctrine developed out of such circumstances, and courts are most likely to apply the doctrine when the former and prospective employers are direct competitors, the employee possesses highly confidential information of great strategic value and the employee will occupy a substantially similar position. The high-water mark for inevitable disclosure in New York was arguably reached in DoubleClick Inc. v. Henderson, No. 116914/97, 1997 N.Y. Misc. Lexis 577 (New York Co., N.Y., Sup. Ct. Nov. 5, 1997), when the court enjoined the defendants, who misappropriated the plaintiff’s trade secrets, from competing against the employer for six months. The court noted that “[i]njunctive relief may issue where a former employee’s new job function will inevitably lead her to rely on trade secrets belonging to a former employer.” 1997 N.Y. Misc. Lexis 577, at 16. The national high-water mark for inevitable disclosure was reached with PepsiCo, discussed above. Plaintiff-employers generally have invoked the inevitable disclosure doctrine for two purposes: to prevent the employee from working for a competitor when there is no noncompete agreement, or to show irreparable harm when there is no proof that the employee actually stole, or had yet used, trade secrets. Courts have been unpredictable in their application of the doctrine, however. Accordingly, employers can most effectively protect themselves against competition from former employees-and give themselves a fighting chance of obtaining injunctive relief-by requiring employees to sign confidentiality agreements and, where permitted by law, covenants not to compete, at the outset of employment. One caveat is that some courts have found that having such agreements precludes application of the inevitable disclosure doctrine altogether. Another is that some states-California in particular-prohibit general noncompete agreements (as opposed to limited restrictive covenants) except in narrowly prescribed circumstances such as the sale of a business. Restrictive covenants It is clear that restrictive covenants are an employer’s best tool for protecting its trade secrets against use by competitors. See EarthWeb Inc. v. Schlack, 71 F. Supp. 2d 299, 311 (S.D.N.Y. 1999) (“[A] written agreement that contains a non-compete clause is the best way of promoting predictability during the employment relationship and afterwards.”), remanded, 205 F.3d 1322 (2d Cir.), judgment aff’d after remand, No. 99-9302, 2000 WL 1093320 (2d Cir. June 12, 2000) (table). Of course, the terms of the restrictive covenant should be reasonable, and the employer should leave some room for negotiation, where appropriate. In recent years, courts generally have agreed that restrictions on competition after the end of the employment relationship should be established by clear agreement. Indeed, courts have refused to enjoin former employees from working for competitors when the employee has specifically avoided-or the employer has not required-signing a restrictive covenant.

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