We are blogging on “Non-competes, Trade Secrets, Fiduciary Duties, and the Inevitable Disclosure Doctrine.” Mark Oberti has prepared a detailed paper on all of these issues, which can be found here.
Yesterday’s post discussed the fact that no case expressly adopts the inevitable disclosure doctrine. There are, however several Texas cases that implicitly rely on a probable or inevitable disclosure theory to enjoin an ex-employee from performing specific types of work for a new employer, even where there is no proof that the ex-employee misappropriated his or her ex-employer’s trade secrets or confidential information. See 36 A.L.R. 6th 537, Applicability of Inevitable Disclosure Doctrine Barring Employment of Competitor’s Former Employee (2008) (summarizing Texas cases applying the probable or inevitable disclosure theory as a basis to enjoin an ex-employee from working in a specific area for a competitor). One such case is Baker Petrolite Corp. v. Spicer, No. 06-1749, 2006 WL 1751786 at *10-11 (S.D. Tex. 2006). There, a former employee, Spicer, was accused of misappropriating his former employer’s trade secrets and confidential information. See <em>id. at *3. Judge Gray H. Miller found that Spicer’s covenant not to compete was unenforceable because it was not “ancillary to or part of” an otherwise enforceable agreement, as required by Section 15.50 of the Texas Business and Commerce Code. See id. at *7. There was also no proof that Spicer misappropriated or used Baker Petrolite’s trade secrets or confidential information. Id. at *9.
Nevertheless, Judge Miller applied a probable or inevitable disclosure theory and granted a preliminary injunction in favor of the former employer. See id. at *11. The injunction was carefully tailored to allow Spicer the maximum amount of freedom to pursue new employment, while still protecting the former employer’s confidential information. See id. at *10. In addition to being generally enjoined from disclosing any of his former employer’s trade secrets, Spicer was specifically enjoined from working with any customers of his former employer with whom he had sales contact during the last eighteen months of his employment, at the specific locations at which he worked for his former employer. See id. at *10-11. The court determined that the injunction would not unfairly limit Spicer’s freedom to advance his career because of the large number of non-Baker Petrolite customers he could work with, and the numerous other locations at which he could work. See id. Therefore, the court held that it was appropriate and necessary to enjoin Spicer from working with particular customers at particular locations where the risk of using or disclosing Baker Petrolite trade secrets was particularly high. See id. As the court held:
Due to the inherent threat of disclosure, the nature of the information at issue, and the direct competitive relationship between Baker and Multichem, Spicer is further enjoined from working with Baker customers with which he had contact in a sales capacity during the last eighteen months of his employment with Baker.
Id. at *11.
Spicer did not use the phrase “inevitable disclosure.” But, it applied the doctrine.