The Inevitable Disclosure Doctrine

The Texas inevitable disclosure doctrine has been recognized by Texas law to prevent an ex-employee, with knowledge of his former employer’s trade secrets and confidential information, from later being put in a position with a future employer where it would be inevitable for the employee to access those trade secrets or that information even unintentionally.  Although, this is contrary to a trade secret misappropriation claim. For example, where use or threatened use of the trade secret is usually required, the Texas inevitable disclosure doctrine is aimed at preventing inadvertent disclosure and use by an employee even if the employer has no knowledge that such use or disclosure is or may take place.

This extends the protection of trade secrets because Texas law generally requires a third party misappropriator, like the employer in the above example, to know of the trade secret misappropriation or under the circumstances should have known before the employer can be held vicariously liable for the acts of employees. Because this knowledge requirement is not an element of the inevitable disclosure doctrine, the doctrine provides potentially broader protection.

Employment Agreements for Protection

One step an employer can take to increase the chance of successfully invoking the Texas inevitable disclosure doctrine is to require employees to sign employment agreements that address this issue before employment begins. Therefore, non-compete agreements and non-solicitation agreements are frequently included in employment agreements. However, they can be difficult to enforce under Texas law. Confidentiality agreements, as well as non-disclosure agreements (NDAs) are much easier to enforce. One strategy then is to require the employee to acknowledge that certain trade secrets and confidential information can be kept in his memory after employment ends and to acknowledge that it would be impossible for the employee to not recall these trade secrets or confidential information if he were to take a similar job with another company. This sets up potentially helpful admissions to prove up the enforcement of the inevitable disclosure doctrine.

Cases Dealing with Texas Inevitable Disclosure Doctrine

The following is a summary of cases dealing with the Texas inevitable disclosure doctrine:

• Electronic Data Systems Corp. v. Powell, 508 S.W.2d 137 (Tex. Ct. App. – Dallas 1974).

• Electronic Data Systems Corp. v. Powell, 524 S.W.2d 393 (Tex. Ct. App. – Dallas 1975).

• Weed Eater, Inc. v. Dowling, 562 S.W.2d 898 (Tex. Ct. App. – Houston 1978).

• FMC Corp. v. Varco Int’l, F.2d 500 (5th Cir. [Tex.] 1982).

• Union Carbide Corp. v. UGI Corp., 731 F.2d 1186 (5th Cir. Ct. App. 1984).

• Williams v. Compressor Engineering Corp., 704 S.W.2d 469 (Tex. Ct. App. – Hous. 1986).

• Bertotti v. Shepherd, 752 S.W.2d 648 (Tex. Ct. App. – Hous. 1988).

• Rugen v. Interactive Business Systems, Inc., 864 S.W.2d 548 (Tex. Ct. App. 1993).

• T-N-T Motorsports, Inc. v. Hennessey Motorsports, Inc., 965 S.W.2d 18 (Tex. Ct. App. –Hous. 1998).

• Conley v. DSC Communications Cor., 1999 Tex. App. LEXIS (Tex. Ct. App. – Dallas 1999).

• Cardinal Health Staffing Network, Inc. v. Bowen, 106 S.W.3d 230 (Tex. Ct. App. – Hous. 2003).

• EMSL Analytical, Inc. v. Younker, 154 S.W.3d 693 (Tex. Ct. App. – Hous. 2004).

• Trilogy Software, Inc. v. Callidus Software, Inc., 143 S.W.3d 452 (Tex. Ct. App. – Austin 2004).

• Baker Petrolite Crop. v. Spicer, 2006 U.S. Dist. LEXIS 41535 (S.D. Tex. 2006).

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