Georgia Supreme Court Rejects Independent Claim for Inevitable Disclosure of Trade Secrets

Under the inevitable-disclosure doctrine, a plaintiff can prove trade-secret misappropriation by showing that the defendant is now working for a competitor in a capacity that will require him or her to rely on the plaintiff’s trade secrets. Essentially, this doctrine allows a plaintiff to impose a noncompete in the absence of a signed agreement. There are broad discrepancies in whether, and how, this doctrine is applied in different states. Often, there is confusion surrounding these issues.

In Holton v. Physician Oncology Serv., LP, 2013 WL 1859294 (Ga. May 6, 2013), the Georgia Supreme Court clarified the applicability of this doctrine in Georgia and held that there is no independent cause of action for inevitable disclosure.

Here, the plaintiff operated facilities providing radiation therapy services. The defendant worked as an executive for the plaintiff, with oversight over facilities in Georgia. He signed a one-year noncompete agreement. One month after the plaintiff terminated him in October 2011, the defendant started working for one of the plaintiff’s direct competitors, which had four operating centers within the geographic scope of the defendant’s noncompete.

The plaintiff brought suit and sought a temporary restraining order based on violations of the noncompete, misappropriation of trade secrets under the Georgia Trade Secrets Act, and an independent claim based on the inevitable-disclosure doctrine. The lower court granted the injunction based on the inevitable disclosure of trade secrets.

By the time the appeal was heard, the one-year noncompete period had expired. Thus, the primary issue on appeal involved whether Georgia recognizes an independent cause of action for inevitable disclosure of trade secrets.

The Georgia Supreme Court reversed, holding “that the inevitable disclosure doctrine is not an independent claim under which a trial court may enjoin an employee from working for an employer or disclosing trade secrets.”

While this specific issue has now been resolved in Georgia, it remains unsettled in other states. To deal with this uncertainty when bringing a claim based on inevitable disclosure, it is important to present any evidence of actual misappropriation. That way, the court may have an independent basis to find for the plaintiff.

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2 thoughts on “Georgia Supreme Court Rejects Independent Claim for Inevitable Disclosure of Trade Secrets

  1. Pingback: Liability of Ex-Employees for Breach of Confidence | Rationes Decidendi

  2. Pingback: Trade Secrets Watch 2013 Year-in-Review | Trade Secrets Watch

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