Locating Inevitable Disclosure’s Place in Trade Secret Analysis

For ten years, William Redmond, Jr., worked for PepsiCo, the maker of the sports drink All-Sport. Redmond’s status as General Manager gave him access to trade secrets. PepsiCo protected those trade secrets by contract, and, as is typical, PepsiCo required Redmond to sign a confidentiality agreement covering all “confidential information relating to the business of [PepsiCo].” This confidentiality agreement, like most of its kind, protected the company from the danger that an employee who knew secret information would change jobs and disclose that information. In late 1994, Redmond accepted a position with Quaker’s Gatorade division, a major competitor of PepsiCo’s All-Sport. Redmond’s new position held sufficient similarities to his position at PepsiCo that PepsiCo had reason to fear he might use the secret information he held. PepsiCo filed suit seeking a temporary injunction to prevent Redmond from assuming his duties at Quaker and to prevent him from disclosing trade secrets. PepsiCo’s argument, which became the defining element of the case and caused the case to become a pivotal component of current trade secret law, was that Redmond would “inevitably disclose” PepsiCo trade secrets in his new job at Quaker. PepsiCo argued that it found itself “in the position of a coach, one of whose players [had] left, playbook in hand, to join the opposing team before the big game.” The Seventh Circuit agreed and enjoined Redmond from working for Gatorade for six months. One basic principle of trade secrets law is that employees owe a duty to employers not to disclose information that qualifies as a trade secret. Ordinarily, an employer may recover damages from, or secure an injunction against, the misappropriation or disclosure of trade secrets. An employee’s general knowledge, on the other hand, is not considered a trade secret. Inevitable disclosure lies between these two extremes. As this Note defines it, and as its history supports, inevitable disclosure means that the employee’s general knowledge and the employer’s trade secrets cannot be separated so that it would be “virtually impossible” for the employee to do his or her new job without using the former employer’s secrets.