The following situation can occur when employees and executives possess a company’s trade secrets and confidential business information.  An employee works for Company A.  The employee signs a confidentiality agreement promising not to disclose certain information after his employment ends.  His employment with Company A ends, and he goes to work for a competitor, Company B.  There is no evidence that the former employee has documents with confidential information or trade secrets or has revealed any of A’s trade secrets or confidential information to Company B.  However, Company A argues that its former employee has the trade secrets and confidential information in his head and that because of the nature of his employment with Company B, the former employee must inevitably disclose those trade secrets or confidential information to Company B or make use of them in his employment with Company B.  This argument is called the “inevitable disclosure” doctrine.  Courts in some states have recognized it.  However, in Holton v. Physician Oncology Servs., L.P., Case No. S13A0012 (decided May 6, 2013), the Georgia Supreme Court rejected the inevitable disclosure doctrine.

The inevitable disclosure doctrine works, in effect, as a non-compete covenant.  The Georgia Supreme Court held that inevitable disclosure doctrine cannot support an injunction against a departed employee.  The alleged injured party must prove either a violation of an agreement or an actual or threatened disclosure of trade secrets that rises to a violation of the Georgia Trade Secrets Act.

This case reinforces the need for employers to have in place effective agreements with their employees with access to confidences that limit the ability of those employees to leave and join a competitor.  In recent years Georgia has adopted statutes that give more favorable treatment to non-competition covenants.  Georgia employers should explore that option.