Two recent decisions from Massachusetts courts granting preliminary injunctions against former employees who went to work for competitors, suggest that the inevitable disclosure doctrine is alive and well in Massachusetts. Judges in several prior cases had refused to grant injunctions in the absence of actual evidence of misuse of confidential information or trade secrets. These new cases provide authority to assist employers in protecting their confidential information and trade secrets where there is no evidence of actual, harmful competition, but where disclosure is inevitable because of the employee’s knowledge of his employer’s secrets, and because the employee is engaged in direct competition with his former employer.
It is a common fact pattern: Employee is trained in, and has knowledge of, his employer’s trade secrets or confidential information. His non-competition provision prohibits him from working for a competitor, soliciting the employer’s customers, and from using or disclosing the employer’s confidential information. When he goes to work for a competitor, the former employer suspects that the departed employee will have to use its trade secrets or confidential information for his new employer, but is unable to move against the former employee because it does not yet have evidence of an actual violation of the restrictive covenants. Many an employer in Massachusetts has argued that such misuse is “inevitable”; the employee knows the secret, and has gone to work for a direct competitor. How can he do his job for the new employer without using what he learned during his prior employment? While there has been some suggestion in a few Massachusetts cases that the “inevitability” of such disclosure is enough to obtain an injunction, many courts have refused to grant the injunction against competitive employment in the absence of evidence of actual misuse.
The new cases hold that the inevitability of disclosure, on the right facts, will be enough to support the application for an injunction.
In Aspect Software, Inc. v. Barnett, the federal District Court in Massachusetts granted a preliminary injunction against Barnett, the former CTO of Aspect, a technology company, from working for a direct competitor. Barnett had access to Aspect’s confidential business information and technology secrets. Upon leaving Aspect to work for the competitor, the competitor required Barnett, in its own contract with him and in a set of “ground rules,” not to use or disclose information he had learned from Aspect. The court acknowledged the “good faith” efforts reflected by these documents and the absence of evidence of actual breach of the restrictive covenants previously signed by Barnett, but granted the injunction nevertheless, noting that, “Whether or not Barnett actually has ‘employed, revealed or otherwise utilized’ [the words found in the non-competition provision] Aspect’s trade secrets in the course of his work for [the competitor] (or whether he will do so in the future), Aspect has established that at the time of his departure from Aspect it was at the very least ‘reasonably likely’ that he would do so. That likelihood is sufficient to establish a breach of the Agreement.” The court specifically rejected the argument that the inevitable disclosure doctrine was not available in Massachusetts.
A Massachusetts Superior Court judge reached a similar conclusion in Empirix, Inc. v. Ivanov. There, the court granted an injunction against a sales engineer, Ivanov, from working for a direct competitor of his former employer, Empirix. Shortly before he departed, Ivanov had obtained training on a new technology that Empirix hoped to sell. Ivanov went to work for NetScout, which sold that technology, and was thus a direct competitor of Empirix. The court held that given Ivanov’s knowledge of the technology, the direct competition of NetScout with Expirix, and the timing of Ivanov’s departure (leaving Empirix within a few months of learning the new technology), “Mr. Ivanov’s knowledge of the competing product will inevitably or inadvertently surface during Ivanov’s employment with NetScout. . . . He will make decisions for his competing product based on information he holds about [the technology], and even without formal disclosure, thereby benefit NetScout.”
Both cases show that on the right facts—particularly, knowledge of confidential information, directly competing companies, and holding the same position with both the former and the new employer— the inevitability of disclosure may carry the day for employers seeking to enforce noncompetition agreements. Employers should check their noncompetition and nonsolicitation provisions to be sure they are in place, current, and appropriately drafted to put them in the best possible position to prevail against departed and disloyal former employees. They should also confirm that procedures are in place and enforced to protect their trade secrets; an injunction to protect a secret will not be possible if the secret is no longer truly a secret. In this area of law in particular, properly drafted agreements and vigilant enforcement are the keys to success.