In recent years, lawyers in many jurisdictions have utilized a creative approach called the “inevitable disclosure doctrine” to generate what is effectively an unwritten non-compete obligation that prevents employees from moving to a competitor in a role comparable to their prior job. The Georgia Supreme Court in Holton v. Physician Oncology Servs., No. S13A0012, 2013 Ga. LEXIS 414 (Ga. May 6, 2013), recently clarified that under Georgia law, 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.” Notably, however, the Court left open the question of whether the inevitable disclosure doctrine could be used “to support a claim for the threatened misappropriation of trade secrets.”
As it is recognized in some states, the inevitable disclosure doctrine allows an employer to prove a claim of trade secret misappropriation against a former employee simply by demonstrating that the former employee’s new employment inevitably would cause him to disclose or use the trade secrets or confidential information of his former employer. As the Court in Holton explained, the practical effect of the inevitable disclosure doctrine is that it "may impose a non-compete covenant where one does not exist, or … extend a covenant not to compete beyond the time negotiated by the parties." Id. at *9-10. Some courts and commentators had read an earlier Georgia Supreme Court decision, Essex Grp., Inc. v. Southwire Co., 269 Ga. 553 (1998), as implicitly adopting the doctrine in Georgia. The Court clarified that its opinion in Essex, which did not expressly address the doctrine, "does not stand for the proposition that this State adopted the inevitable disclosure doctrine in that case." Holton, at *14.
In Holton, the former employer sought injunctive relief, alleging that the employee misappropriated trade secrets under the Georgia Trade Secrets Act and that Plaintiff would inevitably disclose and use Defendant’s trade secrets. Id. at *3. Even though the former employer presented no evidence to the trial court that the employee had in fact shared or disclosed trade secrets or confidential information or that the employee showed an intent to use proprietary information, the trial court granted the injunction, finding a likelihood that the employee would inevitably disclose the employer’s information. Id. at *8-9. The Georgia Supreme Court reversed this ruling. "Because a stand-alone claim for the inevitable disclosure doctrine of trade secrets – untethered from the provisions of our state trade secret statute – is not cognizable in Georgia," the Court reversed the part of the trial court’s order enjoining the employee from the inevitable disclosure and use of trade secrets. Id. at *14-15. Although the inevitable disclosure doctrine does not provide an independent basis for curtailing conduct of a former employee, practitioners and employers should be aware that the decision in Holton does not preclude an "inevitable disclosure" argument in support of a claim under the Georgia Trade Secrets Act, which provides a cause of action for actual or threatened misappropriation of information that satisfies the statutory standards for trade secret protections. Id. at *15.