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Inevitable Disclosure Doctrine Not Viable Substitute for Non-Competition Agreement

Published:  June 9, 2014

Last month, the United States District Court for the District of Massachusetts made it clear that a non-disclosure agreement and an argument that employment for a competitor would inevitably require disclosure of trade secrets does not offer the same protection as a non-competition agreement. In the case leading to this decision, a medical device manufacturer attempted to use a non-disclosure agreement to prevent a former employee from working for a competitor. The former employer argued that since the employee would be doing strikingly similar work, disclosure of materials and information relating to operation procedures, products, design specification, trade secrets, research, development or marketing plans would be inevitable and such disclosure would violate the non-disclosure agreement.

The court determined that this was not sufficient to restrain the former employee from working for a competitor in the absence of a non-competition agreement. However, the court did order the employee not to use or disclose “Proprietary Information” of the former employer to the new employer and ordered the employee to return all “Proprietary Information” to his former employer.

This case highlights the need for carefully worded restrictive covenants. Whether it is for non-solicitation, a non-competition, or a non-disclosure; the importance of specificity and accuracy cannot be understated. To ensure an agreement will be effective and valid, it would behoove all employers to contact employment counsel prior to drafting or using any agreement.

If you have any questions regarding the restrictive covenants, please contact any of the attorneys at Royal LLP at (413) 586-2288.