Tuesday, July 5, 2016

Trade Secret Specificity and Inevitable Disclosure

For good reason, the "inevitable disclosure" doctrine has been the focus of much discussion among those in the nerd blogosphere (that's a term of endearment, for I am a charter member and wear the nerd label proudly).

The reason is that the Defend Trade Secrets Act, recently enacted by Congress, disapproves of the doctrine. In truth, so do many states and the doctrine itself always was meant to apply to a very narrow slice of trade-secrets cases. To be sure, the doctrine nominally was available to a discrete subset of injunction cases where the plaintiff had some indicia of bad faith that stopped short of an outright threat to steal.

Like many facets of the law, this narrow carve-out turned into a sledgehammer for reasons that are not particularly altruistic. The very use of the inevitable disclosure theory ought to raise judicial hackles, for it surely can be a weapon improperly deployed and not easily disabled.

Which got me thinkin'...

Assume a plaintiff decides to embark on the inevitable disclosure path (and therefore eschews the DTSA as a means of recovery). How does this fit within another secondary trade secrets principle - that the secrets themselves must be identified with reasonable particularity? Put another way, is there - or should there be - a heightened specificity requirement when a plaintiff uses the inevitable disclosure theory of misappropriation?

I think the answer must be yes, for a few reasons. First, if "inevitability" is a benign form of a threat, then the plaintiff must have a pre-existing factual basis for what that threat is. Otherwise, there simply is no claim and no sense of inevitability of a legal wrong occurring. Second and relatedly, if the plaintiff alleges only general categories of trade secrets and claims inevitable disclosure over them in an undifferentiated way, it suggests implausibility over the act of misappropriation. Another way to say this is that the plaintiff really is just fearful of unfair competition but can't state that fear beyond mere generalities.

The difficult part of this inevitable disclosure/specificity problem is procedure. Courts understandably don't require plaintiffs to set forth the details of their actual trade secrets in a complaint, so it's hard to dismiss cases on the pleadings when the claimed deficiency is a crummy attempt at identifying the actual secret. But hiding details and demanding specificity are not incongruous concepts. Here, I think courts need to take a much more pragmatic approach and assess generally what the theory of misappropriation is and what the plaintiff is claiming the trade secret is. If the claim is based on inevitable disclosure and the plaintiff is unable or unwilling to plead its secrets in a narrow, particular way, then the claim becomes presumptively implausible.

One way to tell is to see if the plaintiff is offering up only broad categories - strategic plans, for instance, as opposed as to a particular launch date in a particular market. Remember, the details of the secret need not be in the pleading, but the allegations must give enough notice to the defendant and the court to inform the ultimate theory of the case.

No comments:

Post a Comment