You may recall that in February, a senior executive from Bimbo Bakeries USA, Inc. (“Bimbo”) – maker of, among other things, Thomas’ English Muffins – went to work for a competitor. The executive, Chris Botticella, was one of only a few people in the world with knowledge of how the secret behind the famous “nooks and crannies.” That and other knowledge was information that Bimbo claimed would be inevitably used or disclosed if Botticella were permitted to work for Bimbo’s competitor.
The trial court enjoined Botticella based on a legal doctrine known as the “inevitable disclosure doctrine.” On appeal, one of the central issues was the legal showing necessary for the doctrine to apply (and thereby prevent a former employee from working for a competitor, even when the employee is not subject to a noncompetition agreement). The question came down to this: did Bimbo need to show that Botticella would “inevitably” use or disclose the information, or was it sufficient for Bimbo to show that Botticella would “likely” use or disclose the information.
On July 27, the United States Court of Appeals answered that question (under Pennsylvania law). The Court held that the standard is not “inevitability,” but rather “whether there is sufficient likelihood, or substantial threat’ of a defendant disclosing trade secrets.” Affirming the lower court’s finding that disclosure was likely, the Court of Appeals upheld the injunction. (The decision is here.)
So, what’s the takeaway? At least in Pennsylvania, where “inevitable” seems to mean “likely,” application of the inevitable disclosure is something to be seriously considered by employers in the absence of a noncompetition agreement and something that should not be taken lightly by employees considering leaving for a competitor.
For the rest of us, stay tuned. The 3rd Circuit seems to represent the most liberal construction and application of the doctrine. It remains to be seen whether others follow and fill in the nooks and crannies.