(November 17, 2009, BNA's Daily Labor Report)
Recently, Jeffrey Klein, head of the Employment Litigation Group at Weil, Gotshal & Manges, was quoted by the Bureau of National Affairs'
Daily Labor Report on the changing face of noncompete agreements. The piece is entitled "Noncompetition Agreements: Panelists Describe Legal Issues, Offer Hints On Managing Use of Noncompete Agreements," and relates the November 6 discussions of a panel for the American Bar Association Section of Labor and Employment. As a member of the panel, Klein explained the history of "inevitable disclosure," which came about early last century, and has a recent example in PepsiCo Inc. v. Redmond, 54 F.3d 1262, 10 IER Cases 1089 (7th Cir. 1995). Klein says courts differ in their reliance on the theory.
The
Daily Labor Report cites a paper written for the conference by Klein and Weil Gotshal associate Gregory Silbert: “‘in some circumstances, the probability that an employee would reveal trade secrets’ in a new position with an employer's competitor ‘is sufficiently high that a court may enjoin the employment to prevent the disclosure from occurring.’” This, Klein points out, has the effect of functioning like a noncompetition agreement between employee and former employer, though no such agreement has been entered. As an example of the continually changing application of the theory, Klein cited IBM Corp. v. Papermaster, No. 08-9078 (S.D.N.Y. 2008), in which inevitable disclosure was applied outside of a classic competitive relationship.
The article was written by Lawrence E. Dubé and appeared on November 12, 2009.