Trade Secrets Law 25 Years After PepsiCo Disclosure Case

Law360

Peter A. Steinmeyer and Brian E. Spang, Members of the Firm in the Employment, Labor & Workforce Management practice, in the firm’s Chicago office, co-authored an article in Law360, titled “Trade Secrets Law 25 Years After PepsiCo Disclosure Case.” (Read the full version – subscription required.)

Following is an excerpt:

Twenty-five years ago, the U.S. Court of Appeals for the Seventh Circuit issued what many at the time perceived as a landmark decision, PepsiCo Inc. v. Redmond, in which the court applied the concept of inevitable disclosure of trade secrets to affirm an injunction prohibiting a senior executive from taking a similar position at a direct competitor.

The decision did not invent the phrase or concept of inevitable disclosure as a theory of trade secret liability. But the publicity given to the decision led many to think that the doctrine of inevitable disclosure could be an alternative to, or backstop for, traditional post-employment noncompetition agreements.

Notwithstanding expectations at the time, PepsiCo has not in fact widely changed the landscape of trade secret law and employee mobility injunction practice. Although the doctrine remains alive and well and continues to be applied in appropriate circumstances, it is no substitute for a well-crafted garden leave clause or post-employment noncompetition agreement.