Setting the Record Straight on the Inevitable Disclosure Doctrine in Massachusetts

by Stacey Dogan & Felicity Slater

The Inevitable Disclosure Doctrine (“IDD”) is one of the most controversial and poorly understood doctrines in trade secret law. The doctrine permits courts to enjoin certain employees from accepting new employment even in the absence of a non-competition agreement, based on the notion that these employees cannot help but use or disclose their former employer’s trade secrets in their new positions.[1] Courts apply the IDD most often in cases involving senior executives or others with intimate knowledge of time-sensitive, competitively important information, relying on the doctrine to intervene in the tricky balancing act between employers seeking to protect their trade secrets and individuals who want the freedom to change jobs.

In seeking to resolve this tension, some states, such as California, have endorsed complete employee mobility, not only rejecting the IDD but also finding non-competition agreements in general unenforceable. Other states, including Massachusetts, have tried to craft a balance between employer and employee interests.[2] Massachusetts will enforce non-competition agreements that are: “(1) necessary to protect a legitimate business interest, (2) reasonably limited in time and space, and (3) consonant with the public interest.”[3] Massachusetts’ approach to the IDD, however, is more ambiguous. Massachusetts courts have neither embraced nor rejected the IDD definitively, though the state’s courts have discussed the doctrine in terms that range from agnostic to misleading. Furthermore, two laws passed in the state in 2018—the Massachusetts Uniform Trade Secrets Act[4] (“MUTSA”) and the Massachusetts Noncompetition Agreement Act[5] (“MNAA”)—can be read as moving the state closer to the IDD, although to-date no Massachusetts court has had the opportunity to interpret them in an IDD-like context. This blog post explores why the IDD, despite not having been adopted by Massachusetts courts, has nonetheless created such confusion in the case law, and why this confusion matters.

Restrictions on employee mobility such as the IDD have repercussions that go beyond any one employee’s freedom to change jobs. For example, scholars have argued that California’s refusal to enforce non-competition agreements and Massachusetts’ willingness to enforce them has had deep impacts on the innovativeness and economic success of firms in these two states.[6] They contend that California, by not enforcing non-competition agreements, has facilitated fluid employee movement between jobs, creating a culture of knowledge sharing among firms that has in turn played a major role in bringing about the flourishing Silicon Valley that we know today.[7] By contrast, these scholars suggest, Massachusetts’ enforcement of non-competition agreements has discouraged employees in the state from changing jobs as frequently, frustrating the free circulation of ideas between firms and causing the state’s tech sector to languish in comparison to California’s.[8] This research suggests that the ease with which employers are able to place restrictions on the mobility of their employees under state law can influence the overall success of firms, and especially of tech firms, in the state. Furthermore, it indicates that employee clarity about whether a state has or has not adopted the IDD is crucial, as employees may consider the possibility of being enjoined from seeking new employment when they contemplate changing jobs. For these reasons, we believe that it is essential to establish clarity about the status of the IDD under Massachusetts law.

In 2018, the Massachusetts legislature passed two laws with important implications for trade secret and non-competition agreement doctrine in the state. First, Massachusetts, which prior to 2018 had been one of the last states not to have adopted the Uniform Trade Secrets Act (“UTSA”), joined the majority of states by adopting a modified form of the model code.[9] Massachusetts’ version of the law, MUTSA, differs from other states’ versions by creating the possibility of a prospective remedy upon the threat of misappropriation, even if that misappropriation has not yet occurred.[10] Second, also in 2018, Massachusetts passed the MNAA, which sought to simplify non-competition agreement doctrine in the state by codifying it.[11] Prior to the law’s passage, Massachusetts noncompetition doctrine had all been based on state common law. The MNAA contains a passage that allows courts to apply IDD-like remedies even in the absence of a non-competition agreement, but only if the defendant has already breached a duty, such as a trade secrets non-disclosure duty.[12] As such, although the MNAA does not allow courts to grant injunctions based on the threat of misappropriation alone, once there has been any misappropriation, it allows courts to award plaintiffs a full arsenal of remedies, including injunctions against employment. Taken together, these laws endorse injunctive remedies, including limitations on employment, for breaches of confidentiality agreements, and allow prospective relief for the threat of misappropriation posed by inevitable disclosure. However, neither law explicitly endorses the IDD and it is not entirely clear that they should be read to do so, thus keeping the question of the status of the doctrine in the state alive.

To understand the confusion over the IDD’s status in Massachusetts requires attention to the difference between ordinary trade secret injunctions and enforcement of non-competition agreements in employment contracts. Injunctions in trade secret cases usually forbid the use or disclosure of trade secrets in situations where such use is imminent, or order the return or destruction of materials that have already been divulged. A typical trade secret injunction involving a former employee, for example, might require the employee to relinquish confidential documents or customer lists from the former employer, to prevent their use for the benefit of a competitor.[13] In Massachusetts, the MUTSA and the MNAA broaden the available relief to include employment-related injunctions against employees who have breached agreements with their former employer. But those statutes stop short of allowing an injunction against employment based on the mere risk of disclosure. The MUTSA allows prospective injunctions against misappropriation (but not employment); and the MNAA allows employment-related injunctions only after a trade secret misappropriation has occurred. In contrast to trade secret non-disclosure agreements, which focus on duties with respect to information, non-competition agreements are contracts in which an employee commits not to work for a competitor for some period of time after leaving her current employment. Although non-competition agreements have come under increasing criticism in recent years, most recently by the Biden Administration,[14] Massachusetts (like many other states) allows them based on the notion that they reflect a bargained-for agreement between employers and employees, with employees accepting limits on employment mobility in exchange for other benefits that come with the employment.[15]

Unlike these forms of relief, the IDD involves a limit on employment mobility in the absence of a non-competition agreement and without any requirement of a prior breach. It thus allows employers to limit employees from accepting new employment without even the fiction of a bargained-for contract that anticipates such drastic relief. In light of this, courts are understandably reluctant to recognize these non-bargained-for, judicially-created non-competition agreements, and are often cautious about invoking the IDD. The doctrine is used sparingly in jurisdictions that adopt it, and outright rejected in others.[16] Yet the doctrine has an outsized shadow because its language often appears in opinions that doctrinally have nothing to do with the IDD. In particular, IDD-like language – specifically, language addressing the risk that a former employee may use confidential information in subsequent employment – often appears in cases involving enforcement of non-competition agreements. Readers of these opinions sometimes come away with the impression that the court has adopted the IDD, when in fact the court has done nothing of the sort.

The confusion caused by the slippage of IDD-type language into non-competition disputes has produced what First Circuit Judge Selya aptly referred to, in a 2013 opinion, as a “thicket” of confusion about the state’s stance on the doctrine.[17] This thicket is well-illustrated by three US District Court opinions from Massachusetts: Lombard Medical Technologies Inc. v. Johannessen (D. Mass 1991), U.S. Electrical Services, Inc. v. Schmidt (D. Mass 2012), and Corporate Technologies, Inc. v. Harnett (D. Mass 2013), along with the Judge Selya’s opinion in Corporate Technologies, Inc. v. Harnett (1^st Cir. 2013).

In Lombard Medical Technologies, Inc. v. Johannessen, the plaintiff, Lombard Medical Technologies (“LMT”), a medical device company specializing in endovascular stents, sought to enjoin two low-level former employees, both of whom ran clinical trial sites for the company, from going to work for one of its competitors, Aorfix. Both employees were bound by non-competition agreements and Lombard asserted a breach of contract claim against each of them. To be eligible for an injunction under Massachusetts law, a plaintiff must demonstrate: “(1) a likelihood of success on the merits; (2) that it will suffer irreparable harm if the injunction is denied; (3) that a balance of the hardships weighs in its favor; and (4) that an injunction will benefit, or at least not harm, the public interest.”[18]

The Lombard Court found the non-competition agreements to be valid and enforceable against the former employees, and thus that LMT was likely to succeed on the merits of its breach of contract claim.[19] As for the second prong, LMT asserted that it would suffer irreparable harm if the former employees were permitted to use and disclose its trade secrets in their new jobs, while the employees maintained that they simply had no confidential information to disclose.[20] In its analysis, the court used language reminiscent of the IDD, asserting that, “despite defendants’ best intentions, . . . given the similarities among the products and the defendants’ positions at the companies, . . . disclosure [of the plaintiff’s trade secrets] would be inevitable.”[21] Finding that the third and fourth prongs favored LMT as well, the Lombard Court enjoined the former employees from accepting employment with Aorfix.[22]

It is tempting to view the Lombard Court’s use of the word “inevitable” as reliance on the IDD in granting an injunction. This interpretation, however, ignores the factual and doctrinal context of the Lombard opinion. Lombard involved a contract in which two employees agreed not to compete with their former employer for a period of time.[23] The court found the agreement valid and considered whether an injunction was appropriate to enforce its terms.[24] Thus, Lombard is not an IDD case, but a straightforward application of Massachusetts injunctive relief doctrine to the enforcement of a non-competition agreement. When a court—as the Lombard Court did— grants an employer-plaintiff an injunction to enforce a valid non-competition agreement with a former employee-defendant, even when it uses IDD-inspired language in assessing “irreparable harm,” it does so not on the basis of the IDD, but on standard principles of injunctive relief.

Similarly, the court in U.S. Elec. Servs., Inc. v. Schmidt, applied the Lombard factors in a related context.[25] Here, plaintiff U.S. Electric Services, Inc. (“USESI”), an electric parts distributor, sought to enjoin Schmidt, a former employee, from working for Monro, a competitor, relying on a recent confidentiality agreement rather than a non-competition agreement.[26] In analyzing USESI’s eligibility for an injunction, the Schmidt Court assessed the same four factors the Lombard court did. In Schmidt, though, plaintiff’s argument fell apart during analysis of the first factor. The court found that USESI failed to demonstrate a likelihood of success on the merits because it did not show that Schmidt had either violated his confidentiality agreement with USESI or misappropriated any of USESI’s trade secrets.[27]

The Schmidt Court rejected USESI’s argument that Schmidt would “inevitably” disclose its trade secrets, noting that although courts in cases “dealing with the so-called ‘inevitable disclosure doctrine’” such as Lombard may use IDD-influenced language to establish irreparable harm, “none of the authorities cited by USESI stand for the proposition that allegedly inevitable future misuse of trade secrets is by itself sufficient to establish a violation of either common law or statutory obligations regarding secrets.”[28] In other words, while an application of the IDD may establish a likelihood of success on the merits in states where it has been adopted for claims where the defendant-employee is not bound by a non-competition agreement, the IDD-inspired language used by courts—as in Lombard—relates only to the existence of irreparable harm once the plaintiff has already established likelihood of success on the merits of a claim involving a non-competition agreement.[29]

Although some courts—like the Schmidt Court—appear to appreciate the distinction between “inevitable disclosure” as a factual matter and the IDD doctrine, other courts find the common language confusing. In Corporate Techs., Inc. v. Harnett, for example, plaintiff Corporate Technologies., Inc. (“CTI”) sued defendant-former employee Harnett, who was not bound by a non-competition agreement, for breach of non-solicitation and non-disclosure agreements and sought to enjoin him from “doing business with clients he worked with while at CTI.”[30] Recall that the IDD, in states where it has been adopted, allows courts to enjoin defendants who are not bound by non-competition agreements from accepting subsequent employment.[31] Recall also that the Lombard Court did not apply the IDD, but instead found the inevitability of disclosure a sufficient basis for enforcing a valid non-competition agreement. The District Court in Harnett conflates the Lombard holding with the IDD. Harnett both took confidential documents with him when he left CTI and solicited CTI clients for his new employer, so the court found it was “inevitable” that Harnett would disclose CTI’s trade secrets to those clients, thereby breaching his nondisclosure—not non-compete—agreement. In its analysis of the first injunctive relief factor, likelihood of success on the merits, the court cites Lombard to conclude CTI was likely to succeed on the merits of its non-disclosure claim because disclosure was inevitable.[32] Finding that Harnett had breached his non-solicitation agreement as well, the court granted CTI an injunction.

By purporting to rely on Lombard’s application of the IDD to find a likelihood of success on the merits of CTI’s breach of non-disclosure agreement claim, the Harnett Court misinterprets both Lombard and the IDD. First, Lombard was not an application of the IDD, and did not establish the IDD as a principle of Massachusetts law. More fundamentally, however, Harnett did not involve an IDD claim—an appeal for an injunction against prospective employment—but rather, alleged breaches of non-solicitation and non-disclosure agreements, and a request for injunction against further solicitation and disclosure.[33] While the inevitability of disclosure, as a factual matter, may be relevant to this sort of contract claim, the IDD, as a doctrinal matter, is not. A Massachusetts court may squarely address whether the risk of disclosure justifies an injunction against employment, but neither the Lombard nor the Harnett Court did so, leaving the status of the IDD in Massachusetts unresolved.

On appeal, the First Circuit affirmed on the grounds that Harnett had actually breached his non-disclosure agreement by revealing CTI’s confidential information, not on the grounds that he would inevitably do so.[34] Judge Selya declined to correct the lower court’s misapplication of the IDD, stating, “[w]e need not plunge into this thicket. Here, there was sufficient record evidence for the district court to infer that it was likely that Harnett actually used CTI’s confidential information in order to secure business for OnX [CTI’s competitor].”[35] Because the facts of this case did not present the court with an opportunity to either adopt and apply, or to reject, the IDD, Selya is rightly circumspect, stating only that the doctrine is “sparingly used in Massachusetts.”[36]

As these opinions demonstrate, the use of the IDD across doctrinal contexts—including those where the IDD does not apply—confuses the role of “inevitable disclosure” across a wide range of employment and trade secrets contexts. Furthermore, the MUTSA and the MNAA, if not actual endorsements of the IDD, inch closer to it by placing “threatened” misappropriation on equal footing with actual misappropriation for trade secret purposes, and by explicitly approving court-imposed employment restrictions on employees who breach confidentiality agreements with their former employers. In light of this ongoing confusion, Massachusetts courts must confront two issues. First, courts must be careful to distinguish the doctrinal application of the IDD from the use of “inevitable disclosure” as a factual matter in a variety of trade secret and employment contexts. As Lombard and Harnett demonstrate, inevitable disclosure may be factually relevant in contexts where the IDD does not doctrinally apply, including in evaluating irreparable harm in the context of a valid non-competition agreement, or in deciding the likelihood of success on the merits of trade secret misappropriation claims. Second, Massachusetts judges must decide whether to adopt the IDD—and whether the MUTSA and MNAA affect that decision. When an appropriate case presents itself, the judges will have the difficult job of determining and balancing the state’s legislative intent, firms’ interests in protection of trade secrets, and equitable considerations regarding employment relationships and employee mobility.

[1] PepsiCo, Inc. v. Redmond, 54 F.3d 1262, 1266, 1271 (7th Cir. 1995).

[2] Russell Beck, Inevitable Disclosure Doctrine – A Brief History and Summary, Fair Competition Law (June 5, 2019), https://faircompetitionlaw.com/2019/06/05/inevitable-disclosure-doctrine-a-brief-history-and-summary/ [https://perma.cc/T4TT-2QBQ].

[3] Automile Holdings, LLC v. McGovern, 136 N.E.3d 1207, 1218 (Mass. 2020).

[4] Mass. Gen. Laws ch. 93 § 42A (2021).

[5] Mass. Gen. Laws ch. 149 § 24L (2021).

[6] See Ronald J. Gilson, The Legal Infrastructure of High Technology Industrial Districts: Silicon Valley, Route 128, and Covenants not to Compete, 74 N.Y.U. L. Rev. 575 (1999); Richard A. Booth, Give Me Equity or Give Me Death – the Role of Competition and Compensation in Building Silicon Valley, University of Maryland Legal Studies Research Paper No. 2006-44 (2006); Gabriella Falcone, Massachusetts Non-Competition Laws: Protecting Trade Secrets Or Restricting Commonwealth Innovation?, B.C. Intell. Prop. & Tech. F. 1 (2017).

[7] “The different legal rules governing post-employment covenants not to compete in California and Massachusetts help explain the differences in employee job mobility and therefore the knowledge transfer that…[is] a critical factor in explaining the differential performance of Silicon Valley and Route 128.” Gilson, supra note 6, at 579.

[8] Id.; c.f. AnnaLee Saxenian, Regional Advantage: Culture and Competition in Silicon Valley and Route 128 36, 37, 149 (1994).

[9] Aaron Nicodemus, Massachusetts Adopts Uniform Trade Secrets Law, Bloomberg Law (Aug. 16, 9:29 PM), https://news.bloomberglaw.com/ip-law/massachusetts-adopts-uniform-trade-secrets-law [https://perma.cc/M65R-P9EL].

[10] Mass. Gen. Laws ch. 93 § 42A (2021) (“[a]ctual or threatened misappropriation may be enjoined upon principles of equity including but not limited to consideration of prior party conduct and circumstances of potential use, upon a showing that information qualifying as a trade secret has been or is threatened to be misappropriated.”).

[11] Steven D. Wilson, New Trade Secret and Noncompete Laws, Beggs & Lane (Dec. 17, 2018), https://beggslane.com/new-trade-secret-and-noncompete-laws/ [https://perma.cc/E97S-FUGP]. Russell Beck, Massachusetts noncompete and trade secret reform has arrived: What you need to know, Fair Competition Law (Aug. 1, 2018), https://faircompetitionlaw.com/2018/08/01/massachusetts-noncompete-and-trade-secret-reform-has-arrived-what-you-need-to-know [https://perma.cc/T94S-KADR].

[12] Mass. Gen. Laws ch. 149, § 24L (c) (2021) (“nor does it [the MNAA] preclude the imposition of a noncompetition restriction by a court, whether through preliminary or permanent injunctive relief or otherwise, as a remedy for a breach of another agreement or a statutory or common law duty.”).

[13] See, e.g., Peggy Lawton Kitchens, Inc. v. Hogan, 466 N.E.2d 138, 140-41 (Mass. App. Ct. 1984) (upholding an injunction on a former employee’s use of their former employer’s cookie recipe, which qualified as a trade secret); Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Dewey, 2004 Mass. Supp. LEXIS 222, 222 (2004) (upholding the portion of an injunction that required a former employee to return to his former employer a database of their confidential client information),

[14] E.g., Exec. Order No. 14036, 86 FR 36987 (July 14, 2021).

[15] Tom Spiggle, President Biden’s Recent Executive Order Takes Aim At Non-Competes, Forbes (July 16, 2021, 10:53 AM), https://www.forbes.com/sites/tomspiggle/2021/07/16/president-bidens-recent-executive-order-takes-aim-at-non-competes/ [https://perma.cc/2ATR-VCTV].

[16] Table on file with authors.

[17] Corp. Techs. Inc. v. Harnett, 731 F.3d 6, 14 (1^st Cir. 2013).

[18] Lombard Med. Techs., Inc. v. Johannessen, 729 F. Supp. 2d 432, 438 (D. Mass. 2010).

[19] Id. at 435.

[20] Id. at 441–42.

[21] Id. at 442.

[22] Id. at 442–43.

[23] Id. at 435.

[24] Id.

[25] U.S. Elec. Servs., Inc. v. Schmidt, No. 12–10845–DJC, 2012 WL 2317358 at *7 (D. Mass. June 19, 2012).

[26] Id. at *1.

[27] Id. at *12.

[28] Id. at *8.

[29] See id.

[30] Corp. Techs., Inc. v. Harnett, 943 F. Supp. 2d 233, 235 (D. Mass 2013).

[31] See cases cited supra note 13, and accompanying text.

[32] Corp. Techs., Inc. v. Harnett, 943 F. Supp. 2d at 241.

[33] Id. at 235.

[34] Corporate Techs. Inc. v. Harnett, 731 F.3d 6, 14 (1st Cir. 2013).

[35] Id.

[36] Id.