A growing concern in our ever-changing market is the information that may leave with that employee who goes to work for a competitor. Specifically, what happens to the trade secrets and confidential information learned by an employee through knowledge or memorization? Oftentimes, such information is taken by that employee to their new employer and eventually divulged. The Doctrine of Inevitable Disclosure provides some protection to the former employer for the information retained in the employee’s memory upon departure. Although Arizona courts have not yet examined this doctrine, exploring trends in other jurisdictions may be helpful in predicting how Arizona courts will rule on this issue.

The Doctrine of Inevitable Disclosure came to solid fruition in Pepsico, Inc. v. Redmond, 54 F.3d 1262 (7th Cir. 1995). In that case, a preliminary injunction against a former employee who had quit Pepsico was upheld after that employee quit to become a field operations officer for Gatorade, owned by Coca Cola, at the Quaker Company. His employment at Quaker was to position Gatorade and Snapple in relation to the competitor’s sports drinks, including Pepsico’s All Sport. In analyzing the circumstances, the Court required something more than a person assuming a new, similar job, in order to apply the Doctrine of Inevitable Disclosure. The “something more,” in this case, was the detailed secrets that the former employee knew about Pepsico and the fact that the same employee would be making decisions about product marketing and positioning for Gatorade and Snapple by relying on the knowledge he had gained at Pepsico. The Court considered three factors in concluding that Pepsico’s trade secrets would be inevitably disclosed by the former employee: (1) his lack of honesty when he left Pepsico, (2) the fact that he was a high level employee of Pepsico, and (3) Quaker’s unnatural interest in recruiting other Pepsico employees.

Two other Northern District of Illinois cases contributed to the Pepsico decision. In AMP, Inc. v. Fleischacker, 1986 WL 3598 (N.D. Ill. 1986), the Court rejected AMP’s argument that its former employee would inevitably disclose the confidential and trade secret information because the former employee had been performing at the new employer for only twenty-three months pursuant to a Protective Order entered previously by the Court, which was not violated. The Court went on to state that in this case the former employee “cannot be compelled to erase from his mind all of the general skills, knowledge and experience acquired through ‘his AMP employment.’” In Teradyne, Inc. v. Clear Communications Corp., 707 F. Supp. 353 (N.D. Ill. 1989), a Complaint was dismissed that alleged inevitable disclosure of Teradyne’s trade secrets based on allegations that three employees joined a competitor, Clear Communications. The Court found that there was no allegation Defendants threatened to use Teradyne secrets but suggested such allegations could exist if Clear Communications could not operate without Teradyne’s trade secrets.

Several earlier Illinois cases helped form the Inevitable Disclosure Doctrine. Schulenburg v. Cignatrol, Inc., 33 Ill.2d 379, 212 N.E.2d 865 (1965) established that an employee’s mere exposure to his or her employer’s confidential information could form the basis for later misappropriations when the employee left to work at a competitor. The Court’s rationale was that trade secrets contained in writing were really no different than trade secrets memorized or committed to memory by regular exposure. Id. at 869. This principle was also followed in Cincinnati Tool Steel Co. v. Breed, 137 Ill. App.3d 267, 482 N.E.2d 170 (2nd Dist. 1985) where the former employee testified that she might recall customer pricing discounts of her former employee that were retained in her memory that could be given to her new employer.

Notably, in Strata Marketing, Inc. v. Murphy, 317 Ill.App.3d 1054, 740 N.E.2d 1166 (2000), Strata pled allegations following the Pepsico case, alleging that the defendant could not operate or function without relying on the plaintiff’s trade secrets that would be inevitably disclosed by the former employee. The State Court allowed the plaintiff to proceed under the Illinois Trade Secrets Act. The Doctrine of Inevitable Disclosure was now not only being recognized in the Federal Courts with Pepsico, but also in the State Courts with Strata.

Although Arizona has not yet had an appellate case adopting the Inevitable Disclosure Doctrine, the Arizona legislature has adopted the Uniform Trade Secrets Act (“UTSA”). Moreover, a recent Iowa case examined the Doctrine of Inevitable Disclosure under the UTSA and, as a result, this analysis may be helpful in predicting how Arizona courts will handle a similar situation. See Barilla America, Inc. v. Wright, 2002 WL 31165069 (S.D.Iowa 2002).


The Plaintiff, Barilla America (“Barilla”) hired Defendant Wright to be its plant manager at the Barilla pasta facility in Ames, Iowa. The Defendant worked as the plant manager for approximately four months, during which time he had access to trade secrets, including financial records and technical information. Although the Defendant was given a new employee packet upon his hire, complete with non-compete and confidentiality agreements, he did not sign these, nor was he specifically told to sign them.

After four months, the Defendant went to work for a Barilla competitor in Arizona. Barilla sued Defendant Wright and the new company, American Italian Pasta Company (“AIPC”), seeking a preliminary injunction to keep Defendant Wright from working and disclosing any Barilla trade secrets to AIPC. Specifically, Barilla sought to prohibit Wright from disclosing any information housed on a compact disc that Wright had received while employed at AIPC. The CD contained a library of Barilla’s 125 years of data collection. This included general layout details, troubleshooting guidelines, recipes and processes used in making the pasta, in essence, the “heart of the company.” Id. at *3. The Defendant also failed to return personal notebooks and pictures he took while in training, as well as company financial statements from 2001.

After examining other cases dealing with this issue, the Court determined that the inevitable disclosure rule in Iowa was limited to the actual or threatened disclosure of trade secrets. The Court also found that the inevitable disclosure doctrine appeared to be aimed at preventing a disclosure despite an employee’s best intentions to not disclose confidential information. On the other hand, the threatened disclosure doctrine seemed to be aimed at preventing disclosures based on the employee’s intentions to disclose the confidential information. After comparing the two doctrines, the Court treated each as variations of the same standard. Id. at *9.

In reaching this conclusion, the Court examined the Iowa Uniform Trade Secrets Act (the “IUTSA”), which provides in part, that “[t]he owner of a trade secret may petition the district court to enjoin an actual or threatened misappropriation.” Id. (quoting Iowa Code § 550.3(1)). The Court then determined there were two alternatives that could be reached about the inevitable disclosure doctrine and the threatened disclosure doctrine under the IUTSA. First, disclosures could be limited to actual or threatened disclosures, following the language in the Act and the Florida Court in Del Monte Fresh Produce Co. v. Dole Food Co., 148 F.Supp.2d 1326 (S.D.Fla. 2001). Second, follow Pepsico, using the terms inevitable disclosure and threatened disclosure interchangeably. The Court chose the first option and followed the stricter standard, though noted the standards of each to simply be modifications of the same standard. Barilla America, 2002 WL 31165069 at *9.

The Court determined that the threatened disclosure doctrine was applicable in this case even though the Plaintiff clearly demonstrated that Defendant Wright was exposed to trade secrets, but failed to prove that (1) Wright retained any of this information or (2) Wright was attempting to use Barilla’s trade secrets at AIPC. However, the fact that Defendant Wright left Barilla with some of Barilla’s trade secrets led the Court to determine that there was a threat of disclosure to AIPC.

Ultimately, the Court granted the injunction to keep Defendant Wright from working for Defendant AIPC, or any other Barilla competitor, for the period of one year. In addition, the Court ordered that Defendant Wright be enjoined from misappropriating any of Barilla’s trade secrets and using or keeping any further notes or information relating to trade secrets gained while at Barilla.

Iowa and Arizona have very similar Uniform Trade Secret Acts, and thus, it is possible, perhaps even probable, that this interpretation will be extended to Arizona law. In light of the recent holdings in Barilla, we can expect that the Arizona Courts will soon be forced to address the growing concern of inevitable disclosure, relying on the authority of Barilla and Pepsico for guidance.