One of the most fundamental basis of Inevitable Disclosure Doctrine was laid down by the Seventh Circuit Court of Appeals in a landmark PepsiCo, Inc v. Redmond, 54 F.3d 1262 (7th Cir. 1995). Although the case is almost two decades old, its application demonstrates the resurrection of the centuries-old trade secret doctrine.
PepsiCo and Quarter Oats were fierce competitors in the sport drink market. Redmond was a high level manager at PepsiCo with sensitive information of PepsiCo’s business plans in 1995. Testimony and records indicated that Redmond was fully aware of these plans and took a part in drafting them as well. Redmond then joined Quaker Oats as the Vice President. He indeed signed an agreement with Quaker Oats that he would not disclose or use PepsiCo’s trade secrets.
The Court of Appeals held that there was no evident claiming Quarter Oats had actually misappropriated any trade secrets of PepsiCo. However, the critical point was, the court held, that Redmond inherently knew the detailed information about PepsiCo’s business plans and there was no way to delete this from his memory. Even if Redmond exercised his judgment with a good faith, this sensitive information inevitably helped him made decision at his new employment. Therefore, after all, the court ruled against Redmond and awarded PepsiCo an injunction.
There are two critical points to take from this case: (1) even if there is no trade secret misappropriation, the doctrine of inevitable disclosure can prohibit certain employee from moving between companies; and (2) the act of good faith is irrelevant – the information is “inscribed” in the brain and such information will inevitably influence one’s work even if one insists not using it.
