PrepTest 55, Section 4, Question 4

Often when a highly skilled and experienced employee leaves one company to work for another, there is the potential for a transfer of sensitive information between competitors. Two basic principles in such cases appear irreconcilable: the right of the company to its intellectual property�its proprietary data and trade secrets�and the right of individuals to seek gainful employment and to make free use of their abilities. Nevertheless, the courts have often tried to preserve both parties' legal rights by refusing to prohibit the employee from working for the competitor, but at the same time providing an injunction against disclosure of any of the former employer's secrets. It has been argued that because such measures help generate suspicions and similar psychological barriers to full and free utilization of abilities in the employee's new situation, they are hardly effective in upholding the individual's rights to free employment decisions. But it is also doubtful that they are effective in preserving trade secrets.

It is obviously impossible to divest oneself of that part of one's expertise that one has acquired from former employers and coworkers. Nor, in general, can one selectively refrain from its use, given that it has become an integral part of one's total intellectual capacity. Nevertheless, almost any such information that is not public knowledge may legitimately be claimed as corporate property: normal employment agreements provide for corporate ownership of all relevant data, including inventions, generated by the employee in connection with the company's business.

Once an employee takes a position with a competitor, the trade secrets that have been acquired by that employee may manifest themselves clearly and consciously. This is what court injunctions seek to prohibit. But they are far more likely to manifest themselves subconsciously and inconspicuously�for example, in one's daily decisions at the new post, or in the many small contributions one might make to a large team effort�often in the form of an intuitive sense of what to do or to avoid. Theoretically, an injunction also prohibits such inadvertent "leakage." However, the former employer faces the practical problem of securing evidence of such leakage, for little will usually be apparent from the public activities of the new employer. And even if the new employee's activities appear suspicious, there is the further problem of distinguishing trade secrets from what may be legitimately asserted as technological skills developed independently by the employee or already possessed by the new employer. This is a major stumbling block in the attempt to protect trade secrets, since the proprietor has no recourse against others who independently generate the same information. It is therefore unlikely that an injunction against disclosure of trade secrets to future employers actually prevents any transfer of information except for the passage of documents and other concrete embodiments of the secrets.

Often when a highly skilled and experienced employee leaves one company to work for another, there is the potential for a transfer of sensitive information between competitors. Two basic principles in such cases appear irreconcilable: the right of the company to its intellectual property�its proprietary data and trade secrets�and the right of individuals to seek gainful employment and to make free use of their abilities. Nevertheless, the courts have often tried to preserve both parties' legal rights by refusing to prohibit the employee from working for the competitor, but at the same time providing an injunction against disclosure of any of the former employer's secrets. It has been argued that because such measures help generate suspicions and similar psychological barriers to full and free utilization of abilities in the employee's new situation, they are hardly effective in upholding the individual's rights to free employment decisions. But it is also doubtful that they are effective in preserving trade secrets.

It is obviously impossible to divest oneself of that part of one's expertise that one has acquired from former employers and coworkers. Nor, in general, can one selectively refrain from its use, given that it has become an integral part of one's total intellectual capacity. Nevertheless, almost any such information that is not public knowledge may legitimately be claimed as corporate property: normal employment agreements provide for corporate ownership of all relevant data, including inventions, generated by the employee in connection with the company's business.

Once an employee takes a position with a competitor, the trade secrets that have been acquired by that employee may manifest themselves clearly and consciously. This is what court injunctions seek to prohibit. But they are far more likely to manifest themselves subconsciously and inconspicuously�for example, in one's daily decisions at the new post, or in the many small contributions one might make to a large team effort�often in the form of an intuitive sense of what to do or to avoid. Theoretically, an injunction also prohibits such inadvertent "leakage." However, the former employer faces the practical problem of securing evidence of such leakage, for little will usually be apparent from the public activities of the new employer. And even if the new employee's activities appear suspicious, there is the further problem of distinguishing trade secrets from what may be legitimately asserted as technological skills developed independently by the employee or already possessed by the new employer. This is a major stumbling block in the attempt to protect trade secrets, since the proprietor has no recourse against others who independently generate the same information. It is therefore unlikely that an injunction against disclosure of trade secrets to future employers actually prevents any transfer of information except for the passage of documents and other concrete embodiments of the secrets.