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Frontal Lobotomies and Employee Mobility in California, California Trade Secrets & Inevitable Disclosure

Resources & Self-Education   |   Tuesday, May 29, 2018

Call it hyperbole. But don’t underestimate the size of the issue behind it.

When Judge William Alsup of the Ninth Circuit presided over Waymo v. Uber, he used the term “frontal lobotomy” to express his concerns about the future of employee mobility. Sure, it was a bit of hyperbole, but the legal issue that he referred to is hardly straightforward, and its consequences are huge.

Though the Waymo / Uber trade secret case was settled out of court, unresolved legal issues still remain, principally the question of how to balance the protection of trade secrets against the skills and experience an employee gains on the job. These two areas of the law were in high relief during the Waymo / Uber case.

The jury was left with a complicated question. Did the technology developed at Uber come from stolen Waymo trade secrets? Or, did Uber engineers (some who were former Waymo employees) simply use the general knowledge gained from their jobs at Waymo, which they have a right to keep? “Is an engineer really supposed to get a frontal lobotomy before they go to the next job?,” asked Judge Alsup.

There is no clear and consistent line of case law that helps to delineate these two areas of the law, especially when they collide in a case like the Waymo / Uber suit.

California law has repeatedly protected employee mobility. And when Judge Alsup said that hiring away employees to work at competitors is “the American way,” he summarized a key distinction in the Silicon Valley work culture that is vastly different from many other states. A significant number of other state jurisdictions have adopted the inevitable disclosure doctrine, which permits a court to prohibit an employee from being employed by a competitor, due merely to the fact that trade secrets of the former employer will inevitably be disclosed in the future, without proof of any actual trade secret disclosures. However, the inevitable disclosure doctrine has held little weight in California courts, opening the door for employees to jump from one competitor to another, so long as they do not actually disclose their former employers’ trade secrets.

So, when it came to the Waymo / Uber case, lawyers for both sides argued an age old problem in Silicon Valley: employees from one company end up working at a competitor. Waymo also alleged its former employee Anthony Levandowski stole 14,000 proprietary documents from Waymo prior to joining Uber, which in fact were never fully proven to be trade secrets.

I tend to agree with the cynical statement that it’s the American Way to steal your competitors’ best employees. Some sensitive information can be protected under patent law, and trade secret law does indeed protect a significant amount of confidential information held by employers. However, general knowledge about the industry, skills honed on the job, and trial-and-error application of a person’s skills, are not protected under trade secret law, permitting employees to change employers and still call upon the years of experience gathered during prior employment.

Importantly, many facts that are burned into memory (and not in memory due to elaborate memorization techniques), are not protectable. This permits employees to apply their years of experience to some work facts stored in memory in performing work for future employers.

In the end, employers need to be resigned to the fact that California promotes employee mobility, and proving a trade secret case based only on information stored in a person’s memory is difficult.

Please contact me directly if you have questions about trade secrets, inevitable disclosure, and issues pertaining to employee mobility. These issues present many nuanced areas of the law. I look forward to hearing from you.

This entry was posted on Tuesday, May 29, 2018 and is filed under Resources & Self-Education, Internet Law News.

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