Schlage Lock Co. v. Whyte, 101 Cal. App. 4th 1443 (2002)

J. Douglas Whyte was employed as a vice-president of Schlage where he was responsible for sales to The Home Depot (which alone accounts for 38 percent of Schlage’s sales) and other “big box” retailers such as HomeBase and Lowe’s. Whyte signed a confidentiality agreement to protect Schlage’s proprietary information and agreed to abide by the company’s code of ethics, which forbids disclosure of confidential information for personal or non-company uses. One of Schlage’s biggest competitors is Kwikset Corporation. Whyte accepted employment as vice-president of sales for national accounts with Kwikset on June 3, 2000 but did not resign from Schlage until June 14, 2000 – after participating on behalf of Schlage in confidential meetings with The Home Depot on June 5, 2000. After Schlage failed to obtain an injunction against Whyte in Colorado state court based on the “inevitable disclosure” of trade secrets doctrine, Whyte filed suit in California, alleging interference with his contract and seeking a declaration of his freedom to work for Kwikset. In response, Schlage filed a cross-complaint for unfair competition, misappropriation of trade secrets, breach of contract, interference with contractual relations and other claims. Schlage obtained a temporary restraining order prohibiting Whyte’s use or disclosure of any trade secrets and compelling him to return any such information in his possession. However, the trial court denied Schlage’s application for a preliminary injunction. The Court of Appeal affirmed, holding that although some of the information that Schlage sought to protect was trade secret, Schlage had failed to establish that Whyte threatened to or actually misappropriated any of Schlage’s trade secrets. Furthermore, the Court declined to adopt the “inevitable disclosure” doctrine that might have supported an injunction against Whyte based on the similarity of his positions at Schlage and Kwikset and the “inevitability” of his relying upon trade secrets to perform his new job duties.