Corporate espionage is a real threat that could be perpetrated by any employee or other insider at any time. How do you spot the red flags in real time before the damage is done? It's not a perfect science, but here are some tips that can help prevent unethical employees from taking the fruits of your intellectual capital and unfairly diverting business away.
Notwithstanding California's strong public policy in favor of lawful competition, California employees' duty of loyalty to their current employer reigns supreme. A violation of that duty can lead to costly jury verdicts in favor of the employees' former employer. This was illustrated in the recent case, AeroVironment vs. Gabriel Torres, Justin McAllister and Jeff McBride.
The simplest, most valuable, yet commonly overlooked piece of advice any trade secret owner can receive is this: Protect yours trade secrets! It seems crazy that this simple advice warrants repeating, but apparently, it does, particularly in Silicon Valley where billions of dollars have been spent researching and developing electric and autonomous vehicle technology.
The rules of professional conduct in the majority of jurisdictions make restrictive covenants between attorneys unenforceable. But what about in-house attorneys? At least one court in Colorado recently enforced a noncompete, enjoining an in-house attorney from accepting a new position with a competitor.
Late last year, Pennsylvania legislators introduced House Bill 1938, the “Freedom to Work Act” (the “Act”), an outright ban on “covenant[s] not to compete” in Pennsylvania. Under the Act, “a covenant not to compete is illegal, unenforceable and void as matter of law.”
Last week, the Attorney General of Illinois filed suit against Check Into Cash, LLC, alleging that the payday lender required its low-wage customer service employees to agree to illegal non-compete agreements in violation of Illinois law. The lawsuit is another example of the Attorney General’s fight against illegal non-competes and marks the first time the Attorney General has brought a claim under the Illinois Freedom to Work Act, 820 ILCS 90/1.
Did an employee violate the terms of her non-solicitation agreement when she used LinkedIn to advertise her new employer’s services? A Minnesota decision helps define the parameters of prohibited solicitation in the social media context.
Courts are increasingly asked to examine the scope and enforceability of non-solicitation agreements in the age of social networking. With employees using LinkedIn and other websites to stay in touch with current and former colleagues, a recent Illinois appellate court decision helps shed some light on the types of communications that may or may not constitute a breach of a valid non-solicitation agreement.
The Eighth Circuit recently decided a case under Iowa law determining that a noncompete with an independent contractor was unenforceable. The noncompete was not per se unenforceable but ultimately determined unenforceable following a fact-intensive analysis finding it to be unreasonable.
Employers who operate in a multi-state environment that seek to enforce restrictive covenants across state lines face numerous challenges in attempting to comply with the law of various jurisdictions and protecting their interests. Choice-of-law and choice-of-forum issues often times prove to be outcome determinative.