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Non-Compete and Trade Secrets Blog

Posts in Restrictive Covenants.

State legislatures across the country have been active in recent years proposing and enacting legislation that impacts employers’ use of restrictive covenants. In a series of three posts, we will examine how this movement started, where it has gone, and where it is going.

Nondisclosure agreements are not enough to fully protect the value of a company’s proprietary information. The $30 million dollar jury verdict in BladeRoom v. Facebook, et al. is not inconsequential, to be sure, but it represents only ten percent of the recovery that BladeRoom was seeking against Facebook and Emerson Electric.

The recently proposed federal Employee Mobility Act of 2018 would effectively create a nationwide ban on non-compete agreements. Introduced in both the Senate and the House of Representatives, Senate Bill 2782/House Bill 5631 is the next step in a multi-year effort by a group of Senators and Representatives, and previously White House personnel under President Obama, who argue that employee non-competes (a) unduly inhibit employees’ economic opportunities, and (b) harm the economy by limiting employee mobility. This proposal comes as multiple state legislatures likewise have been considering and, in some cases, enacting legislation relating to employee restrictive covenants. 

Employers must fight the urge to utilize overbroad non-compete clauses with their high level employees. The Northern District of Illinois reminds employers of the consequences that can result from the use of such overbroad covenants.

Many defendants attempt to defend against claims of trade secret misappropriation by asserting that they never actually used or disclosed the information at issue. Based on a recent ruling by a federal district court in New York, however, that defense may sometimes be insufficient to defeat the claim. This ruling is the latest in a series of court decisions recognizing that merely acquiring a trade secret through improper means is enough to violate the Defend Trade Secrets Act.

Non-compete agreements are an essential instrument in many employers’ toolkits. But what happens to these agreements when an employee is laid off or let go due to economic downturn? In a small subset of states, such conditions could render non-compete agreements unenforceable.

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.

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.

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.

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