Fairly Competing

On April 23, 2024, the FTC adopted a rule to ban virtually all employee noncompetes. The rule was scheduled to go into effect on September 4, 2024. But 15 days before – on August 20, 2024 – the United States District Court for the Northern District of Texas vacated the rule.

Companies and employees have a reprieve, but they should not let their guard down.

Join John, Ben, and Russell for a discussion of what happened, what to expect going forward, and what companies should do now to protect their trade secrets, confidential information, customer goodwill, and the integrity of their workforce.

Listen to us on Spotify or Apple Podcasts. Or, if you’re just looking for the feed, it’s here: Fairly Competing RSS feed.

On April 23, 2024, the FTC adopted a rule that bans virtually all employee noncompetes. The rule is scheduled to go into effect on September 4, 2024. If that happens, how will companies protect their trade secrets, confidential information, customer goodwill, and the integrity of their workforce?

Join John, Ben, and Russell for a discussion of what the FTC’s noncompete rule will do, when it will go into effect, legal challenges to the rule, and what companies can do to limit the impact of the new rule.

Listen to us on Spotify or Apple Podcasts. Or, if you’re just looking for the feed, it’s here: Fairly Competing RSS feed.

On January 1, 2024, California will officially begin exporting its ban on noncompetes, nonsolicits, broad confidentiality agreements, and likely no-recruits to the rest of the country — whether the other states like it or not.

Here’s what happened: This fall (in September and October), California passed two laws that together will: (1) expand the scope of California’s already-sweeping ban on employee noncompetes and other restrictive covenants; (2) export California’s law nationwide to void contracts between non-California residents signed outside of California; (3) require companies to provide notice to their employees and certain former employees that their noncompetes are void; and (4) impose penalties for violations.

According to the legislation, “California’s public policy against restraint of trade law trumps other state laws . . . .” 

In this episode, John, Ben, and Russell discuss California’s new laws, what the laws purport to do, and what companies can do to limit the impact of the new laws.

Listen to us on Spotify or Apple Podcasts. Or, if you’re just looking for the feed, it’s here: Fairly Competing RSS feed.

And if you just can’t get enough, when you are finished listening to the podcast, here is a link to a brainstorming session on the new laws with over 40 of the leading trade secret / restrictive covenant / employee mobility lawyers from around the country: Responding to California’s New, Expanded, Anti Restrictive Covenant Laws.

In 2016, Congress passed the Defend Trade Secrets Act (the “DTSA”). The vote was unanimous in the Senate and 410:2 in the House. President Obama signed it on May 11, 2016.

Codified at 18 U.S.C. § 1836, et seq., the DTSA created a federal private right of action for trade secret owners to sue for the misappropriation of their secrets.

But, as John Marsh has pointed out, “the DTSA is far from perfect. Like the Uniform Trade Secrets Act on which it was based, the DTSA can be improved as trade secret law evolves.”

There are certainly plenty of people who engage in culpable, willful misappropriation of trade secrets. The DTSA was designed to address that.

But others get caught up in the DTSA’s enforcement mechanism far longer than they should be.

Many defendants (typically former employees) are either wrongfully accused of taking information that they did not take, or are accused of taking information that they did take, but that they had not intended to take or even realized they took. For example, employees often forget that they have company information on thumb drives they used for work, or in their email, or backed up on personal devices as part of routine computer or cellphone backups.

There are also plenty of employees who made a mistake of judgment and took information they should not have taken.

Many of the employees who have their former employer’s information will — at least once counsel is involved — promptly realize the error of they ways and cooperate with the trade secret owner to ensure that all information is returned and that all copies are permanently removed from their possession. Nevertheless, in many of those cases, the former employer continues to press the misappropriation claim, long after any potential material harm has been addressed.

Having represented many such defendants, John has identified two proposed amendments to the DTSA:

Join John, Ben, and Russell as they discuss John’s suggested amendments – and their plans to try to make those a reality.

So, come join us on Spotify or Apple Podcasts. Or, if you’re just looking for the feed, it’s here: Fairly Competing RSS feed.

The FTC’s proposed ban on noncompete agreements (and other “de facto” noncompetes) relies in large part of the research of University of Maryland’s Robert H. Smith School of Business Professor Evan Starr — one of the leading scholars in the field.

Join John, Ben, and Russell as they talk with Professor Starr about the strengths and weakness of his research, key insights he has into other research in the field, and an important working paper of HEC Paris Professor Jessica Jeffers, The Impact of Restricting Labor Mobility on Corporate Investment and Entrepreneurship.

So, come join us on Spotify or Apple Podcasts. Or, if you’re just looking for the feed, it’s here: Fairly Competing RSS feed.

The FTC just proposed a ban on noncompetes with virtually no exceptions. And, they have placed nondisclosure agreements and other restrictive covenants squarely in the crosshairs.

Join John, Ben, and Russell as they take a look at the FTC’s proposed ban on noncompetes, how we got here, what the proposed rule would do and when, the potential practical and legal problems with it, the opportunity to provide comments to the FTC about it, what employers should do in the interim to protect their trade secrets and customer goodwill, and predictions on where this all goes.

So, come join us on Spotify or Apple Podcasts. Or, if you’re just looking for the feed, it’s here: Fairly Competing RSS feed.

Happy Holidays!

Join John, Ben, and Russell as they take a look back on some of the more significant developments in trade secret and restrictive covenant law from the past year and what to be expecting in the coming year. They discuss recent criminal prosecutions for use of no-poach agreements, legislative changes to state noncompete and nonsolicitation laws, federal regulatory and legislative efforts to limit or ban noncompetes, eye-popping trade secret damage awards, and developing trends in the way trade secret cases are being handled and tried.

So, come join us on Spotify or Apple Podcasts. Or, if you’re just looking for the feed, it’s here: Fairly Competing RSS feed.

For the American Intellectual Property Law Association’s 125th Anniversary, John and Russell (both former chairs of the AIPLA Trade Secret Law Committee) and Ben (the current chair) went on the road to talk to the current AIPLA President, Brian Batzli, immediate past-President, Patrick Coyne, and Executive Director, Vince Garlock, at this year’s AIPLA Annual Meeting in Washington, D.C. We caught up about their experience with the AIPLA and the AIPLA’s Trade Secret Law Committee, and the importance of trade secret law more generally and its place with other forms of intellectual property. Enjoy the conversation!

So, come join us on Spotify or Apple Podcasts. Or, if you’re just looking for the feed, it’s here: Fairly Competing RSS feed.

When an employee leaves for a competitor, it’s not uncommon for the former employer to investigate whether the employee took information on the way out the door. But, a recent case from the Georgia Court of Appeals, Patel v. Duke Hospitality LLC, highlights some limits on what the former employer can do.

As Ben discusses in a recent article about the case, “Employers often assume they are empowered to exercise broad discretion when investigating employee computer misconduct, especially when employees are suspected of using company emails or computers to engage in the misconduct. However, employers should be aware of potential liability that could arise from their digital investigations and monitoring of employee computer and email use.”

In this episode, John, Ben, and Russell discuss how the teachings of the Patel v. Duke Hospitality LLC case affect what employers can and cannot do when they suspect misappropriation by a departing employee.

So, come join us on Spotify or Apple Podcasts. Or, if you’re just looking for the feed, it’s here: Fairly Competing RSS feed.

Temporary retraining orders (called, “TROs”) are a staple of trade secret and restrictive covenant litigation. In this episode, John, Ben, and Russell discuss what you need to know when you are either seeking or defending against a TRO in a trade secret or noncompete case.  

So, come join us on Spotify or Apple Podcasts. Or, if you’re just looking for the feed, it’s here: Fairly Competing RSS feed.