As readers of this blog know, on April 23, 2024, the Federal Trade Commission voted to adopt a rule banning 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 JohnBen, 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.The FTC’s Rule Banning Noncompetes (Episode 24)

As readers of this blog already know, the Federal Trade Commission issued a final rule banning the use of most employee noncompetes throughout the United States.  It’s estimated that this new rule will impact at least 30 million employment contracts, including even confidentiality agreements and other forms of employee restrictive covenants.  Several lawsuits, including one by the U.S. Chamber of Commerce, have already been filed challenging that rule.

My partner Chris Tackett and I will be providing a 30-minute webinar on Monday, April 29, 2024 at noon ET to provide guidance to employers and business owners on what they can expect in the near future.  In-house counsel, human resources professionals and senior executives will learn the specifics of the rule, who is affected by the rule, and steps they can take now to protect their trade secrets and customer relationships.

Join the seminar here

Yesterday afternoon, as expected, the Federal Trade Commission (FTC) announced its Final Rule banning noncompetes throughout the United States during an open hearing available to the public. The FTC’s Final Rule is more measured than the proposed rule announced on January 5, 2023 in several key respects–most notably, (1) nonsolicitation agreements are not prohibited, with some caveats explained below and (2) nondisclosure agreements (NDAs) seem to be on somewhat better footing, as the FTC has abandoned its proposed de facto noncompete test, also with some caveats below. Not unexpectedly, the vote broke down along party lines, 3-2, with the Democratic commissioners voting in favor and the Republican commissioners voting against it. The Final Rule is not yet effective, and the U.S. Chamber of Commerce has already filed a lawsuit challenging it today. Many commentators (including yours truly) believe the Final Rule will not survive that litigation. And while it is an inherently political rule, it does provide some lifelines for employers eager to protect their trade secrets and customer relationships. Here are my preliminary thoughts on what employers and employees need to know.

Continue Reading The FTC’s Final Rule Banning Noncompetes: It could have been a lot worse

On Thursday, March 21, 2024, I will be speaking at the Defense Research Institute’s 2024 Business and Intellectual Property Litigation Super Conference on a panel, “Tips from the Trenches: Litigating and Trying Trade Secret Cases as a Plaintiff and Defendant, What Every Business Needs to Know,” with Ben Fink of Berman, Fink, Van Horn P.C. and Mark Klapow of Crowell & Moring LLP. Here is a description of the program:

“Trade secrets are increasingly becoming the preferred protection for intellectual property. As a result, trade secret disputes and verdicts have dominated the news, as juries have awarded $2B to Appian Corp., $65M against Goodyear Tire & Rubber, and $105 million against Ford Motor Company, only to see some of those verdicts reduced or eliminated by the courts. These big verdicts and the challenges in upholding them, signal a potentially significant shift away from how trade secret cases have been traditionally litigated, as employers have previously relied on injunctions to prevent employees and others from taking their trade secrets. This presentation will address the importance of trade secret litigation in protecting your IP, the potential paradigm shifts in trade secret litigation, and guide trade secret owners and their lawyers in adapting to these changes.”

You can register for this CLE here.  The conference starts at 2:30 p.m. today. Ben, Mark and I speak tomorrow at 11:30 a.m. and we hope you can join us.

In a post last year, I proposed a solution for a recurring problem in trade secret litigation–namely, the situation where a former employee takes information but quickly regrets their conduct and looks for a way to resolve the dispute. As readers will recall, I proposed a “safe harbor” that would allow that former employee to provide disclosures and an injunction to address their former employer’s legitimate concerns. After my post, several colleagues, including my friends and fellow trade secret travelers Russell Beck and Mark Klapow, noted a potential dilemma for a trade secret owner. They suggested that I should consider a similar protection for plaintiffs whose suspicions about trade secret misappropriation never fully materialize or who face litigation costs that outstrip that litigation’s utility. To afford protection to those trade secret owners, this post proposes an “off ramp” procedure early in a trade secret dispute that would hopefully alleviate those situations.

Continue Reading Another Idea for Improving the Defend Trade Secrets Act: Providing an “Off Ramp” to the Plaintiff Who Wants to Avoid a Costly Litigation

On Thursday, March 14, 2024 and Friday, March 15, 2024, I will be speaking at the AIPLA 2024 Trade Secret Summit on three panels. The Trade Secret Summit has become one of the premiere trade secret law events, with thought leaders and trade secret experts meeting to debate and discuss key developments in trade secret law. Applied Materials has graciously agreed to host this year’s Summit at its Santa Clara, California headquarters.

On Thursday, March 14 at 10:15 a.m., I am going to be moderating a panel with Neal Weinrich of Berman Fink Van Horn, Barry Brown of Applied Materials and Leigh Ann Buziak of Blank Rome LLP entitled “Protecting Trade Secrets in a World with No Noncompetes – Non-Disclosure, Return of Information and IP Assignment Provisions.” Then at 11:15 a.m., I will be speaking with Jim Pooley and Russell Beck of Beck Reed Riden on a roundtable discussion of “Potential Changes and Improvements to the DTSA.” Finally, on Friday, March 15 at 9:30 a.m., I will be joining David Almeling of O’Melveny and Mindy Morton of Procopio for a panel on “Equitable Remedies in Trade Secret Litigation: Injunctions, Disgorgement and Royalties.”

You can register for this CLE here.  The conference starts at 8:30 a.m. and I hope you can join us.

On Wednesday, March 6, 2024, I will be speaking at the State Bar of Georgia ICLE – Restrictive Covenants and Trade Secrets CLE on a panel entitled “The Assault on Noncompetes: Update on FTC, NLRB and State Efforts to Ban or Curtail the Use of Noncompetes.” I am going to be presenting with Rachel P. Steely of Foley & Lardner LLP’s Houston office, Ben Fink of Berman Fink & Van Horn PC in Atlanta and Eric Wostroff of Meland Budwick in Miami.

You can join remotely and register for this CLE here.  The conference starts at 8:30 a.m. and our panel will start at 2:50 p.m. ET on Wednesday.  Hope you can join me.

On Tuesday, January 30, 2024, I will be giving a one-hour Webinar/CLE for the Ohio State Bar Association (OSBA) entitled “Trade Secret and Restrictive Covenant Law Year in Review.”

As readers of this blog know, the number of trade secret and restrictive cases continues to grow each year. As a result, trade secret disputes and verdicts have dominated the news, as juries have awarded $2 billion to Appian Corp., $65 million against Goodyear Tire & Rubber, and $105 million against Ford Motor Company, only to see some of those verdicts reduced or eliminated by the courts. At the same time, federal and state legislators, as well as the Federal Trade Commission, are aggressively moving to curtail the use of restrictive covenants and non-disclosure agreements. In this seminar, I’ll give an update on these and other important legal and legislative developments, as well as practical tips for employers and businesses to minimize their risk and protect themselves in the event of litigation.

You can register for this CLE here.  It starts at 1 p.m. ET on Tuesday.  Hope you can join me.

On January 1, 2024, California officially began exporting its ban on noncompetes, nonsolicits, broad confidentiality agreements, and likely no-recruits to the rest of the country.

As Russell Beck has written, in September and October, California passed two laws that together will: (1) expand the scope of California’s ban on employee noncompetes and other restrictive covenants; (2) export California’s law 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, JohnBen, 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’re interested in hearing more on this legislation, 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.

Preparing for California’s newly expanded noncompete ban and anti-restrictive covenant laws
(Episode 23)

A recent scandal unites two of my favorite passions: college football and trade secret litigation. As most sports fans are aware, the University of Michigan’s polarizing head coach Jim Harbaugh was suspended last Friday by the Big Ten Conference as part of a disciplinary action against Michigan for improperly recording and stealing signs in violation of the conference’s Sportsmanship Policy. The scandal unfolded quickly as the NCAA announced it was investigating Michigan’s football team on October 20, and then metastasized as The Washington Post and The Wall Street Journal began to cover it. Michigan has a splendid football team this year and one of the strongest teams in college football. But from my vantage point, Michigan’s administration has put that potential championship season at risk by mishandling its response to the scandal and provoking a confrontation with the Big Ten’s Commissioner, Tony Petitti. As explained below, Michigan’s mistakes provide a case study for parties accused of stealing another’s trade secrets on how to avoid the hard lessons that Michigan is absorbing now.

Continue Reading Five Lessons Trade Secret Defendants Can Learn from the Michigan Sign-Stealing Scandal