Remedying the overseas misappropriation of U.S. companies’ trade secrets, particularly in China, was one of Congress’ core goals when it enacted the Defend Trade Secrets Act (DTSA) in 2016. But despite that goal, some district courts have wrestled over the extent to which the DTSA could apply to misconduct that occurred abroad. Now, in Motorola Sols., Inc. v. Hytera Commc’ns Corp. Ltd., the U.S. Court of Appeals for the Seventh Circuit has resoundingly affirmed the extraterritorial reach of the DTSA, finding that worldwide sales of a product incorporating misappropriated trade secrets may be recoverable as damages. The Seventh Circuit has ruled that, under the DTSA, liability can accrue for acts committed wholly abroad if some act in furtherance of the misappropriation occurred in the U.S. In the Motorola case, the marketing of the product at trade shows in the U.S. was a sufficient act in furtherance of the overseas misappropriation for a damages award including sales from around the world.

Continue Reading Motorola v. Hytera: The Seventh Circuit Upholds Damages for Worldwide Sales under the Defend Trade Secrets Act

On April 23, 2024, the FTC adopted its noncompete rule to ban virtually all employee noncompetes. For background, see my posts on the rule here and here.

The rule was scheduled to go into effect on September 4, 2024. But on August 20, 2024, Judge Dana Brown of the U.S. 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. In this episode, Ben, Russell and I discuss 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.

You can join us on Spotify or Apple Podcasts, or go to FairlyCompeting.com, if you’re just looking for the RSS feed.

And, because this show is for you, please email Ben, Russell or me with any topics you’d like to hear us discuss. While we cannot offer legal advice on the show, we can certainly discuss any issues you may be wondering about.

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Well, that was quick. After rejecting a request for a nationwide injunction in her original opinion granting the plaintiffs’ motion for a preliminary injunction, and then summarily denying a motion to reconsider that ruling, this afternoon U.S. District Court Judge Ada Brown reversed course, granted summary judgment against the FTC, and effectively entered a nationwide ban against the Federal Trade Commission’s Final Rule banning noncompetes. This should mean that employers around the country will not have to send out notices to their former and current employees telling them their noncompetes are no longer valid, as the Final Rule required by September 4, 2024. For a concise review of Judge Brown’s opinion, read on.

Continue Reading Ding, Dong, the Rule is Dead: Judge Brown Effectively Enters a Nationwide Ban Preventing Enforcement of the FTC’s Noncompete Rule

I will be providing a 1-hour webinar for the Ohio State Bar Association entitled “Strategies for Defusing Trade Secret Disputes” on Friday, August 16, 2024 at 1:00 p.m. ET. Here’s a description of the presentation:

What can employers and employees do to avoid litigation and minimize their risk once they are ensnared in a trade secret lawsuit? The number of trade secrets and restrictive covenant cases continue to grow each year. These cases are notoriously contentious and can be extremely expensive. We’ll look at high profile trade secret lawsuits and share tips to minimize your client’s risk of and exposure in litigation.

You can register for the seminar here.  Hope you can join us.

As widely predicted, U.S. District Court Judge Dana Brown granted Ryan, LLC’s motion for a preliminary injunction against the Federal Trade Commission’s (FTC) Final Rule banning noncompetes. In her July 3, 2024 opinion, Judge Brown found that the FTC “lacks substantive rulemaking authority with respect to unfair methods of competition.” She also enjoined the FTC from implementing or enforcing the Final Rule against the parties in that case, which included the plaintiff Ryan, LLC, the U.S. Chamber of Commerce and the Business Roundtable.

But while employers may cheer that decision, their noncompetes are not out of the proverbial woods yet. To date, Judge Brown has declined to issue a nationwide injunction prohibiting the FTC from enforcing its rule against other parties. This means that the FTC may still try to enforce its Final Rule against other employers who are not parties to that lawsuit. The FTC’s Final Rule becomes effective Wednesday, September 4, 2024 and it requires employers to provide a notice to current and former employees that their noncompetes are no longer enforceable. Given that impending deadline, many employers are concerned about the uncertainty left by Judge Brown’s decision. However, as explained below, the Final Rule may provide cover for employers under a “good faith” exception.

Continue Reading Worried about the Current Uncertainty Over the FTC’s Noncompete Ban? How the FTC’s “Good Faith” Exception May Provide Cover to Employers

On April 23, 2024, the Federal Trade Commission issued its final rule banning the use of most employee noncompetes throughout the United States.  It is estimated that this new rule will impact at least 30 million employment contracts, including confidentiality agreements and other forms of employee restrictive covenants.  Several lawsuits have already been filed to stay that rule and challenge its validity.

My partner Chris Tackett and I will be providing a 1-hour webinar for the Ohio State Bar Association entitled “The FTC Just Issued A Rule Banning Noncompetes: What you need to know and should be doing to protect your company” on Thursday, June 6, 2024 at 1:00 p.m. ET. 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.

You can register for the seminar here. 

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 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.The FTC’s Rule Banning Noncompetes (Episode 24)

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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.