Earlier this month, I wrote a post about President Biden’s executive order directing the Federal Trade Commission (FTC) to take action to curtail the abuse of non-competes and other employment agreements that could limit employee mobility. In response to that executive order, nearly sixty lawyers (including yours truly) joined in a letter asking the FTC
A lot has been written about the havoc that COVID-19 has wrought on courts and the changes it has caused in the way we litigate and try cases. Unlike more conventional litigation, which ultimately seeks damages in trials that go before a jury, trade secret litigation frequently revolves around a trade secret owner’s request for an injunction, fast-moving legal proceedings that are generally decided by judges rather than juries. So what has been the impact of COVID-19 on trade secret cases? Perhaps the easiest way to analyze the pandemic’s impact is to break it down into three components: (1) administrative, (2) procedural and (3) substantive.
Continue Reading How COVID-19 Is Changing the Way We Litigate Trade Secret Cases
The economic carnage unleashed by the COVID-19 virus has disrupted virtually every industry in the United States. At last count, more than 38 million workers had lost their jobs and made claims for unemployment benefits. And while states have begun easing restrictions on the ability of many businesses to reopen, it is reasonable to expect there will be further turnover, leading to the departure of many employees to competitors. Feeling more vulnerable because of the downturn, employers will inevitably look to enforce restrictive covenants, including non-competes and non-solicitation agreements, against those former employees. How will courts tend to handle requests to enforce restrictive covenants, especially non-competes, in this difficult economy? One guide may be looking at how they handled similar requests during the last economic downturn in 2008 in the state of Ohio.
Continue Reading Back to the Future: Do Restrictive Covenant Cases from the 2008 Recession Offer Clues to How Courts Will Rule in the Aftermath of COVID 19?
A recent decision by U.S. District Court for the Northern District of Illinois addresses a very timely and novel question: can a website provider enforce the equivalent of a covenant not compete through an online clickwrap agreement? In TopstepTrader, LLC v. OneUp Trader, LLC, Case No. 17 C 4412 (N.D. Illinois June 28, 2017), the U.S. District Court for the Northern District of Illinois rejected one website provider’s effort to do just that, reasoning that the provider was attempting to use its website’s terms and conditions to improperly restrict competition under Illinois non-compete law. The opinion, which can be found here, may prove to be a significant one as courts wrestle with the enforceability of online terms of condition that may limit competition or the use of information publicly available through those websites. (A shout out to Evan Brown’s Internet Cases for first reporting on this case).
Continue Reading Can A Website Provider Use A “Clickwrap” Agreement to Enforce A Non-Compete?
Given the increasing number and quality of fine posts about trade secret, non-compete and cybersecurity issues, I am resurrecting my regular updates post (although it will be monthly rather than weekly). Without further adieu, here are the noteworthy posts of the past month:
Defend Trade Secrets Act:
- With the recent passage of the 1-year anniversary of the DTSA, there have been a number of interesting posts that have detailed compilations about the cases filed with DTSA claims over the past year. Professor David Opderbeck of Seton Hall has an interesting guest post for Patently O and Fish & Richardson’s Claire Collins, Jeffrey Schneidman and Carol Simons have some noteworthy statistics in their Litigation Blog as well.
- Finnegan’s John Williamson, Paula Miller and Jon Self have a guest post nicely summarizing the extra-territorial reach of the DTSA and other statutes for the IP Watchdog.
- Robert Milligan and Josh Salinas offer their take on likely developments for the DTSA in its second year in Seyfarth’s Trading Secrets Blog.
- Maxwell Goss has a post that suggests that reports of the death of the inevitable disclosure doctrine under the DTSA may be greatly exaggerated in his Law and the Creative Economy Blog.
When moving to enforce a non-compete, the last thing a litigator wants to do is to stumble out of the gates and struggle over a profound legal issue that could delay consideration of that normally urgent request. A new and little-talked-about section of the Defend Trade Secrets Act (DTSA), however, has the potential to trip up employers seeking to enforce non-competes if they are not prepared to address this new entanglement.
There has been a significant amount of commentary about the DTSA and its new amendments since President Obama signed the DTSA into law on May 11, 2016. The “whistle-blower” immunity and ex parte seizure order, for example, have generated the most discussion to this point. However, the section of the DTSA that may have the greatest future impact on litigation under the DTSA is 18 U.S.C. §1839(3)(A)(i)(1)(I), which prohibits injunctions that “prevent a person from entering into an employment relationship.”
That new provision, which I will refer to as the “No-Ban-on-Employment” provision, was intended to curb, if not eliminate, the use of the inevitable disclosure doctrine under the DTSA. However, it may have a significant unintended consequence–namely, it may complicate employers’ efforts to enforce non-competes through temporary restraining orders (TRO), the key legal mechanism for non-compete disputes. For the reasons below, employers may want to reconsider invoking the DTSA when they want to enforce their non-competes because of the potential complications of this section’s language and instead opt to file them in state court, at least in the short-term. As the DTSA is likely to overtake the Uniform Trade Secret Act (UTSA) as the dominant statutory regime for trade secret law, this DTSA provision may well set another blow in motion to the viability of the non-compete as an effective tool to protect trade secrets.…
Continue Reading Does the Defend Trade Secrets Act Contain a Potential Roadblock for Non-Competes? Why the DTSA’s Limitations on the Inevitable Disclosure Doctrine May Complicate Enforcing Non-Competes
Legislative efforts to ban non-competes in Massachusetts and Minnesota have garnered lots of media attention over the past year or so, and now, a Michigan legislator has introduced a bill seeking a similar ban for Michigan’s companies and residents. Michigan House Bill 4198, introduced just over two weeks ago by State Representative Peter Lucido…
Social Media Update: Massachusetts Court Holds Mere Posting of New Position on LinkedIn Does Not Violate Restrictive Covenant…
Continue Reading Social Media Update: Massachusetts Court Holds Mere Posting of New Position on LinkedIn Does Not Violate Restrictive Covenant
Mitigating Your Trade Secret Risk When Hiring an Employee From a Competitor: The Trade Secret Litigator’s Five Golden Rules for On-Boarding A New Employee (Part II)…
Continue Reading Mitigating Your Trade Secret Risk When Hiring an Employee From a Competitor: The Trade Secret Litigator’s Five Golden Rules for On-Boarding A New Employee (Part II)
Sunday Wrap-Up (Aug. 25, 2013): Noteworthy Trade Secret, Non-Compete and Cybersecurity News from the Web…
Continue Reading Sunday Wrap-Up (Aug. 25, 2013): Noteworthy Trade Secret, Non-Compete and Cybersecurity News from the Web