Trade Secrets & Employee Mobility

We recently reported on the Federal Trade Commission’s (FTC) 3-2 vote to issue its final noncompete rule that, unless it is enjoined, would ban all new noncompetes and a majority of existing noncompetes (the Noncompete Rule).  As expected, within hours of the FTC’s vote on the final noncompete rule, Ryan, LLC, a leading global tax services and software provider, filed a lawsuit challenging the Noncompete Rule, and shortly thereafter the Chamber of Commerce of the United States of America (the U.S. Chamber) followed suit, filing its own lawsuit seeking to vacate and set aside the ...

As expected, the Federal Trade Commission (FTC) voted 3-2 yesterday to issue its final noncompete rule, with only a few changes from the proposed rule that are discussed below. Unless it is enjoined, which we expect, the rule will become effective 120 days after publication of the final version in the Federal Register.

If the final rule survives the legal challenges, which are likely to make it all the way to the United States Supreme Court, all new non-competes would be banned. Except for existing non-competes for senior executives (as defined below), all existing noncompetes with ...

On March 29, 2024, Maine Governor Janet T. Mills vetoed a bill that would have banned all employee noncompete agreements in the State of Maine.  Both chambers of the Maine legislature passed L.D. 1496, An Act to Prohibit Noncompete Clauses, that if enacted, would have banned employers from entering into noncompete clauses with employees and would have permitted noncompete agreements in Maine in only three limited circumstances: (i) the sale of a business; (ii) a shareholder in a limited liability company who sells or disposes all of the shareholders shares; or (iii) member of a ...

Earlier this year, the United States Department of Justice (“DOJ”) announced that it was launching the Disruptive Technology Strike Force (“Strike Force”) in an effort “to target illicit actors, strengthen supply chains and protect critical technological assets from being acquired or used by nation-state adversaries.”  The DOJ’s initial announcement can be found here.  The Strike Force is co-led by the DOJ and Commerce Department with the goal of countering efforts by hostile nation-states seeking to illegally acquire sensitive United States technology.  On May 16, 2023, the DOJ announced criminal charges in five cases from five different U.S. Attorney’s Offices in connection with the Strike Force’s efforts.  Two of the cases involve allegations of trade secret theft from U.S. technology companies with the intent to market the technology in foreign countries. 

On May 10, 2018, the New Jersey Assembly Labor Committee advanced Assembly Bill A1769, a bill that seeks to provide stricter requirements for the enforcement of restrictive covenants.

If enacted, the legislation would permit employers to enter into non-competes with employees as a condition of employment or within a severance agreement, but such non-competes would only be enforceable if they meet all of the requirements set forth in the legislation. Thus, if enacted, employers will have to comply with the following requirements in order for a New Jersey non-competition agreement ...

Consider the following scenario: your organization holds an annual meeting with all Research & Development employees for the purpose of having an open discussion between thought leaders and R&D regarding product-development capabilities. This year’s meeting is scheduled outside the United States and next year’s will be within the U.S. with all non-U.S. R&D employees traveling into the U.S. to attend. For each meeting, your employees may be subject to a search of their electronic devices, including any laptop that may contain your company’s trade secrets. Pursuant to a new ...

Consider the following scenario that was the premise of the book Charlie and the Chocolate Factory (1964), and later adapted into the classic film Willy Wonka & the Chocolate Factory (1971): your company (Willy Wonka Chocolates) is in the candy business and develops an idea for an everlasting gobstopper (a sucking candy that never gets smaller).  Anticipating substantial profits from the product, the company designates the everlasting gobstopper formula as a trade secret.  As in the book and film, a rival chocolate company (Slugworth Chocolates) seeks to steal the trade secret ...