Category Archives: Trade Secrets Protection/Noncompetes

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Uncle Sam Wants You to Protect Trade Secrets (Maybe)

As business in the United States has increasingly focused on technology development, and as companies are looking to gain market advantages by developing processes and methods intended to increase their competitive position, preservation of trade secrets has become increasingly important. The U.S. Government has not failed to understand this; in recent years it has passed legislation … Continue reading this entry

Does Your 2014 “To Do” List Include Updating Your Company’s Trade Secret Protections?

As you consider the tasks you did not quite finish in 2013 and look ahead to 2014, we recommend including on your to-do list a review of your company’s practices and procedures for protecting its valuable, proprietary information. Chances are that your company engaged in significant efforts in the past year to enhance its competitive … Continue reading this entry

Trending Issues in the Prosecution of Trade Secret Theft

A year ago, we reported on a recent important change to the Economic Espionage Act (“EEA”), making the theft, transmission, or receipt of trade secrets a federal crime. The change clarifies that the EEA does not only apply to “products” that a company sells or intends to sell, but also applies to “services” without regard … Continue reading this entry

The Need to Update Noncompetes, and the Legal and Practical Issues Associated With Doing So

If employers want their noncompete agreements to work, and keep working, it’s critically important that they update those agreements on a regular and repeated basis. Over time things change, and those changes can affect key things that impact the enforceability of a non-compete, such as:   – The contours of state law change with each … Continue reading this entry

Illinois Strikes Down Restrictive Covenant

On June 24, 2013, an appellate court in Illinois made it more difficult for Illinois employers, including those in the automotive industry, to enforce non-solicitation and non-competition provisions. Specifically, the court determined that such restrictive covenants won’t be enforceable unless the employee in question works for at least two years after signing the restrictive covenant. … Continue reading this entry

The Penalties for Stealing Trade Secrets Just Became Worse

When the U.S. Congress enacted it in 1996, the Economic Espionage Act (EAA) made the theft, transmission, or receipt of trade secrets a federal crime. Two recent amendments to the law add new teeth to the law and suggest that employers might be wise to revisit their trade secret policies, protection mechanisms, and training programs … Continue reading this entry

Preventing Unfair Competition in the Absence of a Noncompete Agreement

A key executive, top salesperson, or high-level engineer is joining a fierce competitor after being exposed to your company’s most confidential and proprietary information and trade secrets. The business leaders are very upset and demand action, but for one reason or another — company or industry culture, hiring needs, oversight, deception — there is no … Continue reading this entry

You Might Soon Have New Ammunition in Your Efforts to Combat Trade Secret Theft

If three Democratic senators have their way, some companies may soon be able to protect their valuable trade secret information under federal law. On July 17, 2012, senators from Wisconsin, Delaware, and Rhode Island introduced a bill, the Protecting American Trade Secrets and Innovation Act of 2012 that would allow companies that face certain kinds … Continue reading this entry

Illinois Supreme Court Resolves Appellate Court Split Over Viability of Legitimate Business Interest Test

The Illinois Supreme Court has determined that, notwithstanding a 2009 Illinois appellate court decision to the contrary (Sunbelt Rentals, Inc. v. Ehlers), Illinois courts must consider whether a former employer’s noncompete agreement protects a legitimate business interest. In Reliable Fire Equipment Co. v. Arrendondo, the Court reflected on the Fourth District Appellate Court’s Sunbelt decision and determined that … Continue reading this entry

Trends in Trade Secrets: Legislative Protection Sweeps the Nation

Written by Marilee L. Miller and Ariel Fox Johnson Trade secrets are in the national spotlight—they are the focus of a ready-to-be signed state law, a proposed Senate amendment, and part of the newly updated Patent Act. Historically, trade secrets have been given short shrift, giving legal protection only through a patchwork of common laws … Continue reading this entry

Trade Secret Litigation: It's Getting Criminal

One would think that a civil jury award of $1.3 billion (even one that may be subsequently reduced by a judge to $272 million) would provide sufficient warning to companies about the perils of trade secret litigation. But, as the long-running dispute between SAP AG and Oracle Corporation makes clear, defendants should be concerned not … Continue reading this entry

Is There a Doctor in the House...Outside His or Her Restricted Territory?

Should physicians be subject to a different noncompete standards than other professionals? Several states have established laws, through statute and case law, on the topic of physician non-competes, and yet we are still far from a consensus.… Continue reading this entry

Non-Competition v. Unfair Competition in California

We all know that California does not permit enforcement of non-compete agreements. Despite this broad prohibition, the federal court’s recent decision in Richmond Technologies, Inc. v. Aumtech Business Solutions, No. 11-CV-02460-LHK, 2011 WL 2607158 (N.D. Cal. July 1, 2011) confirms another overriding general rule: courts do not like deceptive behavior of former employees – even … Continue reading this entry

Restrictive Covenants in Georgia: A New Beginning (Again)

On May 11, 2011, Georgia Governor Nathan Deal signed into law a statute that provides the capstone to a significant revision in the state’s acceptance of restrictive covenants, which should make it easier to enforce noncompetition, nonsolicitation, confidentiality and other such contractual provisions.… Continue reading this entry

"Right of Inspection" Provisions - Are You Granting Access to Your Trade Secrets?

In an effort to promote responsible business practices, mass-market retailers often require their suppliers throughout the world to adhere to same ethical and compliance standards that the retailers (and/or U.S. law) demand of themselves. The goals of such standards are no doubt laudable – banning the use of child or forced labor, promoting environmentally responsible … Continue reading this entry

The Times They Might Be A-Changin' in Georgia, Massachusetts and Illinois

As many of us in the noncompete world are aware, the law of noncompetes is constantly evolving and changing, sometimes by court decisions like the Sheshunoff decision in Texas, and sometimes by statute, like in Oregon. There are three legislatures currently considering new noncompete bills: Georgia, Illinois and Massachusetts (linked to my good friend and … Continue reading this entry

Your Licensee Knows Your Confidential, Proprietary Technology and Just Acquired Your Main Competitor: Can You Sue for Threatened Trade Secret Misappropriation?

A federal court in Washington State issued a ruling last week in Edifecs, Inc. v. Tibco Software, Inc., further limiting grounds for seeking trade secret relief arising out of the acquisition by a licensee of the licensor’s primary competitor. The United States District Court in Seattle dismissed trade secret claims that were based on the … Continue reading this entry

Emailed Policy Updates for Noncompetes - Not A Best Practice

A technological solutions company that emailed policy updates to its employees, but did not have the employees sign for the update, could not enforce a noncompete provision against one of its employees in Mississippi. The court ruled that the update might have been enforceable if it did not contain a signature line, which the employee … Continue reading this entry

Can Accusing a Former Employee of Stealing Trade Secrets Be Unlawful Retaliation?

Employers can be subject to lawsuits for actions they take after an employee leaves their employment. Luzenac American fired Sanford Lee Hertz in January 1998. Shortly after his termination, Mr. Hertz sued Luzenac for religious discrimination and retaliation in connection with the firing. The case went to trial and a jury returned a verdict in … Continue reading this entry

Hire a Great Candidate, But Avoid a Lawsuit (Part II)

As mentioned in last week’s Employment Law Update, often the best candidate to hire is an individual who has successfully worked in a similar role in your industry. To further decrease the chances of a lawsuit, consider these additional proactive steps to minimize the risks: Make employment expressly contingent on the individual’s respect for the … Continue reading this entry

Hire a Great Candidate, but Avoid a Lawsuit (Part I)

Often the best candidate for an important, open job at your company is an individual who has successfully worked in a similar role in your industry. Additionally, that top candidate often works for a direct competitor that will not be happy to learn that the person has taken a job with your company. If the … Continue reading this entry

Federal Court Upholds Georgia Non-Compete Agreement

In H&R Block Eastern Enterprises, Inc., v. Morris (PDF), 09-11184 (11th Cir. 2010), a Circuit Court of Appeals determined that a non-compete agreement that national tax preparation company H&R Block used for its Georgia employees was enforceable. Here, former employee Vicki Morris worked as a seasonal tax preparer for the 2000 – 2005 tax seasons. Each … Continue reading this entry