Articles Discussing Restrictive Covenants In The Workplace And Other Topics Relating To Unfair Competition.

Defying claims that bi-partisanship in Congress is dead, the United States Senate has passed the Defend Trade Secrets Act by a vote of 87-0. The measure, approved by the upper chamber on April 4, goes to the House of Representatives, which is considering a very similar bill with sponsorship from both sides of the aisle. The President has expressed support for such a law. (Our article, Defend Trade Secrets Act — Congress Tries Again, discusses the introduction of the DTSA in the Senate.)

A recent unpublished decision of the United States District Court, Eastern District of Pennsylvania, highlights the importance for employers to review carefully their agreements containing restrictive covenants to ensure they do not unintentionally limit the available avenues for relief.

Whether Google Docs, Dropbox, or some other file sharing system, employees, especially millennials and other digital natives, are increasingly likely to set up personal cloud-based document sharing and storage accounts for work purposes, usually with well-meaning intentions, such as convenience and flexibility. Sometimes this is done with explicit company approval, sometimes it is done with tacit awareness by middle management, and often the employer is unaware of this activity.

The Defend Trade Secrets Act (“DTSA”), S. 1890, which would provide federal jurisdiction for the theft of trade secrets, has moved out of the U.S. Senate Judiciary Committee with bi-partisan support. With this procedural hurdle cleared, the DTSA is now in the hands of Senate Majority Leader Mitch McConnell. Should he bring the bill to the floor for a vote, it likely would pass.

The Sixth Circuit recently held that an employer’s “playbook” was protected from disclosure and use, even if the business information was not a “trade secret.” (Orthofix, Inc. v. Hunter, No. 15-3216 (Nov. 17, 2015)) Fortunately for Orthofix, its employment agreements included non-disclosure provisions.

As 2015 draws to a close, reflection on the year’s changes and developments in the law governing non-compete and non-disclosure agreements suggests additional issues to be on the lookout for in the coming year. We review four of them below.

Executive Summary: On September 2, 2015, a federal trial court in California approved a $415 million settlement of an antitrust class action filed against a number of Silicon Valley technology employers, including Apple Inc. and Google, among others. The settlement resolves a class action lawsuit filed by software engineers in May 2011, which claimed that the companies had conspired to repress the engineers’ wages and job opportunities by sharing salary and benefit information, agreeing to pay caps among themselves, and agreeing not to hire employees away from competitors. In re: High-Tech Employee Antitrust Litigation, Case No. 5:11-cv-02509 (N.D. Cal. 2015).

In an opinion issued on July 23, 2015 in Sweet Street Desserts, Inc. v. Better Bakery, LLC, the United States District Court for the Eastern District of Pennsylvania underscored the need to think carefully before filing a lawsuit for misuse of trade secrets.

In an era where bipartisanship is rarely on display, a group of Senators and members of the House of Representatives from both parties recently joined together to propose the Defend Trade Secrets Act of 2015 (S. 1890, H.R. 3326). The bicameral bill, which was introduced and referred to both the Senate and House Judiciary Committees on July 29, 2015, proposes the creation of a federal civil cause of action for the misappropriation of trade secrets by amending the Economic Espionage Act of 1996, which criminalizes the theft of trade secrets.

In the rush to the courthouse after an executive leaves, takes people with her, and opens a competing business, the spurned employer often relies on the promise that executive made—the noncompete agreement—and the undisputed breach of that promise and believes the court will provide a remedy. “Not so fast,” is the takeaway from the 7th Circuit Court of Appeals decision in Instant Technology LLC v. DeFazio, et al., in which it applied Illinois law.

Companies with employees across multiple states face an administrative challenge. How do they ensure that their non-compete programs remain up to date with the various states law requirements for enforcement?

The Center for Responsible Enterprise and Trade (CREATe.org) just released a new White Paper, “Reasonable Steps” To Protect Trade Secrets: Leading Practices in an Evolving Legal Landscape. It’s a must read for companies grappling with how best to protect and manage their trade secrets.

When the celebrity gossip blog Gawker decided to post highlights from a sex tape starring Hulk Hogan, it never thought that decision would lead to suing the FBI. But that’s what happened—and just recently, Gawker prevailed. A federal judge in Florida ordered that the FBI and the Executive Office of United States Attorneys (EOUSA) must respond to Gawker’s FOIA request—even though the agencies argued that the requested evidence related to an ongoing investigation.

Executive Summary: Employers face practical concerns and legal issues when drafting and enforcing noncompete agreements and other restrictive covenants. Though these issues vary widely from state to state, FordHarrison has developed Restrictive Covenant FAQs: How to Protect Your Business, Data, Intellectual Property, and People from Unfair Competition, a practical guide answering frequently asked questions concerning drafting and enforcement of restrictive covenants common to employers nationwide.

Keeping its promise announced last year, the Securities and Exchange Commission on April 1, 2015, released a cease-and-desist order (“Order”) declaring illegal a publicly traded company’s use of a confidentiality agreement that prohibited employees during an internal investigation from discussing—whether inside or outside the company without legal approval—the substance of their interviews involving potentially illegal or unethical conduct by the company or its employees. The SEC also levied a $130,000.00 civil penalty against the company.