Recently, state legislatures in both Idaho and New Hampshire have proposed significant legislation relating to trade secret and non-compete agreements. Each of these bills has the potential to significantly impact employers and their hiring processes.
In the Idaho state senate, a bill was recently introduced to amend the Idaho Trade Secrets Act. The proposed bill clarifies that trade secret misappropriation requires acquisition, disclosure, use or physical retention of the information. As a result, memorization of a trade secret does not qualify as misappropriation. Whether trade secrets can be misappropriated via memory is very much an undecided issue, and there is much disagreement nationally. In Massachusetts, for example, some courts have found that a person, can, in fact, be held liable for misappropriation by memory, while others have found the exact opposite. As a result, this issue is likely to remain a contested topic throughout the United States.
In addition to requiring physical possession for misappropriation, the bill would also allow the prevailing party to recover reasonable attorney’s fees. Finally, the bill makes anyone acting in concert with a misappropriator jointly and severally liable for misappropriation if they turn a blind eye to the misappropriation.
In New Hampshire, the House recently considered a bill requiring employers to disclose any non-compete and non-piracy agreements before hiring an individual. If this bill were to pass, any contract which does not comply with it would be void and unenforceable. On March 7, the House recommended that the bill be passed, but the vote has yet to occur. Such a policy would ensure that employees are fully aware of their future rights before accepting a new position.
We will continue to keep you apprised of relevant future updates in state trade secret and non-compete laws.