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Category Archives: Restrictive Covenants

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Breakfast Briefing: Protecting Your Most Valuable Assets — Trade Secrets, IP and Your Employees

Posted in Practice & Procedure, Privacy, Restrictive Covenants, Trade Secrets

Significant recent developments in Illinois and other states, as well as Congress, have changed the landscape of trade secret and restrictive covenant enforcement and protection. Understanding the impact of these changes, and the tools now available to employers for trade secret and restrictive covenant enforcement and protection, will help a company safeguard its most valuable assets and maintain its competitive …

Australia Non-Compete Primer: Protecting Your Business Interests Post-Employment

Posted in Non-Compete Enforceability, Restrictive Covenants, Trade Secrets

By Justine Turnbull and Cassie Howman-Giles

Given difficult economic times, protection of confidential information (including trade secrets) has become a greater priority for business in Australia. As a result, post-employment restraint litigation is increasingly common as employers attempt to protect their confidential information and restrain former employees from soliciting the business of their valued clients.

This note outlines the position …

Beware: Over-Inclusive Non-Compete Agreement May Be Unenforceable

Posted in Non-Compete Enforceability, Restrictive Covenants

An employment agreement non-competition provision stated that, for 18 months after termination, the employee shall not become employed by or act “directly or indirectly, as an advisor, consultant, or salesperson for, or become financially interested, directly or indirectly, [in an entity] engaged in the business of selling flavor materials.” Earlier this month, the North Carolina Court of Appeals held that …

Top 10 Developments/Headlines in Trade Secret, Computer Fraud, and Non-Compete Law in 2013

Posted in Breach of Fiduciary Duty, Computer Fraud, Computer Fraud and Abuse Act, Cybersecurity, Data Theft, Espionage, International, Legislation, Non-Compete Enforceability, Practice & Procedure, Privacy, Restrictive Covenants, Social Media, Trade Secrets, Unfair Competition

By Robert Milligan and Joshua Salinas

As part of our annual tradition, we are pleased to present our discussion of the top 10 developments/headlines in trade secret, computer fraud, and non-compete law for 2013. Please join us for our complimentary webinar on March 6, 2014, at 10:00 a.m. P.S.T., where we will discuss them in greater detail. As with all

Texas And North Carolina Appellate Courts Repulse Efforts To Enforce Restrictive Covenants

Posted in Non-Compete Enforceability, Restrictive Covenants

In two unrelated cases decided earlier this month, employers failed in their attempts to enjoin former employees from competing. The Texas First District Court of Appeals vacated parts of the lower court’s injunction order, one part because it did not detail with sufficient specificity the conduct that was enjoined, and another part where the order was sufficiently specific but erroneously …

2013 Trade Secrets Webinar Series – Year in Review

Posted in Computer Fraud and Abuse Act, Cybersecurity, International, Legislation, Non-Compete Enforceability, Practice & Procedure, Privacy, Restrictive Covenants, Social Media, Trade Secrets

Throughout 2013, Seyfarth Shaw LLP’s dedicated Trade Secrets, Computer Fraud & Non-Competes Practice Group hosted a series of CLE webinars that addressed significant issues facing clients today in this important and ever changing area of law.

The series consisted of twelve webinars:

1. 2012 National Year in Review: What You Need to Know About the Recent Cases/Developments in Trade Secrets,

Federal Court in Alabama Rules That Non-Compete Signed Prior to Employment is Void

Posted in Non-Compete Enforceability, Restrictive Covenants

By Bob Stevens and Dan Hart

For many in Alabama, the holiday season does not end until after the college football national championship game, which has featured one of the state’s two top college football programs (the Auburn University Tigers and the University of Alabama Crimson Tide) for each of the five past years. While not quite as exciting as …

Massachusetts Judge Rules That Updating LinkedIn Does Not Constitute Solicitation

Posted in Non-Compete Enforceability, Restrictive Covenants, Social Media

Judge Thomas P. Billings, of the Massachusetts Superior Court’s Business Litigation Session, recently declined to issue a preliminary injunction in a non-compete case brought by KNF&T Staffing, Inc. against its former employee, Charlotte Muller, who had left to join a competitor. Among other things, KNF&T alleged that Muller had updated her profile on LinkedIn to reflect her new position, “resulting …

Georgia Federal Court Disregards Forum Selection Clause In Non-Compete And Non-Solicitation Covenant Dispute

Posted in Non-Compete Enforceability, Restrictive Covenants

Notwithstanding a forum-selection provision in the parties’ consulting agreement designating the Northern District of Georgia as the place for litigating non-competition and non-solicitation covenants disputes, a Georgia federal judge transferred covenant violation litigation to the Middle District of Florida. Also, the judge explained why he thought that an arbitration clause was unenforceable, but he said that the Florida court should …

Top Five Trends in Georgia Restrictive Covenants Law Three Years After Constitutional Amendment

Posted in Non-Compete Enforceability, Practice & Procedure, Restrictive Covenants

By Bob Stevens and Dan Hart.

Three years ago last week, Georgia voters overwhelmingly approved a constitutional amendment that substantially altered Georgia’s public policy on restrictive covenants.

Prior to enactment of the amendment, Georgia’s public policy was actively hostile to restrictive covenants in employment agreements — so much so that a provision of the state constitution enshrined the state’s …

Judgment on Willful And Malicious Trade Secret Claim Is Not Dischargeable In Bankruptcy

Posted in Practice & Procedure, Restrictive Covenants, Trade Secrets

Bankruptcy is intended to provide a fresh start and discharge outstanding debt.  But some debt is not dischargeable in bankruptcy.  A Virginia bankruptcy court held last week that a judgment against the debtor for intentional trade secret misappropriation is not dischargeable.

Summary of the case.  La Bella Dona Skin Care, Inc. obtained a $207,000 judgment in a Virginia state court …

How Do I Get a TRO Against a Former Employee If Arbitration in FINRA Is Mandatory?

Posted in Breach of Fiduciary Duty, Practice & Procedure, Restrictive Covenants, Trade Secrets

By Nicholas De Baun

Occasionally, you may need emergency relief against a former employee who has absconded with a client list, your confidential information, and the clients themselves. If you are very unlucky, you may need to get a TRO against his new employer as well. If you, the former employee, and the new employer are all required to arbitrate …

First Circuit Holds that Solicitation is Barred by Non-Compete Agreement Regardless of Who Initiates Contact

Posted in Non-Compete Enforceability, Practice & Procedure, Restrictive Covenants

In Corporate Technologies, Inc. v. Harnett, et al., U.S. Court of Appeals for the First Circuit recently upheld the issuance of a preliminary injunction barring a former employee (Harnett) from doing business with his former employer’s (CTI) customers, even if the customers initiated the contact. 

CTI had employed Harnett as an account executive/salesman for nearly a decade, and required that …

Referring Former Employer’s Customers To New Employer Held Violation Of Injunction, Resulting In Finding Of Criminal Contempt

Posted in Non-Compete Enforceability, Practice & Procedure, Restrictive Covenants

A recent Louisiana non-compete case involving two appellate decisions addresses three significant issues in non-compete litigation: 1) whether a former employee’s referral of customers to a new employer violated the employee’s non-solicitation of customer covenant; 2) the consequences of violating the covenant and court injunction; and 3) the appropriate standard of proof for contempt proceedings.

Summary of decision. Five years …

Upcoming Webinar: How and Why California is Different When it Comes to Trade Secrets and Non-Competes

Posted in Non-Compete Enforceability, Practice & Procedure, Restrictive Covenants, Trade Secrets

On Tuesday, September 24, 2013, at 12:00 p.m. Central, Seyfarth attorneys Mark Hansen, Jim McNairy, and Jessica Mendelson will present the ninth installment in our 2013 Trade Secrets webinar series. They will focus on ways in which California trade secret law is similar to and diverse from other jurisdictions, including a discussion of the California Uniform Trade Secrets Act, trade …

Nosal Update: Court Denies Motion for Acquittal and New Trial in Marathon CFAA and Trade Secret Misappropriation Criminal Case – Part II

Posted in Computer Fraud and Abuse Act, Data Theft, Espionage, Restrictive Covenants, Trade Secrets

In Part I of this post, we reviewed the Court’s ruling on Nosal’s conviction on the CFAA counts. Here in Part II, we turn to the Court’s ruling on the EEA counts, and the exclusion of evidence regarding Nosal’s non-compete provision.

B.    Nosal’s Conviction on the EEA Counts:

Nosal was convicted of two counts under the EEA for downloading, copying …

New Hampshire Court Voids Non-Compete Clause in Independent Contractor Agreement

Posted in Non-Compete Enforceability, Practice & Procedure, Restrictive Covenants, Trade Secrets

A recent New Hampshire decision serves as a reminder that courts may treat non-compete provisions differently in the context of independent contractor agreements compared to employment agreements.

Summary.  The Presiding Justice of the New Hampshire Superior Court held earlier this month that, under the circumstances of the case before him, a non-compete covenant imposed restraints on an independent contractor “greater …

Upcoming Complimentary Webinar: Trade Secret and Non-Compete Considerations in Asia

Posted in International, Practice & Procedure, Restrictive Covenants, Trade Secrets

To accommodate our global audience, Seyfarth’s eighth installment in its 2013 Trade Secrets Webinar Series will be available as an on-demand broadcast this month! On Tuesday, August 27, 2013, Seyfarth attorneys Dominic Hodson, Wan Li, and Robert Milligan will discuss non-compete and trade secret issues in China, including best practices to protect trade secrets and confidential information in the country. …

Employment Agreement Mandating Arbitration With Exclusion To Seek Equitable Relief From Court For Non-Compete Violations Found Unconscionable

Posted in Non-Compete Enforceability, Practice & Procedure, Restrictive Covenants

Summary:  Tatum, an employee of ProBuild, purportedly blew the whistle on her subordinate for allegedly stealing from ProBuild.  Shortly thereafter, she was fired, but alleged similarly situated male employees were not.  She filed a gender discrimination suit in a New Mexico state court. ProBuild removed the case to federal court and then moved to compel arbitration based on the mandatory …

Illinois Appellate Court Rules That Employment For Less Than Two Years Is Inadequate Consideration For Enforcement Of Non-Compete And Non-Solicitation Covenants

Posted in Non-Compete Enforceability, Practice & Procedure, Restrictive Covenants

Overview.  Non-compete and non-solicitation covenants in an employment agreement are not enforceable unless the restrictions are supported by adequate consideration.  Illinois courts have held that there “must be at least two years or more of continued employment to constitute adequate consideration in support of a restrictive covenant.”  No reported decisions from other states are in accord.

The covenants and the …

Connecticut Legislature Passes Non-Compete Legislation

Posted in Legislation, Non-Compete Enforceability, Restrictive Covenants

We previously reported on H.B. 6658, which was introduced earlier this year in the Connecticut House of Representatives.  The Connecticut Legislature passed the legislation on the last day of the legislative session.  The final text of the Act, which was enacted as Public Act No. 13-309 and will go into effect on October 1, 2013 assuming the Act is signed …

Massachusetts Federal Court Grants Preliminary Injunction Absent Showing of Actual Use of a Trade Secret and Potentially Expands the “Inevitable Disclosure” Doctrine

Posted in Restrictive Covenants, Trade Secrets

By Erik Weibust and Ryan Malloy

In an action for misappropriation of trade secrets, unfair competition, and other claims, Judge Hillman of the U.S. District Court of Massachusetts recently granted a former employer’s motion for a preliminary injunction against three defendants who allegedly stole trade secrets from the plaintiff, without a showing that the defendants actually used that information for …

Virginia Federal Court Dismisses Trade Secrets Misappropriation Claim Based on Power Brokering and Tax Expertise

Posted in Restrictive Covenants, Trade Secrets

On May 30, 2013, a federal judge in Virginia dismissed a tax consultant’s trade secrets misappropriation claim against its telecomm customers, ruling that the consultant’s alleged relationships with tax authorities, tax-law ‘accounting system,’ and its ability to negotiate property tax discounts do not constitute statutory trade secrets.  Cablecom Tax Services, Inc. v. Shenandoah Telecomms. Co. et al., No. 5:12-cv-69-MFU-JGW (W.D.

Pleading Former Employer’s Breach Of Employment Contract: Affirmative Defense Or Counterclaim To Suit For Violating Non-Compete And Non-Solicitation Covenants?

Posted in Non-Compete Enforceability, Restrictive Covenants

Affirmative defenses and compulsory counterclaims.  In many instances, the consideration for an ex-employee’s non-compete and non-solicitation covenants was new or continued employment.  If the former employer then breaches the employment contract — for example, by failing to pay all of the compensation and benefits to which the ex-employee was entitled — but nevertheless sues the ex-employee in an effort to …