OverviewWe are pleased to announce the webinar “The Intersection of Trade Secrets Violations and the Criminal Law” is now available as a webinar recording.

In Seyfarth’s eighth installment in the 2016 Trade Secrets Webinar Series, attorneys Andrew Boutros, Katherine Perrelli and Michael Wexler focused on criminal liability for trade secret misappropriation. Trade secret misappropriation is increasingly garnering the attention of federal law enforcement authorities. This reality creates different dynamics and risks depending on whether the company at issue is being accused of wrongdoing or is the victim of such conduct.

As a conclusion to this well-received webinar, we compiled a summary of three takeaways that were discussed during the webinar:

  • The theft of trade secrets is not only a civil violation — it is also a criminal act subject to serious fines and imprisonment.  In an ever-increasing technological age where a company’s crown jewels can be downloaded onto a thumb drive, victims and corporate violators must be mindful of the growing role that law enforcement plays in this active area.  And, in doing so, working with experienced counsel is critical to interfacing with law enforcement (especially depending on which side of the “v.” you are on), while still maintaining control of the civil litigation.
  • With the advent of the Defend Trade Secrets Act, intellectual capital owners have a powerful new tool to both protect assets with as well potentially defend against.  As such, processes must be in place to carefully screen new employees as well as provide vigilance over exiting employees so that one can guard against theft and be prepared to address purported theft brought to ones doorstep with a new hire.  Finally, it is important to review and update agreements with the latest in suggested and required language to maximize protections which is best accomplished through annual reviews of local and federal statutes with one’s counsel.
  • “Protect your own home” by putting tools in place before a trade secret misappropriation occurs. This includes taking a look at your employment agreements to make sure they are updated to comply with the Defend Trade Secrets Act (DTSA) and that they have been signed. In addition, make sure you have agreements in place with third parties (e.g., clients, vendors, contractors, suppliers) to protect your proprietary information. Finally, secure your network and facilities by distributing materials on a need-to-know basis: Don’t let your entire workforce have access.

shutterstock_338783330Fresh off of signing the Defend Trade Secrets Act, the White House released a report yesterday entitled “Non-Compete Reform: A Policymaker’s Guide to State Policies,” which contains information on state policies related to the enforcement of non-compete agreements. Additionally, the White House issued a “Call to Action” that encourages state legislators to adopt policies to reduce the misuse of non-compete agreements and recommends certain reforms to state law books.

The “Non-Compete Reform: A Policymaker’s Guide to State Policies,” which relied heavily on Seyfarth Shaw’s “50 State Desktop Reference: What Employers Need to Know About Non-Compete and Trade Secrets Law,” suggests that non-compete clauses have recently become more widespread, impacting 18% of all workers and 15% of employees without a college degree. The report analyzes the various states that have enacted statutes governing the enforcement of non-compete agreements and the ways in which those statutes address aspects of non-compete enforceability, including durational limitations; occupation-specific exemptions; wage thresholds; “garden leave;” enforcement doctrines; and prior notice requirements.

Continue Reading The White House’s Call to Action: A Step in the Right Direction or a Bridge Too Far?

WebinarOn Wednesday, November 16, at 12:00 p.m. Central, Seyfarth attorneys Robert B. Milligan, Daniel P. Hart and Scott E. Atkinson will present “Trade Secret Audits: You Can’t Protect What You Don’t Know You Have,” the tenth installment in Seyfarth’s 2016 Trade Secrets Webinar series.

Trade secrets are critical intellectual property for most businesses, whether they realize it or not. The risk of trade secret theft to businesses has increased in recent years, with greater employee mobility between companies, the alarming frequency of targeted data theft attacks, and the explosion of social media and cloud computing. Companies cannot simply react to these real business risks to their data after the data is compromised. By then, it’s too late. Instead, companies should employ a thoughtful and comprehensive approach to the protection of their trade secrets and confidential information.

It is not uncommon for companies to find themselves in situations where important assets are overlooked or taken for granted. Yet, those same assets can be lost or compromised in a moment through what is often benign neglect. Authoritative sources estimate that companies lose hundreds of billions of dollars as a result of trade secret theft. At the same time, companies sometimes find themselves exposed to potential liability when they inadvertently obtain others’ trade secrets. Recent jury verdicts across the nation demonstrate the risk is real. Moreover, once the trade secret is lost, it is lost forever — along with the value the company derives from the information.

To address these recurrent issues, Seyfarth Shaw helps clients protect their important assets and effectively manage risk by conducting Trade Secret Audits. Our experience has shown that companies gain tremendous value by taking a proactive, systematic approach to assessing and protecting their trade secret portfolios through a Trade Secret Audit.

Please join us for our webinar on Trade Secret Audits, which will cover:

  • Identifying trade secrets and secrecy protections
  • Effective secrecy protections, including employment and non-compete agreements.
  • Effective hiring and termination protocols, including effective exit interviews and termination protocols
  • Employing a comprehensive approach and trade secret protection plan
  • Managing and working to protect computer-stored data, including responding to emergency issues related to computer fraud and security breaches

This informative presentation will include a question and answer portion and checklists.

register

By Michael Tamvakologos & Justine Giuliani. Cross Posted from Workplace Law and Strategy.

14-1621-AU-Post-Employment-Map_R9_PAGE-11-640x4521-320x226Effective restraints of trade protect businesses which rely heavily on human capital from damage that sometimes can’t be undone. These restraints – usually sitting in an employment contract – can be a key business asset.

Others might think about it as an insurance policy. The capacity to preserve customer connections, protect confidential information and discourage key executives from setting up their own business or moving to a competitor can be critical to information rich businesses operating in a competitive market. As we pointed out in our previous blog piece on post-employment protections, The difference between winning and losing restraint litigation is often good housekeeping, ensuring the currency of your restraint provisions is an important exercise in risk management.

Our experience in this area is that one key distinction separates cases where restraints are successfully upheld and those where compromise outcomes are required. When seeking to enforce a restraint, an employer will need to demonstrate to the court there is a protectable interest capable of supporting the restraint. In successful cases, typically, the restraint provision has been drafted quite neatly around the key protectable interests. This is the first limb of the test for enforceability. The scope, duration and geographical operation of the restraint are logically tied to the protectable interest (see our map, above). An employer will need to make out each of these elements to meet the second limb of the test.

This success can be attributed to the practice of regularly revisiting the questions of which key executives or employees should be subject to restraints, and how those restraints should operate. Think about their knowledge and relationships (their human capital) as key business assets that have to be protected – or protected against. The yearly promotion, pay rise or management re-shuffle cycles are perfect opportunities to update restraint provisions. Often, this is when operational changes (such as the make-up of roles) become effective, so restraints can be tweaked to align with these changes. A promotion or pay rise can be tied to a new contract or restraint provision.

Instead of adopting a one-size-fits-all approach when an employee first joins the business, employers can increase the likelihood that a restraint will be enforceable by showing it was the subject of specific negotiation during the employment.

Cross Posted from Employment Law Lookout.

Seyfarth Synopsis: On October 20, the DOJ and the FTC jointly issued their Antitrust Guidance for HR Professionals, stating that DOJ intends to pursue employers criminally for alleged wage fixing and no-poaching agreements.  

shutterstock_77814403On October 20, 2016, the DOJ and FTC jointly issued their “Antitrust Guidance for Human Resource Professionals.”  The Guidance explains how antitrust law applies to employee hiring and compensation practices.  The agencies also issued a “quick reference card” that lists a number of “antitrust red flags for employment practices.”

In a nutshell, agreements (whether formal or informal) among employers to limit or fix the compensation paid to employees or to refrain from soliciting or hiring each other’s employees are per se violations of the antitrust laws.  Also, even if competitors don’t explicitly agree to limit or suppress compensation, the mere exchange of compensation information among employers may violate the antitrust laws if it has the effect of suppressing compensation.

The seriousness of this issue is underscored by the agencies’ statements in their press releases that the guidance is aimed at putting companies on notice that DOJ will proceed criminally against wage fixing and no-poaching agreements.  There also has been a significant uptick in recent years in class action litigation and enforcement activity challenging antitrust violations in the employment context.  In one exchange of wage information case in Detroit, a group of hospitals paid a total of $90 million to settle the case, and in one consolidated case involving allegations of agreements among employers not to poach each other’s employees, the defendants settled for a total of $435 million.

The evidence in many of these cases demonstrates that many HR professionals and other managers and executives do not realize that the antitrust laws apply in the employment marketplace just as they do in the commercial marketplace.  It is important that those HR professionals and other managers and executives who are involved in recruiting, hiring or the compensation process have a clear understanding of antitrust requirements as applied to those practices.

For more information on this topic, please contact the authors, your Seyfarth Attorney or a member of the Firm’s Antitrust/Trade Regulation Team or the Workplace Policies and Handbooks Team.

shutterstock_312797282Earlier this fall, the U.S. District Court in Massachusetts transferred an employee’s declaratory judgment action to the Eastern District of Michigan pursuant to a forum-selection clause in a non-compete agreement over the employee’s argument that he had signed the agreement under duress because he was not told he would need to sign it until he had already spent the money and traveled all the way from India to the United States. The court also used the value of the employee’s annual salary, not just the damages the former employee was seeking to recover, to determine whether the minimum threshold for diversity jurisdiction had been satisfied, because his former employer was seeking to enforce his non-compete and keep him out of work. The case is Kurra v. Synergy Computer Solutions, Inc., No. 15-cv-13952-ADB (D. Mass.). Continue Reading Federal Court Rejects Foreign Employee’s Attempt to Avoid Forum Selection Clause on Grounds He Signed Under Duress Upon Arriving in U.S.

itechlaw_logoSeyfarth Shaw LLP is pleased to be a Global Sponsor at ITechLaw’s 2016 European Conference in Madrid on November 9-11.

ITechLaw is a not-for-profit organization established to inform and educate lawyers about the unique legal issues arising from the evolution, production, marketing, acquisition and use of information and communications technology.

The conference will feature a wide-ranging program and invaluable networking opportunities that will focus on cutting-edge legal topics, including e-commerce, e-contracting, disruptive technologies, data protection developments, and the impact of cognitive technologies in the legal spheres. Attendees at the European Conference include leading attorneys in private practice, in-house counsel, business executives focusing on the global economy, government officials and academics.

This year, Seyfarth Shaw Partner Robert B. Milligan serves on ITechLaw’s Board of Directors and is Chair of the Intellectual Property Committee. He will also serve as the moderator of the Disruptive Technologies session, which will cover:

  • a practical approach to the Internet of Things (IoT)
  • consumer protection in the age of IoT
  • the impact of robotics, artificial intelligence & disruptive technologies in law

In addition, Seyfarth Shaw is pleased to co-sponsor the conference. Please stop by our table during the conference to learn about our Intellectual Property, Global Privacy & Security and Trade Secrets, Computer Fraud & Non-Competes Practice Groups.

For more information, click here.

shutterstock_150165167On September 25, California Governor Jerry Brown signed into law Senate Bill 1241. SB 1241, effective January 1, 2017, adds Section 925 to the Labor Code to restrain the ability of employers to require employees to litigate or arbitrate employment disputes (1) outside of California or (2) under the laws of another state. The only exception is where the employee was individually represented by a lawyer in negotiating an employment contract.

For companies with headquarters outside of California and employees who work and reside in California, this assault on the freedom of contract is not welcome news. Particularly affected are companies that include forum-selection clauses in contracts with California employees that include non-competition or customer non-solicit provisions. Once SB 1241 becomes effective, it may foreclose—in all but the most unusual circumstances—the sometimes successful strategy of enforcing a non-competition agreement against a California resident through litigation in another state. Continue Reading New California Law May Preclude Use of Forum-Selection Clauses to Enforce Non-Compete Agreements in Employment Contracts

Seyfarth Offers 2016-2017 Edition of 50 State Desktop Reference:
What Employers Need To Know About Non-Compete and Trade Secrets Law

2016 50 state desktop guideWith the passage of the Defend Trade Secrets Act (DTSA) in May 2016, there is now a federal cause of action for trade secrets misappropriation. In addition, some states have passed legislation this year further narrowing the use of non-compete agreements, and both federal and state regulators have increased their scrutiny of such agreements in certain contexts.

Seyfarth’s Trade Secrets, Computer Fraud and Non-Competes Practice Group is pleased to provide the 2016-2017 Edition of our one-stop 50 State Desktop Reference, which surveys the most-asked questions related to the use of non-competes, restrictive covenants, and trade secrets in all 50 states. For the company executive, in-house counsel, or HR professional, we hope this guide will provide a starting point to answer your questions about protecting your company’s most valuable and confidential assets.

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DTSA Cover ImageOn May 11, 2016, President Barack Obama signed into law the Defend Trade Secrets Act of 2016 (“DTSA”), which Congress passed April 27, 2016. So, what does the passage of the DTSA mean for your company?

In a nutshell, the DTSA “federalizes” trade secret law by creating a federal claim for trade secret misappropriation and creates new remedies, including an ex parte seizure order to recover misappropriated trade secrets. It also serves as a reminder that trade secrets can be highly valuable to your company and that you should ensure that your company has reasonable secrecy measures in place to protect them.

Nevertheless, the DTSA also imposes new obligations on employers. To take full advantage of the remedies provided under the DTSA, companies have an immediate obligation to provide certain disclosures in all non-disclosure agreements with employees, contractors, and consultants that are entered into or updated following the statute’s effective date.

Seyfarth’s DTSA Desktop Reference guide describes the DTSA’s unique legal structure and remedies. We also provide tips and strategies in light of the passage of the DTSA.

How to get your DTSA Desktop Reference guide:

This publication may be requested from your Seyfarth contact in hard copy or eBook format (compatible with PCs, Macs and most major mobile devices). The eBook is fully searchable and offers the ability to bookmark useful sections and make notations for easy future reference.

To request the DTSA Desktop Reference guide in eBook or hard copy, please click the button below:

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