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Melody Ayres-Griffiths, Unsplash

In a case that should stand as a strong reminder to apportion your damages whenever possible, the Fifth Circuit Court of Appeals affirmed a significant post‑trial ruling in Trinseo Europe GmbH v. Harper, et al., upholding the district court’s decision to vacate a $75 million jury verdict for trade secret misappropriation. 2026 WL 160524 (5th Cir. Jan. 21, 2026). Although the jury found that the defendants misappropriated four of the ten trade secrets Trinseo asserted, the appellate court agreed that Trinseo’s damages model—predicated on misappropriation of all ten alleged trade secrets—left the jury without any legally sufficient basis to apportion damages to the specific secrets actually found misappropriated. Without that foundation, the multimillion‑dollar award could not stand.

The dispute arose from Trinseo’s allegations that several defendants, including KBR, misappropriated various trade secrets related to polycarbonate production in violation of the Defend Trade Secrets Act. Before trial, KBR moved to exclude Trinseo’s damages expert, arguing that the expert failed to apportion damages between misappropriated and non‑misappropriated features of the technology. Although the district court allowed the testimony, it expressly warned that Trinseo’s “all‑or‑nothing” approach would be “totally undermined” unless Trinseo obtained a verdict on all ten trade secrets. Id. at *3, *14. Trinseo nonetheless presented a damages model that bundled all ten trade secrets together without providing the jury any methodology to assign value to each one individually.

After the jury awarded more than $75 million in reasonable royalty and unjust enrichment damages, the district court granted judgment as a matter of law, concluding that Trinseo’s failure to apportion damages—paired with the jury’s decision not to find all ten secrets misappropriated—was “fatal” to the verdict. Id. at *4. The Fifth Circuit affirmed, emphasizing that trade secret damages—like patent damages—must “reflect the value attributable to the infringing features of the product, and no more.” Id. at *6. Where a plaintiff alleges multiple secrets, the jury must be provided a reasonable, non‑speculative basis to apportion value to the specific secrets actually proven at trial.

Beyond damages, the Fifth Circuit affirmed the district court’s permanent injunction barring defendants from using Trinseo’s trade secrets and agreed that Trinseo’s alternative “confidential information” claims are preempted by the Texas Uniform Trade Secrets Act. The court also affirmed the denial of Trinseo’s request for a new trial on damages. But the court’s focal point was clear: damages must be grounded in evidence that ties the monetary award to the particular secrets misappropriated—not to the universe of information a plaintiff hopes to prove. If the plaintiff instead offers a single, bundled number that assumes every alleged secret was misappropriated, the jury has no reasonable, non‑speculative way to award damages limited to the secrets actually proven—and any such award is vulnerable to being vacated.

The decision reinforces a critical takeaway for plaintiffs: parties must ensure whenever possible that their experts valuate each alleged trade secret or provide a methodology for juries to calculate the value of a trade secret or group of trade secrets to withstand post‑trial scrutiny. As the Fifth Circuit’s ruling makes clear, an “all‑or‑nothing” approach may ultimately leave a prevailing plaintiff with nothing at all.

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On February 3, 2026, the Delaware Supreme Court issued a short but highly anticipated order in North American Fire Ultimate Holdings, LP v. Doorly, reversing the Chancery Court’s dismissal of contract claims seeking to enforce restrictive covenants against a former senior executive. The decision clarifies that the existence of consideration supporting restrictive covenants must be evaluated at the time the parties enter into their agreement—not at the time of an alleged breach or at the time the employer seeks enforcement.

Background

As part of a 2021 acquisition, the plaintiff North American Fire granted common equity units to Alan Doorly, a co‑founder of the acquired company. Doorly later exchanged those units for incentive units subject to time‑ and performance‑based vesting under an Incentive Unit Grant Agreement, which contained various restrictive covenants, including confidentiality, non‑solicitation, and non‑competition provisions.

By 2023, Doorly had formed a new competing entity in violation of his non-compete. Upon discovering these activities, North American Fire terminated Doorly for cause, triggering a contractual forfeiture of both his vested and unvested incentive units under his agreement. North American Fire sued Doorly, seeking among other things to enforce his restrictive covenants. The Chancery Court dismissed the contract claims, holding that the covenants lacked consideration because the incentive units—framed by the court as the sole consideration for Doorly’s agreement to abide by the covenants—had been forfeited by the time enforcement was sought.

The Supreme Court’s Decision

The Supreme Court reversed, holding that the Chancery Court applied the wrong legal framework. The Supreme Court reaffirmed a “general principle of contract law” that consideration is assessed at the time the parties form their contract, not at the time of breach or enforcement. In other words, the forfeiture of Doorly’s incentive units after formation did not retroactively eliminate the consideration that existed when he entered into the agreement.

The Supreme Court found that the Chancery Court’s reliance on the forfeiture of Doorly’s vested and unvested units “at the time of enforcement” was improper and emphasized that the units, though contingent, had “actual value” at the time of contract formation. In doing so, the Supreme Court analogized to earlier Chancery Court precedent involving restricted stock units, where contingent equity awards were held to constitute valid consideration despite time or performance conditions to vest.

The Supreme Court remanded the case for further proceedings on the contract claims. The Court did not address North American Fire’s claim that the restrictive covenants were supported by consideration other than the incentive units, apparently finding it unnecessary to address that issue in light of its determination that the question of consideration should be measured at the time of contract formation, notwithstanding the later forfeiture.

Context: Delaware’s Evolving Approach to Restrictive Covenants

Although narrow in scope, the decision arrives as Delaware continues to refine its approach to restrictive covenants in both the employment and M&A contexts. Recent decisions and commentary have signaled an increased willingness by the Chancery Court to closely scrutinize post‑employment restrictions. However, Doorly follows other decisions from the Delaware Supreme Court that have reaffirmed Delaware’s stated policy of freedom of contract that has been in tension with certain rulings by the Chancery Court (see some of our prior discussions here and here).

Against this backdrop, Doorly fits into a larger trend: Delaware courts continue to enforce restrictive covenants when they reflect bargained‑for exchange and reasonable scope, but the Chancery Court has shown an increased readiness to challenge enforceability of such covenants.

Takeaways

While the law continues to evolve, Doorly and its predecessors offer some guidance to businesses that continue to use Delaware law to govern restrictive covenants agreements (whether in the employment context or in the sale of a business):

  • Under Delaware law, the forfeiture of equity after contracting does not retroactively invalidate the consideration that existed when the agreement was executed.
  • Contingent equity awards can be valid consideration for restrictive covenants. Delaware continues to view such equity awards as non‑illusory, even if they are tied to performance or time vesting.
  • Drafting matters. Businesses relying on restrictive covenants should carefully structure grant agreements to reinforce that the award itself—regardless of future vesting or forfeiture—constitutes consideration.
  • Restrictive covenants are being subjected to much greater scrutiny for reasonableness in scope, time and geography than ever before.
  • The broader landscape remains in flux. Delaware courts continue to scrutinize restrictive covenants in both employment and M&A settings, and alternative mechanisms such as forfeiture‑for‑competition clauses may ultimately prove to be a more attractive option for businesses to enforce restrictive covenants in the “First State.”
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We are pleased to share the 2026 edition of Seyfarth’s 50-State Non-Compete Desktop Reference, a trusted nationwide resource for navigating the complex and increasingly dynamic landscape of non-compete and trade secrets law.

What’s Inside

This year’s updated edition provides in-depth, jurisdiction-by-jurisdiction analysis of:

  • Enforceability of non-compete and non-solicitation agreements
  • Statutory notice, timing, and wage threshold requirements
  • Judicial trends and compliance considerations
  • Penalties and enforcement mechanisms
  • Restrictions on venue and choice-of-law provisions

With continued FTC scrutiny and growing state-level legislative momentum, organizations face increasing complexity in designing compliant restrictive covenant strategies. This Desktop Reference equips employers with the clarity and practical guidance needed to navigate these changes while protecting business-critical assets.

HOW TO ACCESS THE DESKTOP REFERENCE

Access the full 2026 edition here

Seyfarth’s nationally recognized Trade Secrets, Computer Fraud & Non-Competes team is proud to support clients across industries with strategic counseling, program development, compliance audits, and high-stakes litigation.

Stay informed. Stay compliant. Stay ahead.

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Dave Adamson, Unsplash

As the Seattle Seahawks and the New England Patriots meet again on football’s biggest stage, the rematch inevitably pulls everyone back to one moment. Different rosters. Different seasons. Same unresolved question. With a championship on the line, memories of the one-yard line come rushing back, not because the teams are the same, but because the decision still divides fans, analysts, and armchair quarterbacks.

As a brief recap (apologies to Seattle fans for reopening old wounds), late in the fourth quarter of Super Bowl XLIX, Seattle trailed by four points with roughly twenty seconds remaining and only one timeout. On the one-yard line, the decision was widely framed as obvious: hand the ball to Marshawn Lynch (aka Beast Mode), arguably the best power running back in the league at the time. But the game situation significantly narrowed the Seahawks’ options. With just one timeout left, a run on second down that ended in bounds would have forced Seattle either to burn its final timeout or rush into a highly predictable third-down play under extreme time pressure. Bill Belichick understood this constraint. From a clock-management and optionality perspective, a pass on second down was not reckless, it was rational. An incompletion would stop the clock and preserve both third and fourth down. The Patriots were not guessing. They were reading the situation.

When Russell Wilson released the ball, the defense was ready. Malcolm Butler jumped the route, intercepted the pass, and ended the game. In hindsight, the interception hardened the narrative. But hindsight obscures the real lesson. The play call did not fail because it was irrational. It failed because high-reward decisions carry inherent risk, especially when the other side understands the constraints driving the call.

That same dynamic plays out when companies decide whether to patent an invention or keep it as a trade secret. On the surface, patents often look like the riskier choice. A patent application will be published, usually eighteen months after filing, meaning competitors get a clear window into how the invention works. A patent also has a finite life, generally twenty years from the earliest filing date, after which the invention falls into the public domain. Unlike a trade secret, which can theoretically last forever, a patent comes with a built-in expiration clock that starts ticking the moment you file.

More importantly, patents are not guaranteed. Filing an application does not ensure that claims will be allowed, that the scope will be meaningful, or that the rights will survive challenge. During prosecution, claims may be rejected, narrowed, or abandoned altogether. That uncertainty is especially acute in software and AI, where eligibility concerns, obviousness rejections, and functional claiming issues routinely derail applications. In that sense, pursuing patent protection is very much like throwing a pass at the goal line. The play might succeed and win the game, but there is always a real possibility that it gets intercepted by an examiner unconvinced that the claimed invention passes the patentability goal line.

Trade secrets, by contrast, feel like the power run. No publication. No term limit. No examiner second-guessing claim scope. If secrecy is maintained, protection can last indefinitely. For certain categories of innovation (e.g., manufacturing processes, server-side algorithms, internal workflows, or secret recipes and formulations that are difficult to reverse engineer), this can be exactly the right call. But just as a run up the middle only works when the blocking holds, trade secrets only survive when a company puts real protection in place. Reasonable secrecy measures are the IP equivalent of an offensive line and protection package: access controls, compartmentalization, NDAs, monitoring, and training are what keep the defense from blowing up the play. Once that protection breaks down, through employee turnover, a leak, reverse engineering, or independent development, the ballcarrier is exposed, and the protection is gone instantly, with no replay and no appeal.

Belichick’s insight at the goal line is the same insight sophisticated companies bring to IP strategy. He understood not only what Seattle wanted to do, but what Seattle could do given the constraints. In IP, those constraints include how visible the invention will be once commercialized, how likely competitors are to independently arrive at the same solution, how fast the technology will evolve, and whether enforceable rights against third parties are more valuable than indefinite secrecy. On the trade‑secret side, those constraints also include how much “surface area” the technology exposes: the number of employees who must know it, the degree to which it shows up in customer‑facing outputs, and how much operational friction the company can tolerate in order to keep it locked down. In software and AI, where patents face higher prosecution risk but trade secrets can evaporate the moment code behavior becomes observable, the choice is rarely obvious.

The real lesson of that Super Bowl play is not that passing was foolish. It is that good decisions carry risk when the other side understands your limitations. Patents disclose and expire. Trade secrets endure, but only as long as the protections around them do, and those protections can collapse overnight. Filing a patent may result in powerful rights or nothing at all. Keeping something secret may work for decades, or fail the moment the information leaks, the protection measures break down, or a competitor figures it out independently. IP strategy, like football, is not about choosing the move that looks safest in hindsight. It is about making a defensible decision in real time, with imperfect information, knowing full well that even the smartest call can still end with the ball going the other way.

Seyfarth has been featured in the World Intellectual Property Review “USA Trade Secrets Rankings” for 2025, which highlights leading legal talent dedicated to trade secrets law across the United States. These rankings spotlight firms and individuals with exceptional strength in litigation, advisory, and transactional work, trusted by leading companies to protect their most valuable intangible assets.

Seyfarth earned a firmwide “Recommended” recognition. In addition, two individual Seyfarth attorneys received individual recognition:

Seyfarth’s Trade Secrets, Computer Fraud & Non-Compete practice helps clients holistically protect their intellectual capital by advising on how to avoid trade secret misappropriation and by aggressively litigating when a violation occurs.

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Seyfarth Synopsis: Effective January 1, 2026, new California law prohibits stay-or-pay clauses in contracts of employment with limited exceptions.

Under new Section 16608 of the California Business and Professions Code, effective January 1, 2026, employers are prohibited from entering into an employment contract or other contract relating to the employment relationship that requires an employee to repay any amount to the employer upon termination of employment, except in specific limited circumstances. The law provides that contracts with non-compliant stay-or-pay provisions will be treated as void. Also, an affected employee can bring a civil lawsuit in which they can seek damages in the amount of the greater of their actual damages or $5,000, injunctive relief, and attorneys’ fees and costs related to the lawsuit.

One of the exceptions to the prohibition on these repayment obligations, that will likely be the most commonly used, is for discretionary payments made at the outset of employment (e.g. sign-on bonuses or relocation reimbursements) if each of the following conditions are met: (1) the promise to repay is in a separate written agreement; (2) the employee is notified of the right to consult an attorney no less than five days prior to signing the agreement; (3) any repayment obligation cannot be longer than 2 years; (4) the amount to be repaid must be prorated upon termination for the remaining retention period; (5) no interest is charged on the repayment amount; (6) the employee must be given the option to instead defer the payment to the end of the fully-served retention period with no repayment obligation; and (7) repayment can only be required if the employee voluntarily elects to leave or if the employee is terminated for misconduct (as defined in the CA labor code).

The new code section also has other exceptions relating to repayment of tuition assistance, certain government loans, and residential leasing or purchase assistance. For further information on these exceptions and an in depth discussion of the new law, see Seyfarth’s prior blog post here. 

Note that the new law is not triggered by a provision promising to pay an amount after a certain retention period is completed (without any repayment obligation) or otherwise deferring payments to a future date.

Employers should review existing offer letters and other employment contracts with California employees to identify payments or other benefits offered in exchange for an employee’s promise to repay upon termination of employment prior to completing a retention period. Any agreements with these provisions will need to be amended to fit into an exception, or to remove the repayment obligations.  

This shift will also require employers to rethink how they offer sign-on and other retention bonuses to employees in California in the future. Restructuring these payment arrangements in a thoughtful manner will not only help employers to avoid costly penalties and litigation, but also should give employers a competitive advantage in recruiting and retaining employees in California.

For a more detailed discussion of California’s new stay-or-pay restrictions under AB 692, including the law’s scope, exceptions, and compliance challenges, see our related post here.

Please contact the author or the employee benefits attorney at Seyfarth with whom you usually work if you have any questions regarding compliance with these new California restrictions.

Seyfarth partners Katherine Perrelli and Dallin Wilson co-authored the United States chapter of Lexology Panoramic’s Trade Secrets 2026 Report. The chapter offers a comprehensive overview of trade secret protection in the U.S., highlighting recent legal developments, enforcement trends, and best practices for safeguarding proprietary information.

Among the emerging issues addressed in this year’s report is the growing impact of generative AI on trade secret protection. As the authors note:

“Companies should also consider implementing policies and procedures regarding employees’ use of generative AI programs while at work. If generative AI programs are able to access confidential information and trade secrets stored on company servers to respond to employee prompts, there is risk that if the product generated by the AI program is later publicly disclosed, the company’s trade secrets could lose their trade secret protection because they could be deemed to no longer be secret and/or because the company did not use reasonable measures to keep them secret under the DTSA.”

To read the full chapter, visit Lexology Panoramic’s Trade Secrets 2026 Report here.

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Georg Bommeli, Unsplash

REGISTER HERE

Wednesday, November 12, 2025
12:00 p.m. to 1:15 p.m. Eastern
11:00 a.m. to 12:15 p.m. Central
10:00 a.m. to 11:15 a.m. Mountain
9:00 a.m. to 10:15 a.m. Pacific

About the Program

Hosted by Seyfarth Shaw LLP, a Platinum Sponsor of the NBA–Corporate Law Section (NBA–CLS), this CLE webinar explores the growing risks of trade secret exposure in today’s hyperconnected world.

In an always-online environment, a single social media post, GitHub upload, or Slack message can put millions of dollars in proprietary data at risk. Join Seyfarth’s Trade Secrets team as they discuss how digital platforms—from LinkedIn to messaging apps—can become high-risk zones for trade secret exposure and what proactive steps companies can take to mitigate those risks.

This session will cover:

  • Common ways trade secrets are inadvertently leaked online
  • How to proactively train and guide employees on safe digital practices
  • Key policy, monitoring, and enforcement strategies for protecting IP
  • Practical steps to take when a potential disclosure occurs
  • Legal implications and what recent cases are telling us

This program is designed for in-house counsel, business leaders, and professionals responsible for trade secret protection, AI innovation, and intellectual property strategy.

Speakers

Michael Wexler, Partner, Seyfarth Shaw LLP
Mitch Robinson, Senior Counsel, Seyfarth Shaw LLP

If you have any questions, please contact Sela Sofferman at ssofferman@seyfarth.com and reference this event.

To comply with State CLE Requirements, CLE forms requesting credit in IL or CA must be received before the end of the month in which the program took place. Credit will not be issued for forms received after such date. For all other jurisdictions, forms must be submitted within 10 business days of the program taking place or we will not be able to process the request.

Our live programming is accredited for CLE in CA, IL, and NY (for both newly admitted and experienced). Credit will be applied as requested but cannot be guaranteed for TX, NJ, GA, NC, and WA. The following jurisdictions may accept reciprocal credit with our accredited states, and individuals can use the certificate they receive to gain CLE credit therein: AZ, AR, CT, HI, and ME. For all other jurisdictions, a general certificate of attendance and the necessary materials will be issued that can be used for self-application. CLE decisions are made by each local board and can take up to 12 weeks to process.

Please note that programming under 60 minutes of CLE content is not eligible for credit in GA. Programs that are not open to the public are not eligible for credit in NC.

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On September 5, 2025, the Federal Trade Commission (FTC) moved to dismiss its appeals in two pivotal cases— Ryan, LLC v. FTC, No. 24-10951 (5th Cir.) and Properties of the Villages v. FTC, No. 24-13102 (11th Cir.)—effectively walking away from its effort to enforce the Noncompete Rule, which attempted to ban most noncompete agreements nationwide.

As previously noted, the FTC had sought a 120-day stay of its appeals after district courts struck down the Noncompete Rule. Today’s move marks another sharp reversal under the agency’s new Republican-led leadership, distancing itself from the more aggressive regulatory stance of former Chair Lina Khan. It also echoes the June 28, 2024, dissent by current FTC Chair Andrew N. Ferguson and Commissioner Melissa Holyoak, and aligns with recent signals from the administration favoring targeted enforcement over sweeping rulemaking.

While the Noncompete Rule may be dead, the FTC is not done with noncompetes. Businesses should brace for focused crackdowns, joint task forces, and case-by-case scrutiny. In addition, the FTC has recently solicited additional public input “to better understand the scope, prevalence, and effects of employer noncompete agreements, as well as to gather information to inform possible future enforcement actions.”

The era of agency blanket bans may be over—but regulatory pressure is far from gone.

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Sasun Bughdaryan, Unsplash

We are pleased to share that Seyfarth attorney Josh Salinas authored the article, “Recent Developments in Employee Mobility, Restrictive Covenants and Trade Secrets 2025,” published on August 11, 2025, in the American Bar Association’s Business Law Today.

In the article, Josh examines key developments in employee mobility, trade secret protections, and restrictive covenant enforcement over the past year. He highlights the continued nationwide trend of limiting noncompete agreements, as well as legislative and judicial efforts to regulate restrictive covenants—particularly within the Fifth Circuit.

Josh points to the significance of the high-profile case Ryan, LLC v. Federal Trade Commission (FTC), No. 3:24-CV-00986 (N.D. Tex. Aug. 20, 2024), noting how closely the Fifth Circuit has been watched in shaping noncompete law.

For companies navigating these evolving challenges, Josh’s insights provide valuable perspective on the changing legal landscape of employee movement and trade secret protection.

Read the full article here.