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We’re proud to share that Seyfarth has been named “Highly Recommended” in World Intellectual Property Review’s inaugural 2024 USA Trade Secrets Rankings. This guide highlights the top law firms and lawyers leading the way in trade secrets law across the United States.

This recognition reflects the hard work and dedication of our team as we help businesses protect their confidential information in an ever-changing legal and technological landscape. It’s an honor to be acknowledged for our efforts during a time when trade secrets are more important than ever.

View the full list and individual honors here.

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Scott Graham, Unsplash

Tuesday, December 17, 2024
1:00 p.m. to 2:00 p.m. Eastern
12:00 p.m. to 1:00 p.m. Central
11:00 a.m. to 12:00 p.m. Mountain
10:00 a.m. to 11:00 a.m. Pacific

Register Here

About the Program

Join us for the final installment of Seyfarth’s 2024 Trade Secrets Webinar Series, where our panel will provide practical guidance on navigating non-compete agreements, safeguarding trade secrets, and understanding critical regulatory developments impacting employers across the United States. This session will highlight key updates from the upcoming release of our 2024-2025 Edition of Seyfarth’s 50-State Non-Compete Desktop Reference—your go-to resource for understanding non-compete laws nationwide.

With significant federal and state changes, including updates from the FTC, NLRB, and new wage threshold requirements, this webinar is essential for employers looking to remain compliant, mitigate risks, and protect their business-critical assets. What to expect:

  • Federal Updates: What employers need to know about changes under the Trump administration, including potential impacts on non-compete enforcement.
  • Regional Trends: A comprehensive review of state-level developments in non-compete laws.
  • Regulatory Outlook: Insights into the Federal Trade Commission (FTC) and National Labor Relations Board (NLRB) regulatory landscapes and what to anticipate in 2025.
  • Wage Threshold Notices: Understanding the implications of wage threshold requirements on non-compete agreements.
  • Protecting Your Company with Non-Competes: Best Practices for Safeguarding Valuable Assets Amid Heightened Scrutiny
  • Interactive Q&A Session: Engage with our panel and get your pressing questions answered.

Exciting news! Our highly anticipated 50-State Non-Compete Desktop Reference is launching soon. Stay ahead with this essential resource—subscribe to our Trade Secrets mailing list today to ensure you’re among the first to receive it!

Speakers

Kate Perrelli, Partner, Seyfarth Shaw LLP
Justin Beyer, Partner, Seyfarth Shaw LLP
Jesse Coleman, Partner, Seyfarth Shaw LLP
Joshua Salinas, Partner, Seyfarth Shaw LLP

Register Here

If you have any questions, please contact Sadie Jay at sjay@seyfarth.com and reference this event.

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Seyfarth is proud to serve as a Silver Sponsor of the Trade Secrets Symposium 2024: Navigating the Law of Trade Secrets and Restrictive Covenants, presented by the New York City Bar Association. This two-day virtual event will take place on Monday, December 9, and Tuesday, December 10, 2024, from 9:00 a.m. to 1:25 p.m. (ET).

The Symposium offers a comprehensive exploration of trade secret law, focusing on critical topics such as:

  • Fundamentals of trade secret law and the regulatory landscape in New York, federal, and state jurisdictions.
  • Emerging issues in trade secrets litigation and the role of trade secret law in artificial intelligence and other cutting-edge technologies.
  • The FTC’s proposed rule to ban non-compete agreements and its implications, as well as evolving state-level regulations.

The panels will feature esteemed judges, in-house counsel, government representatives, and leading practitioners who will address key issues from both plaintiff and defense perspectives. This is a must-attend event for IP attorneys, employment lawyers, general counsel, and executives seeking to navigate this complex and evolving area of law.

Seyfarth’s Kate Perrelli, co-chair of the firm’s Trade Secrets, Computer Fraud, and Non-Compete Practice, will be speaking on Tuesday, December 10, from 11:20 a.m. to 12:20 p.m. ET during the session, “Beyond the FTC: Restrictive Covenants in an Increasingly Hostile Environment.”

To learn more or register, click here.

We look forward to contributing to this important dialogue and advancing the understanding of trade secrets and restrictive covenants.

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Rock Staar, Unsplash

As we previously reported, the Federal Trade Commission (“FTC”) announced that it is amending and reorganizing the document requirements for pre-merger notifications under the Hart Scott Rodino Act (“HSR Act”), 15 U.S.C. 18a, which also includes a requirement for buyers to indicate the existence of non-compete and non-solicit agreements among the businesses involved.  The HSR Act and the associated rules require parties to specified mergers and acquisitions to notify and disclose certain information and wait a short period of time before proceeding with the planned transaction.  Part of the reason for changing the pre-merger requirements is the FTC’s acknowledgment of market changes, noting the “changing nature of competition” since the inception of the HSR and the need to respond to such changes. As we have reported consistently this past year, the FTC has been hyper-focused on the perceived anti-competitive impact of restrictive covenant agreements, specifically non-competition and non-solicitation covenants, as affecting employee mobility and stifling competition.   

While the implementation of the FTC’s ban on non-competes has been thwarted, for now, the FTC claims that its unwavering concerns regarding anti-competitive conduct by businesses necessitate the inclusion of new reporting requirements, specifically to report whether there are any existing agreements among the parties, including non-compete and non-solicitation agreements.  In explaining its reasoning for this new requirement, the FTC noted that it could be “especially useful in revealing that the parties consider themselves to be ‘in competition’ with one another, now or in the future, such that there is value in contracting away the ability to compete for or solicit business or workers.”  As part of the new requirements, the FTC proposed a new “Overlap Narrative” section requiring each filing person to provide an overview of its principal categories of products or services and whether it competes with the other filing party, and identify any documents submitted with the HSR Filing to support that narrative. Then, for each overlapping product or service, the FTC proposes that the filing party also provide sales, customer information (including contacts), a description of any licensing arrangement, and a description of any non-compete or non-solicitation agreements applicable to the employees or business units related to the product or service.

To date, the FTC has received one comment in support of the proposal, and at least one opposing the proposal. These comments largely echo those submitted in response to the FTC’s announcement of its (currently on hold) non-compete ban, and those submitted in the various briefs (including amicus briefs) filed in the Ryan (N.D. Texas), ATS Tree Services (E.D. Pennsylvania), and Properties of the Villages (M.D. Florida) actions challenging the FTC’s authority to implement the non-compete ban. In support of the proposal, state anti-trust enforcers noted that post-employment non-compete covenants stifle competition and “prevent new businesses from emerging and stifle entrepreneurship and innovation.”  In opposition, commenters noted that this requirement significantly increases the burdens on parties in pre-merger negotiations, and worse yet, could result in the inclusion of benign agreements that do not have “anti-competitive” risks typically associated with them, such as confidentiality agreements, such that the proposal might have negative unintended effects.  Specifically, by submitting the restrictive covenant agreements that fall under the auspice of the new disclosure requirement, depending on volume, it might delay the review of the transaction as a whole or disincentivize companies from using such agreements altogether.

The Rule will take effect 90 days after publication in the Federal Register, expected to be published on November 12, 2204 (and thus with an anticipated effective date of February 10, 2025), and available online at: https://federalregister.gov/d/2024-25024. Time will tell if this new rule will spur litigation in advance of the effective date, just as the proposed non-compete ban did.

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Traxer, Unsplash

Once upon a time in the Eastern District of New York, a cryptocurrency foundation, new owners of the sole copy of Wu-Tang Clan’s “Once Upon a Time in Shaolin,” filed suit against the album’s former purchaser, Martin Shkreli, accusing him of wrongfully retaining copies of album data with the intent to publicly release it. The dispute has proved contentious, with the Court now set to weigh a motion against Shkreli for contempt.

Plaintiff PleasrDAO is a crypto foundation focused on digital art. Defendant Shkreli is a former pharmaceutical executive who made headlines after price-gouging an anti-parasitic medication and being unrelatedly sentenced to seven years in prison for securities fraud.

“Once Upon a Time” is Wu-Tang’s seventh studio album. Only one copy was made, consisting of thirty-one songs on two CDs, kept in a jeweled silver box with leather-bound notes, customized audio speakers, and a gold-leafed certificate of authenticity.  Wu-Tang’s RZA and producer Cilvaringz intentionally sought to treat the album like fine art, with a value maintained by its exclusivity. As a result, it was recorded in secret, stored in a vault, and made subject to various intellectual property protections.

In 2015, Shkreli purchased “Once Upon a Time” for $2,000,000, rendering the album the most expensive work of music ever sold. Consistent with Wu-Tang’s intentions for the album, Shkreli’s purchase agreement prohibited duplication or public release of the album until the year 2103.

After his sentencing for fraud in 2018, Shkreli faced a $7,360,450 forfeiture money judgment. He was ordered to forfeit his interests in valuable assets, including “Once Upon a Time,” to satisfy the judgment amount. The order also restrained Shkreli from taking any action that would diminish the value or marketability of the assets.

From 2021 to 2024, PleasrDAO paid the equivalent of $4,750,000 to become the album’s new owner.

In 2022, Shkreli was released early from federal prison to begin a three-year term of supervised release, which mandated his compliance with the forfeiture order. Nonetheless, just a month out of prison, he played the album during a social media livestream and admitted he had retained copies of the album, stating, “I’m not stupid. I don’t buy something for two million dollars just so I can keep one copy.” Shkreli also taunted PleasrDAO over a flurry of posts to X (formerly Twitter), one of which read: “well @pleasrdao blocked me from their account so I think I will play the album on spaces now.” Shkreli then hosted a “Spaces” session on his X account, livestreaming the album to nearly 5,000 listeners.

The Complaint seeks to enforce the forfeiture order and accuses Shkreli of misappropriation of trade secrets, tortious interference with prospective economic advantage, and unjust enrichment. From the outset, Shkreli faced litigation losses, with PleasrDAO successfully moving for a temporary restraining order and, later, a preliminary injunction. The August 26, 2024 preliminary injunction order required Shkreli to provide a sworn affidavit stating he had turned over copies of the album to his attorneys as well as an inventory of the copies retained, contact information of the individuals to whom Shkreli distributed the data, and an accounting of any proceeds Shkreli made from his distribution or playing of the album.

Shkreli filed a declaration of his purported compliance at the end of August, but shortly thereafter, PleasrDAO argued Shkreli’s filing fell short and asked that the Court utilize its contempt powers to intervene. Specifically, PleasrDAO highlighted Shkreli’s admission that additional copies may “possibl[y]” be in storage, his statement that he had only turned over audio files of a specific format, and his attestation that he had turned over “15 tracks” to his attorneys, when the album contains 31 tracks. The Court directed Shkreli to file a supplemental affidavit clarifying the disparity as to the number of tracks and scheduled a hearing “to resolve the deficiencies in Defendant Shkreli’s affidavits.”

The Court is set to hear the parties’ arguments on November 20, 2024. Given the case’s history thus far, the odds do not appear in Shkreli’s favor. In fact, particularly in light of his shenanigans regarding the album’s secrecy, Shkreli’s failure to craft an affidavit of compliance with surgical precision may well come back to haunt him. As it progresses, the case will prove an informative example of a trade secret dispute where the defendant admits wrongdoing, at least in part. Fortunately for Shkreli, litigation is temporary, even if Wu-Tang is forever.

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ZHENYU LUO, Unsplash

With a factual background that resembles a bad Hollywood script, the most recent chapter in the ongoing dispute between former co-founder of Trilobio, Keoni Gandall (defendant), and Trilobio and his two former partners and co-founders Roya Amini-Naieni and Maximilian Schommer (plaintiffs) ended on October 17, 2024, with the court enjoining Gandall and his new company from using Trilobio’s trade secrets. While at first blush this case appears to be a run-of-the-mill trade secret misappropriation case, peeling back the layers even a little identifies a host of questions that seem to lack answers, and may have necessitated a different result.

First, there are questions regarding the timing of the suit, when Plaintiffs did or should have discovered Gandall’s alleged trade secret misappropriation, and if Plaintiffs, therefore, adequately protected their trade secrets.

To that end, Plaintiffs allege that Gandall was fired in February 2023, and allege that Gandall allegedly misappropriated Trilobio’s trade secrets immediately following and several months before his termination. And Plaintiffs also allege that they did not discover Gandall’s trade secret misappropriation until September 2024. Now, for most practitioners, discovering trade secret misappropriation 18 months after the employee departed can happen, but it is not a common occurrence.

Making this all the more odd, though, is that Gandall sued Plaintiffs for employment-related and breach of contract claims in December 2023. And Gandall further made demands of the Plaintiffs for stock he claimed was due him for months prior to that. Gandall also alleged, somewhat salaciously, that his termination was due to a secret affair gone awry between he and Amini-Naieni, all while Amini-Naieni was engaged to Schommer. In the same pleading, Gandall alleges that Amini-Naieni defamed him by claiming to third-parties, including Gandall’s family, that Gandall had sexually assaulted Amini-Naieni. Plaintiffs’ pleadings are virtually silent responding to these points.

Adding to the layers of confusion, no explanation is provided as to why, despite these allegations, Plaintiffs did nothing in the aftermath of Gandall’s termination to forensically image or investigate his behavior, particularly after they were sued.

And that conduct becomes all the more questionable when you start to examine other allegations that Plaintiffs make in their complaint and motion for TRO, including that Trilobio received an email meant for Gandall in April 2023, which suggested that Gandall was soliciting Trilobio’s investors within six weeks of his departure. Or that Gandall began doing business purportedly related to Trilobio’s business with another Trilobio investor in May 2023. Or that Gandall was allegedly posting what Trilobio claims is its trade secret source code on his personal webpage in May 2023. Or that, during that same month, Gandall hosted and posted to his YouTube channel a video in which he discussed his work around oligo pool technology, something Trilobio claims is its trade secret and that Gandall misappropriated. Despite all of these public activities that occurred within months of Gandall’s departure from Trilobio, Trilobio failed to discover any of this until September 2024.

Even more odd, in its moving papers, Trilobio—despite claiming its source code was a trade secret—published the code in an unsealed document, even after filing redacted versions of its pleadings publicly.

These are but a few of the examples that Plaintiffs offer in their papers, but the central theme behind almost all of this is that Gandall was exceptionally public about what he was doing post-termination and yet Plaintiffs, who were embroiled in a lawsuit with Gandall since December 2023, discovered none of it.

Any practitioner that has brought trade secret misappropriation claims knows that the hallmark of a trade secret is taking sufficient steps to protect the confidentiality of the information. But outside of identifying the use of a confidentiality agreement with Gandall, Trilobio’s papers are virtually silent as to the steps it took during Gandall’s employment to protect its information and absolutely silent as to the reasons why—despite Gandall’s very public “use” of those alleged trade secrets—they failed to discover the misappropriation until September 2024. The court’s decision granting the TRO did not address any of these questions or how the information continued to constitute a trade secret.

Next, there are questions about Gandall’s claims to have received permission to download certain information. This is particularly the case when one considers the curious circumstances behind how Gandall departed Trilobio, the evidence of which suggests a question of fact as to Gandall’s claims of having permission to download that which he did. In Gandall’s California state court case, he claims that Amini-Naieni and Schommer were involved in a romantic relationship predating his termination. He also alleges that, in January 2023, Gandall and Amini-Naieni began their own sexual relationship, while Amini-Naieni and Schommer continued to be engaged. When the relationship broke off in February 2023, Amini-Naieni allegedly offered Gandall $100,000 to depart Trilobio, but Gandall declined, because he was approximately two months away from 675,000 shares in Trilobio fully vesting. Interestingly, though, again, the court did not consider any of this.

Indeed, Gandall, who made his allegations in his state-court case (and attached those pleadings to his response in opposition to Plaintiffs’ motion for TRO) nearly a year before Trilobio brought the instant case, claims that Amini-Naieni approved him downloading certain documents, all before the alleged misappropriation occurred and long before he was terminated. Further, according to Gandall, he publicly uploaded the oligo pool files to his website as of November 3, 2022. (Dkt. 21-1 at ¶ 35.) While Plaintiffs do not expressly identify the date on which the review was provided to Gandall, the document does show that Gandall responded and provided comments to it on November 29, 2022, over three weeks after Gandall posted the oligo pool files on his personal webpage, allegedly with Amini-Naieni’s permission. (Dkt. 15-8.) In spite of that, though, the court found that: “It simply is not credible that Amini-Naieni would have given him permission to download the company’s confidential information that same month.” (Dkt. 31 at p. 5.) It is worth noting, however, that this is not what Gandall claimed. Instead, Gandall alleged: “Only after Trilobio ceased its exploration of oligo pool technology in early 2022 and the oligo pool files had been dormant for almost a year, did I request Ms. Amini-Naieni’s consent to upload the oligo pool files to my website. She gave her consent, and on November 3, 2022, I uploaded them to my website.” (Dkt. 21-1 at ¶ 35.) In other words, Gandall does not allege a date specific on which Amini-Naieni provided consent, but instead alleged a date specific on which Gandall uploaded the files to his website.

Rather than deal with these discrepancies, though, the court found that it would be incredible for the plaintiff to provide this sort of permission to Gandall at a time that he was also receiving a negative performance review. It made this finding despite Gandall providing the court with his allegations about his intimate relationship with Amini-Naieni. It also made this finding despite the text exchange that Plaintiffs attached to its complaint including the following exchange:

Amini-Naieni: It’s over. (February 21, 2024, 7:57 p.m.)

Gandall: Wait what?

Amini-Naieni: You’re fired. I’ll handle the paperwork tomorrow. (2/21/24, 8:00 p.m.)

Gandall: You won’t even talk to our investors about it? Or try to hear me out, non-emotionally, with an improvement plan?

Amini-Naieni: My decision is final.

(Trilobio, Inc. v. Gandall, Case No. 4:24-cv-06337-JST, Dkt. 15-4.) At a minimum, this text exchange seems to corroborate Gandall’s claim that he was involved in an intimate relationship with Amini-Naieni, and may also explain why, despite perceptions as Gandall’s performance from Schommer in November 2022, Amini-Naieni may have provided Gandall with permission to download certain information to Gandall’s personal website. From the documentation, it also appears that Amini-Naieni blocked Gandall from sending her messages thereafter. (Id.) The circumstances behind Gandall’s departure and the lead text from Amini-Naieni certainly suggested that some level of follow-up be conducted, especially for purposes of weighing credibility and explanations by the varying parties. None of this occurred, however.

Third, there are questions about whether the information at issue constitutes a trade secret. This was another issue that was not really addressed by the court, despite very different takes from the parties on whether the information (particularly the oligo pool documents) actually constituted a trade secret. Again, a trade secret must have economic value to the company in remaining a secret. However, here, Gandall presented a host of well-pled facts about how Trilobio had abandoned its commercial efforts around oligo pool technology; to which Plaintiffs’ public filing effectively responds, “did not.” (Obviously, it is impossible to know what precisely Trilobio provided under seal for the court’s consideration, but it is worth noting that Amini-Naieni’s Supplemental Declaration offers no evidence that Trilobio was considering this technology after November 17, 2022.) (Dkt. 26-1 ¶ 12.)

What even just this smattering of contradictions reveals is that this case is far more convoluted than a simple trade secret misappropriation case. But it also underscores how important the arguments that are made at the trial level are and how discussing and explaining the standard and where Plaintiffs have failed to meet that standard are essential. Of course, this case is now headed for expedited discovery. And the Plaintiffs will be required to answer questions as to when and how it became aware of certain facts, why it failed to take action sooner, despite Gandall’s public use of this information even during his Trilobio employment (cf. Dkt. 15-15 at ¶ 6 (Sun Decl., discussing his examination of publicly available files on Gandall’s webpage) with Dkt. 21-1 at ¶ 35 (Gandall Decl., identifying that he uploaded oligo pool information to his public website on November 3, 2022)), and whether it truly has treated the oligo pool technology as a trade secret. Moreover, because Plaintiffs brought this as a DTSA claim, they have also exposed themselves to fee shifting if the court later finds that they brought a bad faith trade secret misappropriation claim. This will certainly be an interesting case to follow as further facts develop.

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Scott Graham, Unsplash

In 2016, the Defend Trade Secret Act, 18 U.S.C. § 1836 (the “DTSA”), passed Congress and went into effect. At its heart, it effectively codified the Uniform Trade Secrets Act at the federal level, creating a federal cause of action. Prior to the enactment of the DTSA, a large body of federal common law had developed around the remedies available to a plaintiff after a defendant allegedly misappropriated a trade secret, including the “inevitable disclosure doctrine.” Through this doctrine, even in the absence of a non-compete or non-solicitation agreement, a court could fashion a remedy that enjoined a defendant from performing certain or all work on behalf of their new employer. The seminal decision on the inevitable disclosure is PepsiCo. v. Redmond, a 1995 Seventh Circuit decision. 54 F.3d 1262 (7th Cir. 1995). Through PepsiCo., the Seventh Circuit found that a court had the inherent power to enjoin a former employee from working with a new employer, in whole or in part, if that defendant misappropriated trade secrets, and their conduct was duplicitous in so doing. Following this decision, numerous courts throughout the country have adopted the inevitable disclosure doctrine. See Phoseon Technology, Inc. v. Heathcote, 2019 WL 7282497, at *11 (D. Or. 2019) (identifying states adopting the inevitable disclosure doctrine).

However, with the passage of the DTSA, one of the provisions contained within the DTSA created uncertainty as to the ongoing viability of the inevitable disclosure doctrine. In particular, 18 U.S.C. §1836(b)(3) states:

Remedies.—In a civil action brought under this subsection with respect to the misappropriation of a trade secret, a court may—

(A) grant an injunction—

(i) to prevent any actual or threatened misappropriation described in paragraph (1) on such terms as the court deems reasonable, provided the order does not—

(I) prevent a person from entering into an employment relationship, and that conditions placed on such employment shall be based on evidence of threatened misappropriation and not merely on the information the person knows

(Emphasis added). And to that end, some courts have determined that inevitable disclosure relief is unavailable under the DTSA as a result. See, e.g., IDEXX Labs., Inc. v. Bilbrough, 2022 WL 3042966, **5-6 (D. Me. Aug. 2, 2022) (discussing and collecting cases).

Late last week, though, the Northern District of Illinois in My Fav Electronics, Inc. v. Currie, 24-c-1959, 2024 WL 4528330 (N.D. Ill. Oct. 18, 2024) (Pallmeyer, J.), further muddied the waters on this question, when it enjoined the defendant Currie based on the inevitable disclosure doctrine. Specifically, the court entered a preliminary injunction enjoining the defendant from performing certain work, including soliciting former customers of the plaintiff, for a year from the date of the order, despite the fact that the defendant had not signed a non-compete or non-solicitation agreement with the plaintiff.

While the full extent of the defendant’s conduct is discussed in the court’s detailed opinion, for purposes of this article, defendant Currie’s conduct can be summarized as follows:

  • Left plaintiff’s employ after perceiving to have been demoted;
  • Following her demotion, she downloaded via email and external media scores of files from plaintiff;
  • Attempted to hide such downloads by renaming files to appear to be personal in nature;
  • Returned the plaintiff’s laptop computer in an unusable state, after allegedly “dropping it in the bathtub”;
  • Allegedly retained the documents to defend herself if plaintiff was ever sued for purported unscrupulous conduct and allegedly turned over the documents to an attorney; and
  • Denied accessing documents post-termination, despite metadata showing she had accessed several of the documents post-termination and at times that would suggest use on behalf of her new employer.

On this record, the court analyzed the extent to which defendant would be enjoined. It is important to note that Currie agreed to certain injunctive relief, including returning plaintiff’s property, and not using it further, but she argued against further injunctive relief (though her arguments more focused on the lack of trade secret status than the scope of the injunction).

Despite that, the court still determined that it had the power to enjoin defendant in a manner that, at least at first blush, would call into question the interplay between DTSA and PepsiCo. And while that is seemingly inconsistent with certain federal court decisions, the My Fav court’s decision actually appears to be wholly consistent with the statutory framework of the DTSA.

To wit, while the DTSA prohibits a court from “prevent[ing] a person from entering into an employment relationship,” the statute also appears to permit the court to place “conditions” “on such employment” “based on evidence of threatened misappropriation.” In other words, provided that a plaintiff can demonstrate that the defendant threatens continued misappropriation, the court may place conditions on that employment. And this, in turn, is the lynchpin of the PepsiCo. decision; i.e., based on the defendant’s prior conduct, they cannot be trusted to differentiate between information that must be protected from their prior employment and will “inevitably disclose” that information in performing their job on behalf of their new employer. 54 F.3d at 1271.

In this case, the My Fav court restrained Currie from “contacting, soliciting, or otherwise participating in the procurement of Apple device buyback services, any of [Plaintiff’s] existing customers”, which has the effect of “screen[ing]” defendant “from working on procurement matters related to [plaintiff’s] most important opportunities … but will not be restricted from performing job responsibilities unrelated to the confidential information at issue here.” 2024 WL 4528330, at *18. This decision seems to thread the proverbial needle between the inevitable disclosure doctrine and the DTSA’s prohibition on outright prevention of new employment. What this means, practically speaking, is that PepsiCo v. Redmond and the inevitable disclosure doctrine appear to be alive and well, provided that the court does not completely restrict the defendant’s employment and tailors the relief to prohibiting activities that would threaten the plaintiff’s trade secrets. For plaintiffs seeking injunctive relief against a former employee, the My Fav decision may provide a roadmap for tailoring the relief sought and should be considered heavily.

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In our recent webinar, “Trade Secrets Audits: Strengthening Your Company’s IP Protection,” Seyfarth’s Intellectual Property Partner, Lauren Leipold, along with Trade Secret Attorneys Eddy Salcedo and James Yu, shared essential strategies for enhancing IP protection in today’s complex landscape. As corporate espionage and data breaches become increasingly prevalent, the session provided valuable insights on effective methods for safeguarding your company’s intellectual assets. Notably, recent developments surrounding the FTC’s Non-Compete Ban—currently stalled in litigation—highlight the pressing need for proactive measures to secure your business against emerging threats.

Key Insights from the Webinar

  • Look for opportunities to secure rights in trademarks, copyrights, and patents by filing for federal registrations
  • The same subject matter could be subject to patent or to trade secret protection, depending upon your business needs
  • Consider whether additional contractual language is required to secure ownership rights in IP, even after registration
  • Think critically about your IP portfolio as a whole when crafting employment agreements and corporate policy
  • Determine what, if any, agreements you have in place, such as Confidentiality Agreements, Restrictive Covenants, Assignment of Inventions and Return of Materials, and ensure they are uniform and up to date.
  • Ensure that your agreements, and their terms, comport to the applicable State Laws to ensure enforceability.
  • Review your IP policies, practices and procedures to make sure adequate protections are in place to establish you engaged in reasonable efforts to safeguard your IP and trade secrets.
  • Review and update, as needed, Employee Handbooks, Information Security Policies, BYOD and Social Media Policies so that employees are aware and do not “inadvertently” disclose sensitive materials.
  • Implement Generative AI Policies and procedures to further protect against disclosure of sensitive information.
  • Ensure IT, Legal and Management of the Company are aware of all potential risks of exfiltration with respect to electronic data, so they can implement policies and procedures to mitigate risk.
  • Install extra levels of security where necessary, including two factor authorization, data encryption, and limiting use of third-party apps to protect particularly sensitive information, particularly with a hybrid and remote workforce, of the Company allows use of personal devices.
  • Ensure employees understand what information the Company considers confidential, as trade secret identification is critical to successfully asserting a trade secret claim.
  • Develop a culture of confidentiality by regularly updating Company policies, employment agreements, and provide regular training.
  • Develop and maintain a protocol for on-boarding and off-boarding employees that ensures that confidentiality obligations are acknowledged and enforced.
  • Develop a consistent return of information and device policy for both in-person and remote workforce.

To view the webinar recording, click here.

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On October 4, 2024, Plaintiff ATS Tree Services, LLC (“ATS”) voluntarily dismissed its claims against the FTC challenging the agency’s Non-Compete Rule. See ATS Tree Services, LLC v. Fed. Trade Comm’n, et al., No. 2:24-CV-01743-KBH (E.D. Pa. July 23, 2024). The dismissal ends the case before a decision on the merits, preventing the FTC from obtaining a favorable ruling on the Non-Compete Rule in the Third Circuit.

One day prior, on October 3, 2024, the Eastern District of Pennsylvania denied ATS’ motion to stay the proceedings. ATS argued that a stay was warranted because the nationwide injunction issued by the Ryan Court left no Rule in place to litigate. ATS sought a stay until the deadline for the FTC to appeal the Ryan judgment passed, or until the Fifth Circuit issued a decision if an appeal was filed. The FTC opposed ATS’ Motion, arguing that the Ryan Court’s non-binding judgment did not prevent the Eastern District of Pennsylvania from adjudicating the issues before it and issuing its own ruling.

The Eastern District of Pennsylvania reasoned that both can be true. The Court acknowledged that the Ryan ruling meant there was no Rule left to litigate at present. However, the Court also recognized that the potential for an appeal of the Ryan judgment created uncertainty about the Rule’s future, stating, “[t]he fact that the Rule is currently enjoined does not mean that it is forever gone.” The Court determined it still had a responsibility to decide the issues before it and denied the motion to stay.

The Court then clarified ATS’ options: “[i]f ATS is satisfied with the outcome in Ryan and believes it sufficiently addresses their claims, it is not obligated to continue litigating this case. However, if it does not wish to withdraw, then this Court will move the case forward as is its duty.” ATS responded by dismissing its claims without prejudice less than a day after the Court denied the stay. The matter now shifts to the Fifth Circuit, where the Northern District of Texas issued a judgment on the merits setting aside the Rule pending a possible appeal, and the Eleventh Circuit, where the FTC has appealed the Middle District of Florida’s injunction blocking enforcement of the Rule against that case’s plaintiff.

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