Plaintiff Fujikura Composite America, Inc. (“Fujikura”) is one of the most prominent golf club shaft designers and manufacturers. Per Fujikura, in the 2022-2023 PGA Tour season, half of all PGA tournaments were won by a player using a Fujikura shaft.

On May 1, 2024, in the United States District Court for the Southern District of California, Fujikura sued Alexander Dee, a former golf shaft engineer, and his new competing business, Aretara Golf. Fujikura alleges that Dee took certain shaft prototypes with him when he left his employment and used those prototypes to create competitive Aretera shafts that bear technical, branding, and visual similarities to unreleased Fujikura shafts. Fujikura claims to have analyzed Aretera shafts through an electron microscope and determined that certain shafts had identical features to some Fujikura shafts. Fujikura claims that Dee and Aretera misappropriated its trade secrets and that Dee breached his non-disclosure obligations to Fujikura.

While only one side of this story has been told so far, Fujikura’s allegations illustrate why non-compete agreements provide necessary protection for some businesses and why non-disclosure agreements and trade secret laws are sometimes insufficient. Presumably, to prove its case Fujikura will need to find actual evidence that Aretera had access to and used Fujikura’s prototypes. On the other hand, if Dee was subject to an appropriate non-compete agreement, Fujikura would be more likely to obtain an injunction precluding Dee from working at Aretera and developing competing products without the necessity of proving actual misappropriation and disclosure of Fujikura information.

Some states, like California where this lawsuit is pending, have already made the determination that non-competes are invalid except for certain limited exceptions. The vast majority of other states, however, have balanced interests differently and in many instances opted to allow non-compete agreements provided that such agreements are used with appropriate employees and drafted no broader than necessary to protect the employer’s legitimate business interests. This scenario stands as yet another example why the FTC’s wholesale ban on non-compete agreements is divorced from the reality that many businesses experience.