On August 13, 2021, Governor Pritzker signed into law Public Act 102-0358, which amends the Illinois Freedom to Work Act and sets forth specific requirements for the enforceability of restrictive covenant agreements in Illinois for agreements entered into on or after January 1, 2022.

Income Thresholds
To be enforceable, as of the law’s effective date, non-compete agreements may only be
Continue Reading What Employers Need to Know Regarding Illinois’ New Restrictive Covenant Law

Earlier this month, Plaintiff Bright Side, LLC dba Herbal Edibles, a manufacturer of cannabis edibles, filed a lawsuit in New Mexico state court to enforce a 3-year non-compete and enjoin the misappropriation of its trade secret cannabis recipes by one its former bakers, Christina Johnson.

Based on the complaint, Ms. Johnson had been employed by Herbal Edibles as a baker for less than one year when she was terminated. Ms. Johnson allegedly started her own competing business, selling cannabis edibles such as “psychedelic sugar cookies” through Instagram and an open air market.
Continue Reading Cannabis Baker’s Plans of Own Business Potentially Put On Backburner

The Illinois Trade Secrets Act (“ITSA”), which is consistent with both other states that have adopted the Uniform Trade Secrets Act and the federal Defend Trade Secrets Act, allows the recovery of attorneys’ fees for a party who has been forced to defend against a trade secret claim made in bad faith. See 765 ILCS 1065/5. This fee shifting provision provides an important mechanism to obtain relief for defendants who are forced to incur significant legal fees fighting baseless claims.
Continue Reading Failure to Tune in to Requirements to Meet Trade Secret Status Under Illinois Trade Secrets Act Results in Award of Attorneys’ Fees Against Radio Advertising Time Business

Consistent with many jurisdictions which have adopted the Uniform Trade Secrets Act, Delaware’s version expressly preempts common law claims based on the misappropriation of trade secrets. See 6 Del. C. § 2007. In a recent opinion, Vice Chancellor Slights of the Court of Chancery dismissed a claim for unjust enrichment based on defendant’s alleged misappropriation and use of plaintiff’s confidential and proprietary data because Delaware’s trade secret statute “occupies the filed” and preempts claims for common law unjust enrichment.
Continue Reading Spam Trap Evading Plaintiff Falls into Statutory Preemption Trap under Delaware Trade Secret Act

2020 brought with it a bevy of new challenges for companies of all sizes in every industry, not the least of which was protecting trade secrets and confidential information in the face of newly remote workforces. 2021 brings with it new hope and the promise of a return to “normalcy”—whatever that may mean in this changed world. But companies must remain vigilant about protecting their trade secrets and confidential information. As we enter the new year, here are ten resolutions that companies should make—and keep—to accomplish that important goal in 2021 and beyond.
Continue Reading Ten Trade Secret Resolutions to Keep for 2021 and Beyond

Seyfarth Partner Marcus L. Mintz was recently named as a co-chair of the Restrictive Covenants/Tortious Interference Subcommittee of the American Bar Association Litigation Section.

The Restrictive Covenants/Tortious Interference Subcommittee is part of the Business Torts & Unfair Competition Committee. The Committee and Subcommittee focus on keeping business litigators fully informed on issues and trends regarding fiduciary duties, fraud, unfair trade
Continue Reading Marcus L. Mintz Co-Chairs the ABA Litigation Section’s Restrictive Covenants/Tortious Interference Subcommittee

In a decision of first impression issued last week, the United States District Court for the Western District of Tennessee held, in Gus’s Franchisor, LLC v. Terrapin Restaurant Partners, LLC, that the COVID-19 pandemic did not excuse a terminated franchisee of Gus’s World Famous Fried Chicken (“Gus’s”) from complying with a temporary restraining order (TRO) and permanent injunction prohibiting it from using Gus’s trademarks, trade secrets and proprietary business information.
Continue Reading Don’t Play Chicken With Court Orders: COVID-19 Is No Excuse for a Terminated Franchisee to Continue Using the Franchisor’s Intellectual Property and Trade Secrets

As many of our blog readers will know, the enforceability of restrictive covenants often depends on which state’s law applies to the dispute. For example, California is well known for refusing to enforce employee non-competition agreements and, recently, refusing to honor forum selection clauses in agreements with California employees without the employee first receiving legal advice. In contrast, with limited exceptions, most other states will generally enforce restrictive covenants. Consequently, for employers, controlling and choosing the correct law to  apply to its restrictive covenant agreements can be critical to protection of its business interests.
Continue Reading 6th Circuit Bolsters Employer’s Right to Contract for Chosen Law

Tens of millions of employees have been laid off or furloughed as a result of the COVID-19 pandemic. Now that the reopening process has begun in most states, many of those employees are being rehired and reactivated. For the month of May 2020, the unemployment rate actually started to decline after the massive increase over the prior few months, as businesses began the return to normal and employers who obtained relief from the Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) restored their workforces to pre-pandemic levels in order to secure loan forgiveness.

One thing that employers may not be considering when they rehire laid off or furloughed employees is what impact this has on prior restrictive covenant agreements with those employees. We previously discussed whether non-competes are enforceable against employees who are laid off. But what about employees who are laid off and then rehired, or furloughed and then reactivated? Are restrictive covenant agreements signed by employees prior to the layoffs or furloughs still enforceable if they ultimately leave and join a competitor down the road? The answer depends on whether the employee was technically, even if temporarily, laid off rather than furloughed, and what state’s law applies.
Continue Reading No Good Deed Goes Unpunished: Return to Work May Mean Reduced Protections for Trade Secrets and Customer Goodwill

The “return to normal” in courts across the country has brought with it a flurry of trade secrets decisions that address some interesting and instructive issues, both procedurally and substantively. In the last ten days alone, courts in Illinois, Massachusetts, and Texas have weighed in on issues such as the specificity necessary to assert a viable trade secrets claim, the enforceability of a restrictive covenant against an employee who is laid off temporarily but quickly finds a new role and is rehired by the same organization, and the validity of a $700,000,000 jury verdict that was based on a jury question that combined multiple theories of liability. Let’s take a look:
Continue Reading Courts Across the Country Continue to Address Trade Secrets Issues