In a rare appellate decision on enforceability of non-disclosure agreements and a plaintiff’s burden to establish the existence of trade secrets, the First Circuit recently overturned a district court summary judgment order and trial verdict. This decision serves as an important reminder for both those who litigate trade secrets claims and those who draft restrictive covenants agreements.

Background

TLS Management and Marketing Services, LLC, a tax planning and consulting firm, sued its former employee, Ricky Rodríguez-Toledo, for alleged misappropriation of trade secrets under Puerto Rico’s misappropriation law and breach of his NDA with TLS. TLS claimed two trade secrets germane to the litigation, the “US Possession Strategy”—essentially a tax arbitrage strategy designed to help clients avoid higher mainland taxes—and “Capital Preservation Reports” or “CPRs,” client-specific reports with tax recommendations based on an analysis of applicable statutes and regulations.
Continue Reading Rare First Circuit Decision Invalidating NDA and Overturning Misappropriation Verdict Serves as a Cautionary Tale

Partner Erik Weibust will be speaking on Thursday, August 13, 2020, at 12:00 p.m. EST, on an American Bar Association webinar entitled “Non-Compete Update: Practical Guidance in Response to COVID-19.” Erik will be covering topics including “Enforcing Non-Competes During High Unemployment” and “Preparation and Pursuit of Non-Compete Litigation During Court Closures/Limited Access.” Other topics include:

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

The Massachusetts Superior Court recently held in Now Business Intelligence, Inc. v. Donahue that a temporary reassignment during a business slowdown, consisting of the addition of certain non-billable duties, does not constitute a material change invalidating a non-compete agreement. The dispute centered on Now Business Intelligence, Inc.’s (“NBI”) ability to hold its former employee, Sean Donahue (“Donahue”), liable for breach of his covenant not to compete.
Continue Reading Massachusetts Superior Court Axes an Attempt to Expand the Scope of the Seminal Non-Compete Law Concerning Material Change in Employment

Dawn Mertineit and Robert Milligan authored an article in the Daily Journal, “‘Can’t we just be like California?’ Another solution in search of a problem.” The Seyfarth partners said while historically the issue of noncompete enforcement has been left to the states, the last year has seen the U.S. Department of Justice and the

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

On Tuesday, July 14th at 1 p.m. Eastern, Seyfarth partner Robert Milligan is presenting a 90-minute Strafford CLE webinar, “Noncompetes Under New State Law Restrictions: Wage Requirements, Notice, Time, Layoffs, Proposed Federal Legislation.”

The program will discuss recent state legislative changes and case law trends regarding non-compete agreements and other restrictive covenants in New York,

Seyfarth attorneys Erik Weibust, Alison Eggers, and Anne Dunne recently published an article entitled “Why It’s Important to Bake Restrictive Covenants into Food and Beverage Industry Agreements” in Retail & Food Best Practices, an industry publication for the retail and food industry.

Recipes, ingredients, formulas, and processes are sometimes kept secret for

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

On June 10, 2020, at 2:00 p.m. Eastern, Erik Weibust and Michael Kippins will be presenting a free webinar for the Boston Bar Association entitled “Protecting Trade Secrets in the Face of Remote Workforces, New Technology, and Laid Off Employees.”.

As a result of the COVID-19 pandemic and in response to what many are calling