California, home to more than 40 million people and the 5th largest economy in the world, has passed the California Consumer Privacy Act (CCPA), its omnibus consumer privacy law. The law creates sweeping new requirements concerning the collection, maintenance, and tracking of information for both employees or customers who are residents of California. Many aspects of the implementation and enforcement are still being finalized by the California Attorney General. However, companies with employees or customers in California need to take stock of the information they are processing that could qualify as “personal information” for California residents, and they need to begin establishing mechanisms for compliance before the end of 2019. Continue Reading The California Consumer Privacy Act of 2018: What Businesses Need to Know Now
On December 28, 2018, a three-judge panel of the Tenth Circuit Court of Appeals affirmed the holding by the U.S. District Court for the District of Colorado denying the plaintiff’s, DTC Energy Group, Inc. (“DTC Energy”), request for a preliminary injunction against a collective of defendants: former DTC Energy employees Adam Hirschfeld (“Hirschfeld”) and Joseph Galban (“Galban”) and Ally Consulting, LLC (“Ally Consulting”), Hirschfeld’s new employer and a DTC Energy competitor. DTC Energy Grp., Inc. v. Hirschfeld, No. 18-1113, 2018 WL 6816903, at *1 (10th Cir. Dec. 28, 2018). In a majority opinion written by the Honorable Mary Beck Briscoe, the Court held that the trial court did not abuse its discretion in determining that DTC Energy failed to present evidence in support of a preliminary injunction. Id., at *5. In particular, while DTC Energy proffered prior harm as a consequence of Hirschfeld’s past breaches of his employment contract and the individual defendants’ failure to uphold their duty of loyalty, it could show that neither the prior harm established a significant risk of future irreparable harm saddled by DTC Energy nor Hirschfeld currently breached his employment agreement. Id. Continue Reading 10th Circuit Affirms that Employer Failed to Show How Past Harm Signified Future Irreparable Harm in Support of Preliminary Injunction Request in Trade Secret Battle
Seyfarth Shaw Partner Erik Weibust and Associate Alex Meier published a Law360 article about trade secret protections related to social media. Weibust and Meier discuss risks employers face when employees access social media accounts, as well as some e-discovery considerations for social media. To learn more, check out “Trade Secret Protection and Social Media: A 5-Year Update” from Law360 here.
On Tuesday, February 26, 2019, at 12 p.m. to 2:00 p.m. Eastern, Seyfarth Partner and Trade Secrets, Computer Fraud & Non-Compete Practice Group Co-Chair Robert Milligan is presenting a webinar for myLawCLE, a partner of the Federal Bar Association. The “Latest Developments in Trade Secrets Law and Non-Compete and Non-Solicitation Agreements” webinar covers some of the recent developments in trade secret law and recent legislative and case law trends regarding non-compete and non-solicitation agreements and offers best practices for structuring permissible contracts.
Key topics include:
- Impact of the federal Defend Trade Secrets Act on trade secrets law
- Overview of key trade secret cases involving preemption, damages, and identification
- Current Plaintiff and Defense trade strategies in trade secret litigation
- What are the recent legislative changes and case law decisions affecting restrictive covenants?
- How can employers structure restrictive covenants to comply with new laws and decisions
- Emerging areas in restrictive covenants
For more information and to register, click here.
Seyfarth Synopsis: The New Jersey Legislature recently passed Senate Bill 121 affecting claims of discrimination, harassment, and retaliation, which if signed into law, would render any prospective waiver of rights against public policy, including pre-dispute mandatory arbitration agreements. In addition, non-disclosure provisions in settlement agreements involving these claims would be unenforceable against employees.
The 2018 Trading Secrets Year in Review is a compilation of our significant blog posts from throughout the year and is categorized by specific topics such as: Trade Secrets, Computer Fraud and Abuse Act, Non-Compete & Restrictive Covenants, Legislation, International, and Social Media and Privacy. As demonstrated by our specific blog entries, including our Top 10 Developments and Headlines, 2018 Trade Secrets and Non-Competes Webinar Series Year in Review, and our dedicated page concerning DTSA legislation, our blog authors stay on top of the latest developments in this area of law and provide timely and entertaining posts on significant new cases, legal developments, and legislation.
The 2018 Trading Secrets Year in Review also includes links to the recordings of webinars in the 2018 Trade Secrets Webinar Series. More information on our upcoming 2019 webinars is available in the program listing contained in this Review. Our highly successful blog and webinar series further demonstrate that Seyfarth Shaw’s national Trade Secret, Computer Fraud & Non-Competes Practice Group is one of the country’s preeminent groups dedicated to trade secrets, restrictive covenants, computer fraud, and unfair competition matters.
Clients and friends of the firm can request a digital or printed copy of the 2018 Trading Secrets Year in Review below.
In Seyfarth’s first installment in its 2019 Trade Secrets Webinar Series, Seyfarth attorneys Michael Wexler, Robert Milligan, and Joshua Salinas reviewed noteworthy cases and legal developments from across the nation over the last year in the area of trade secrets and data theft, non-competes and other restrictive covenants, and computer fraud. Plus, they provided predictions for what to watch for in 2019.
As a conclusion to this well-received webinar, we compiled a summary of takeaways:
- The Supreme Court will soon Rule on the meaning of the terms confidential and trade secrets within the meaning of Exemption 4 to FOIA which may have far reaching implications to trade secret and non-compete practitioners.
- State legislation across the country, including in Idaho, Utah, Colorado, and Massachusetts, continues to narrow or place further conditions on the scope of enforceable restrictive covenants.
- Employers with Massachusetts employees should take care to review choice of law, choice of venue and consideration to support their agreements.
- Employers with California employees should carefully evaluate whether to continue to use post-termination non-solicitation of employee covenants with their employees and contractors and discuss their options with counsel.
- Company owners should be careful to not draw the attention of state attorney generals and the justice department by entering into agreements with competitors regarding the mobility of employees.
The Vermont Legislature kicked off 2019 with bill H.1, seeking to ban non-competes in the Green Mountain State. The new bill has been filed by Martin LaLonde, who promulgated an identical bill last January. The 2018 bill was read and referred to the Committee on Commerce and Economic Development and never made further progress. Rep. LaLonde has a new co-sponsor in 2019, Rep. Annmarie Christensen.
The bill, as drafted, seeks to prohibit all non-compete agreements in the employment context. There are three limited exceptions allowing for parties to enter into an agreement not to compete with a business or similarly restrain a person from engaging a profession, business, or trade, where the sale of a business or dissolution of a partnership or limited liability company is involved. The bill specifically notes that it does not “prohibit an agreement that prohibits the disclosure of trade secrets . . . .”
We will continue to closely monitor proposed legislation in Vermont and across the nation and report back with any updates.
Continuing our annual tradition, we have compiled our top developments and headlines for 2018-2019 in trade secret, non-compete, and computer fraud law.
1. Government Agencies Increasing Scrutiny of Restrictive Covenants
In mid-2018, the Attorneys General of ten states investigated several franchisors for their alleged use of “no poach” provisions in their franchise agreements. In a July 9, 2018, letter, the Attorneys General for New Jersey, Massachusetts, California, Washington, D.C., Illinois, Maryland, Minnesota, New York, Oregon, Pennsylvania, and Rhode Island requested information from several franchisors about their alleged use of such provisions. Less than twenty-four hours later, some franchisors (mostly different ones than those who received the information demands) entered into agreements with the Washington State Attorney General’s Office to remove such clauses from their franchise agreements. The recent focus by state law enforcement on franchisors is a new twist, given that restrictive covenant agreements in the franchise industry are typically given more leeway than in the employment context. Continue Reading Top 10 Developments and Headlines in Trade Secret, Non-Compete, and Computer Fraud Law in 2018/2019
Last week, Florida Senator Marco Rubio introduced the “Freedom to Compete Act” (the “Act”) proposing to amend the Fair Labor Standards Act (FLSA) of 1938 to ban non-competes for most non-exempt workers. The Act is broadly drafted to void any agreement that restricts “any work for another employer,” “any work in a specified geographical area,” and “any work for another employer that is similar” to the employee’s prior work. While it purports to void only non-compete agreements, the bill’s use of the sweeping language “any work” could be interpreted to ban not only non-compete agreements, but other post-employment restrictive covenants such as customer and employee non-solicitation agreements. Further, the Act (if passed) would purportedly apply retroactively to agreements entered into before its enactment. Continue Reading Proposed Federal Non-Compete Legislation Could Have Unintended Consequences