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On March 5, 2026, we previously advised that Virginia’s Senate Bill 170 introduces new limitations on the enforceability of restrictive covenants by protecting employees who are terminated without cause. Effective April 13, 2026, that bill became law.

What Virginia Employers Need to Know

Non-competes entered into after July 1, 2026, will become unenforceable if the employer terminates the employee’s employment without cause and does not provide severance benefits or other monetary payments to the employee.

Non-competes include both traditional prohibitions on competition and, pursuant to recent case law, employee non-solicit covenants.

The severance benefits or other monetary payments must be disclosed at the time the non-compete agreement is entered into.

The new law will become effective July 1, 2026 and only applies prospectively.

Violations of Virginia’s law may result in liability to employers. First, employees will be authorized to bring a civil action against any employer who attempts to enforce a non-compete in violation of the law. Any successful employee will be entitled to recover reasonable costs, fees for expert witness, and attorneys’ fees. Second, employers who violate the statute face civil penalties of $10,000 per violation, paid into the Commonwealth’s general fund.

What Virginia Employers Need to Do

Any employer who may hire employees in Virginia post-July 1, 2026, and desires to use a non-compete agreement, needs to update their restrictive covenant agreements to provide for “severance benefits or other monetary payments to the employee.”

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As part of Seyfarth’s 2026 Trade Secrets Webinar Series, our panel presented Protecting the House: Trade Secret Risks in Online Gaming, Sportsbooks & Predictive Markets, examining how the rapid expansion of digital wagering platforms is reshaping trade secret risk, regulatory exposure, and competitive strategy.

Michael Wexler, Mitch Robinson, and Bessie Fakhri led a practical discussion for in-house counsel, compliance professionals, product leaders, and executives operating in online gaming, sports betting, and predictive markets. The session explored how proprietary algorithms, AI-driven models, and consumer data are becoming central assets—and central risks—in an increasingly competitive and scrutinized industry.

View the Recording – CLE credit for this recording expires on March 31, 2027. See description for jurisdictions and details.

Key Takeaways

Predictive Markets Introduce New Trade Secret Exposure

The rise of predictive markets is creating new incentive structures that may increase the risk of misuse or leakage of confidential information. Where outcomes are tied to data inputs, modeling assumptions, or internal insights, companies must carefully assess how access to sensitive information could be leveraged—intentionally or unintentionally—in ways that compromise trade secrets.

Routine Auditing Is a Core Safeguard

Online gaming platforms and sportsbooks are increasingly implementing routine audits of systems that handle proprietary and trade secret information. These audits are critical to maintaining defensibility under trade secret law, helping organizations:

  • Identify access vulnerabilities
  • Monitor data flows across systems
  • Demonstrate “reasonable measures” to protect confidential information

Regular, documented auditing practices are becoming a baseline expectation in this space.

AI Expands Both Capability and Risk

The growing incorporation of AI across online gaming, sportsbooks, and predictive markets raises important considerations around trade secret protection and user privacy. Key risks include:

  • Exposure of proprietary data used in model training
  • Unclear ownership of AI-generated outputs
  • Increased scrutiny of how algorithms operate and use sensitive data

Organizations must implement clear governance around AI systems, including data controls, usage policies, and documentation.

Regulation Will Shape the Industry’s Future

Regulatory frameworks at both the federal and state levels continue to evolve and will play a significant role in shaping the future of online gaming, sportsbooks, and predictive markets. Increased scrutiny around data use, consumer protection, and platform integrity will directly impact how companies:

  • Define and protect trade secrets
  • Structure their platforms and offerings
  • Respond to compliance and disclosure obligations

Staying ahead of regulatory developments will be critical to maintaining both compliance and competitive advantage.

Looking Ahead

As online gaming, sportsbooks, and predictive markets continue to expand and converge, trade secrets will remain central to competitive positioning. Companies that proactively audit their systems, implement strong AI governance, and adapt to evolving regulatory expectations will be better positioned to protect sensitive information while navigating an increasingly complex legal landscape.

To ensure you don’t miss future sessions, subscribe to our Litigation – Trade Secrets & Non-Competes mailing list. For tailored programs, our attorneys are available to present customized sessions for your organization. Subscribe to our Trading Secrets blog for ongoing insights on trade secrets, employee mobility, and information governance.

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Washington yesterday adopted a major shift in its approach to employee restrictive covenants. Engrossed Substitute House Bill 1155 (ESHB 1155), approved by the Legislature in March 2026 and signed by the Governor yesterday, eliminates the use of noncompetition agreements in employment and independent contractor relationships beginning June 30, 2027 in specified situations including notices to existing agreement holders by October 1, 2027.

For employers with operations or employees in Washington, the law will require planning and careful contract review—but it does not leave businesses without tools to protect legitimate business interests.

A Shift from “Limited Use” to Near‑Prohibition

Since 2020, Washington has regulated noncompete agreements through income thresholds and reasonableness requirements. Those rules permitted noncompetes for higher‑earning employees if specific statutory conditions were met.

ESHB 1155 replaces that framework with a far more restrictive model. The new law voids nearly all noncompetition agreements, regardless of employee compensation level, job title, or industry. After the effective date, employers may not enter into new noncompetes, attempt to enforce existing ones, or represent that workers remain subject to them.

In practical terms, noncompetes will cease to be a viable post‑employment restriction in Washington outside of narrow sale‑of‑business situations.

Broad Definition of Prohibited “Noncompetition Covenants”

ESHB 1155 expands the definition of what constitutes a noncompetition covenant. The law goes beyond traditional clauses that explicitly prohibit working for competitors.

Under the new statute, prohibited provisions include agreements that:

  • Restrict a worker from engaging in an otherwise lawful profession or business
  • Prevent a former employee from accepting or transacting business with customers
  • Require workers to repay, forfeit, or lose compensation because they choose to compete after leaving
  • Function as indirect deterrents to post‑employment competition, even if not labeled as a “noncompete”

This expansion reflects legislative intent to prevent employers from using alternative contractual mechanisms that, in effect, limit employee mobility.

What Employers Can Still Use

Although the law significantly limits noncompetition agreements, it preserves several important tools for employers.

1. Nonsolicitation Agreements (Narrowly Defined)

Customer and employee nonsolicitation agreements remain permissible, but only if carefully drafted. To be enforceable:

  • Restrictions must focus on active solicitation, not the acceptance of unsolicited business
  • Customer restrictions are limited to individuals or businesses with whom the worker had a meaningful, work‑related relationship
  • The restriction may not last more than 18 months following separation

Agreements that go further—such as barring business dealings altogether—risk being deemed unenforceable.

2. Confidentiality and Trade Secret Protections

The law does not affect an employer’s ability to protect confidential information, proprietary data, or trade secrets. Properly drafted confidentiality agreements, coupled with strong internal data‑protection practices, will become even more important as noncompetes fade out.

3. Sale‑of‑Business Noncompetes

Noncompetes connected to the sale or acquisition of a business remain enforceable when the individual restricted by the covenant holds at least a 1% ownership interest. This exception preserves a well‑accepted exception in commercial transactions.

4. Limited Training Cost Repayment Agreements

Agreements requiring repayment of bona fide, out‑of‑pocket educational expenses are still allowed—but only if they meet strict statutory conditions related to duration, proportionality, and the circumstances of separation.

Retroactive Effect and Notice Considerations

Importantly, the law applies retroactively. Previously signed noncompete agreements will become unenforceable as of June 30, 2027.

Employers must also make reasonable efforts to inform affected workers that noncompete provisions are no longer valid by October 1, 2027. Failing to update outdated agreements or continuing to reference void restrictions may expose employers to liability.

Practical Impact on Employers

While ESHB 1155 limits one traditional tool for protecting competitive interests, it does not alter the fundamental employer‑employee relationship. However, it does accelerate a broader shift in employment law strategy.

Employers should anticipate:

  • Reduced ability to rely on post‑employment restrictions to retain talent
  • Greater scrutiny of incentive, bonus, and equity arrangements tied to post‑separation conduct
  • Increased emphasis on retention, engagement, and workforce planning
  • Heightened importance of onboarding, off‑boarding, and trade secret protocols

Employers that begin adjusting early will be best positioned to adapt smoothly.

Steps Employers Should Take Now

Although the law does not take effect until mid‑2027, employers benefit from planning well in advance. Recommended steps include:

  1. Review existing agreements containing noncompete, repayment, or broad nonsolicitation language
  2. Review template employment, equity, and bonus agreements for compliance with the new definition of noncompetition covenants
  3. Strengthen confidentiality and trade secret protections through policy and practice
  4. Train HR and management teams on permissible and impermissible restrictions and enforcement proceedings.
  5. Develop retention‑focused strategies that align with a more mobile workforce

Takeaway

ESHB 1155 represents a clear policy choice by Washington lawmakers to prioritize employee mobility and economic flexibility. For employers, the law requires adjustment and creative thinking about protecting intellectual capital and customer relationships. With thoughtful contract design, strong information‑protection practices, and forward‑looking talent strategies, businesses can continue to compete effectively in Washington’s evolving legal landscape.

Washington State Capitol / Washington
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Washington State has long taken a skeptical view of noncompetition agreements—and that skepticism is now on the brink of becoming a complete ban. Both chambers of the Legislature have approved Engrossed Substitute House Bill (ESHB) 1155, and the bill now awaits Governor Bob Ferguson’s signature, which is widely expected.

If signed, the law will dramatically reshape Washington’s restrictive covenant landscape. It would also position Washington State within a growing national trend to prohibit or sharply limit noncompetition agreements. California has long been the most prominent example, banning employment noncompetes for decades. North Dakota, Oklahoma, and Minnesota have also enacted complete bans. Several other states have adopted significant restrictions on the use of noncompetes, including Colorado, Illinois, Maine, Maryland, Oregon, Rhode Island, and Virginia.

Here’s what employers need to know.

Legislative Intent to Ban Noncompetition Agreements Entirely

ESHB 1155 begins by revisiting the Legislature’s earlier efforts to regulate restrictive covenants. The bill acknowledges that while Washington took “a critical step forward” in 2019 by banning noncompetition covenants for lower‑wage earners, “this did not go far enough.” The new findings section declares the Legislature’s intent “to ban noncompetition covenants for all Washington‑based workers and businesses.” This explicit statement makes clear that the policy goal is full elimination of noncompete agreements in the state.

Nonsolicitation Agreements Narrowed but Still Permitted

Importantly, the bill does not prohibit nonsolicitation agreements. Instead, it clarifies that such agreements remain lawful but must be “narrowly construed.” The legislation also revises the statutory definition to specify that a permissible nonsolicitation agreement may prohibit an employee, after termination, from soliciting co‑workers or from soliciting customers, clients, patients, or prospects to shift business away from the employer—but only when the employee established or substantially developed the relationship during their employment and only for up to 18 months following separation. The bill further states that any agreement restricting a former employee from accepting or transacting business with customers is not considered a valid nonsolicitation agreement.

Expansion of What Counts as a Noncompetition Agreement

The bill expands what qualifies as a noncompetition covenant. Newly included within the definition are agreements between performers and performance spaces (or scheduling intermediaries) that restrict lawful performances, as well as any contractual provision requiring a performer or employee to return, repay, or forfeit compensation or benefits as a consequence of engaging in a lawful business or profession. These expanded definitions prevent employers from using indirect or creative mechanisms to accomplish what traditional noncompete agreements once did.

Carveouts That Remain in Effect

Several longstanding carveouts continue under the revised statute. Noncompetition agreements do not include nonsolicitation agreements, confidentiality agreements, covenants prohibiting the use or disclosure of trade secrets or inventions, or covenants tied to the sale or purchase of a business in which the individual has at least a one‑percent ownership interest. The bill also adds a new carveout for written agreements requiring employees to repay out‑of‑pocket educational expenses, so long as the agreement expires within the first 18 months of employment, repayment is pro‑rated, and the repayment obligation is waived if separation occurs for “good cause” as defined in RCW 50.20.050.

All Noncompetition Agreements Will Become Void and Unenforceable

Once the bill takes effect—expected June 30, 2027, pursuant to legislative summaries—all noncompetition covenants will become void and unenforceable, regardless of when they were signed. Employers will also violate the statute if they attempt to enforce, threaten to enforce, or represent that an employee is subject to a noncompetition covenant. Even attempting to enter into such a covenant will constitute a violation.

Employer Notice Obligations

By October 1, 2027, employers must make reasonable efforts to provide written notice to all current and former employees and independent contractors whose noncompetition covenants would otherwise still be in effect, informing them that their covenants are void and unenforceable under the new law. This requirement will necessitate a review of personnel records and contract archives to identify anyone subject to legacy noncompetition clauses.

Clarification of Private Right of Action and Penalties

ESHB 1155 also clarifies who may bring a claim under the statute. Instead of allowing claims to persons “aggrieved by a noncompetition covenant,” the bill permits any person “aggrieved by a violation of this chapter” to bring a cause of action. A violation requires payment of the greater of actual damages or a statutory penalty of $5,000, plus attorneys’ fees and costs—exposure that can multiply quickly for employers with multiple affected workers.

Key Takeaways for Employers

All noncompetition agreements in Washington State will soon become void once Governor Ferguson signs ESHB 1155. Given the strong legislative push, employers should anticipate a near‑term effective ban. While nonsolicitation agreements remain permissible, the narrowed definition means employers must review and likely revise existing templates to avoid inadvertently creating an unlawful noncompetition provision. Employers should also prepare for potential liability, as violations may result in significant statutory penalties and attorneys’ fees.

Seyfarth Shaw LLP provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice or to create a lawyer-client relationship. Readers should not act upon this information without seeking advice from their professional advisers. 

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Virginia’s Senate Bill 170 (2026 Session) introduces new limitations on the enforceability of restrictive covenants by protecting employees who are terminated without cause. More specifically, the proposed amendment will render any non-compete unenforceable against an employee who was discharged from employment unless severance benefits or other monetary payments are made to the employee. The law is silent as to what constitutes sufficient “severance benefits or other monetary payments,” but those terms are required to be disclosed to the employee “upon execution of the covenant not to compete.”

There are two notable exceptions. First, the amendment will not apply to employees that are terminated for cause. Second, the amendment will only apply prospectively to agreements entered into after July 1, 2026; not retroactively.

The bill also provides some teeth by amending the existing non-compete statute to allow employees to bring a civil action against any employer who attempts to enforce a non-compete in violation of the law. Any successful employee will be entitled to recover reasonable costs, fees for expert witness, and attorneys’ fees. Further, employers who violate the statute face civil penalties of $10,000 per violation, paid into the Commonwealth’s general fund.

If Governor Spanberger signs the bill into law, employers will need to move quickly to update their existing templates to include clear severance or other monetary benefits to be provided “upon execution” of any non-compete agreement.

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As part of Seyfarth’s 2026 Trade Secrets Webinar Series, our panel presented The Modern Insider Threat: Shadow IT, BYOD, and Trade Secrets, examining how evolving workplace technology is reshaping trade secret risk, discovery obligations, and governance strategy.

Matthew Catalano, Peter Tsai, and Danny Riley led a practical discussion for general counsel, employment counsel, IP counsel, technology and cybersecurity teams, and HR professionals. With remote and hybrid work arrangements, employees increasingly rely on personal devices, unsanctioned apps, collaboration platforms, and generative AI tools — creating significant exposure when data moves beyond corporate control.

The program focused on identifying risks and actionable strategies for aligning Legal, HR, IT, and Security amid rapidly changing technology and regulatory scrutiny.

View the Recording – CLE credit for this recording expires on February 18, 2027. See description for jurisdictions and details.

Key Takeaways

Shadow IT and BYOD Are Trade Secret and Litigation Risks

Employees adopt personal devices and unsanctioned tools faster than policy can respond, creating invisible data flows outside corporate oversight. These blind spots raise trade secret, discovery, and regulatory concerns.

AI Has Accelerated Exposure

Generative AI tools are accessible and easy to use, they multiply risk: source code in chatbots, trade secrets submitted as prompts, and AI notetakers capturing privileged discussions. Courts applying the DTSA’s “reasonable measures” standard will scrutinize gaps between policy and enforcement. AI agents generate logs, parameters, and decision paths that may themselves become relevant evidence.

Discovery Extends Beyond Corporate Systems

Data on personal devices, messaging apps, cloud drives, and AI chat platforms may all be discoverable, creating preservation risks and discovery blind spots.

Control under Rule 34 depends on policy and practice:

  • In re Pork Antitrust Litigation — remote wipe tools or the employer–employee relationship alone do not give a right to compel access to personal devices.
  • Westin— a specific agreement allowing searches of personal devices created an enforceable legal right; work-related text messages on personal devices were within company “control.”

Generative AI further complicates discovery:

  • United States v. Heppner — AI Terms of Service can determine whether confidentiality is reasonable; generally no reasonable expectation of confidentiality for public AI chat platforms; a public AI chatbot is not an attorney.
  • Preservation may require capturing the prompt, the exact document version, and AI outputs.
  • AI Agent actions, logs, and decision pathways may also be discoverable, and automated alterations can create spoliation risk.

Privacy Laws Add Complexity — But Not Immunity

Monitoring for trade secret protection intersects with privacy laws such as California’s CCPA and the EU’s GDPR. Privacy does not remove governance obligations; it requires thoughtful balancing and documentation.

“Shadow contracts” — employees accepting SaaS terms without review — can bind the company to unfavorable data use or AI-training provisions.

Security Blind Spots Are Costly

Shadow IT operates outside logging, monitoring, and audit controls. Most incidents are unintentional, yet once sensitive information leaves controlled systems, corporate exposure to threat actors, plaintiffs, and regulators can follow.

Protection Requires Cross-Functional Alignment

Technology alone is insufficient; policies without enforcement lack defensibility. Effective management requires Legal, HR, IT, and Security coordination, with measurable standards such as auditability, preservation readiness, and compliance posture.

Looking Ahead

Shadow IT, BYOD, and AI are embedded in daily workflows. Courts are adapting discovery standards, and regulators scrutinize information governance practices. Organizations that assess high-risk roles, enforce approved tool frameworks, and align cross-functional stakeholders are best positioned to protect trade secrets while meeting discovery and compliance obligations.

To ensure you don’t miss future sessions, subscribe to our Litigation – Trade Secrets & Non-Competes mailing list. For tailored programs, our attorneys are available to present customized sessions for your organization. Subscribe to our Trading Secrets blog for ongoing insights on trade secrets, employee mobility, and information governance.

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REGISTER HERE

Thursday, February 19, 2026
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

About the Program

Shadow IT and BYOD practices are not new – but the risks they pose to trade secrets have fundamentally changed. Remote and hybrid work, the explosion of collaboration tools, and the rapid adoption of generative AI have created an environment where employees routinely use personal devices, unsanctioned applications, and third-party platforms to get work done, often faster than policy can keep up.

This webinar will explore how these realities create trade secret exposure, discovery blind spots, and privacy and compliance conflicts. The panel will address the intersection of shadow IT, BYOD, and AI tools; the discovery challenges that arise when business data lives outside corporate-controlled systems; and practical strategies for aligning Legal, HR, IT, and Security around a defensible governance framework.

Key Topics:

  • How shadow IT and BYOD create trade secret pressure points, including in light of advances in AI
  • Discovery challenges: preservation, control, and access over data on personal devices and unsanctioned platforms
  • Privacy, security, and information governance implications
  • Technical controls and organizational strategies that work
  • A practical roadmap for identifying high-risk roles and establishing approved tool frameworks

This program is intended for general counsel, employment counsel, IP counsel, and HR professionals responsible for protecting trade secrets and confidential information in a modern work environment.

Speakers

Matthew Catalano, Partner, Seyfarth Shaw LLP
Peter Tsai, Counsel, Seyfarth Shaw LLP
Danny Riley, Associate, Seyfarth Shaw LLP

REGISTER HERE

If you have any questions, please contact Sela Sofferman at ssofferman@seyfarth.com and reference this event.

Learn more about our Trade Secrets, Computer Fraud & Non-Competes practice. 

To comply with State CLE Requirements, CLE forms requesting credit in IL or CA must be received before the end of the month in which the program took place. Credit will not be issued for forms received after such date. For all other jurisdictions forms must be submitted within 10 business days of the program taking place or we will not be able to process the request.

Our live programming is accredited for CLE in CA, IL, and NY (for both newly admitted and experienced).  Credit will be applied as requested, but cannot be guaranteed for TX, NJ, GA, NC and WA. The following jurisdictions may accept reciprocal credit with our accredited states, and individuals can use the certificate they receive to gain CLE credit therein: AZ, AR, CT, HI and ME. For all other jurisdictions, a general certificate of attendance and the necessary materials will be issued that can be used for self-application. CLE decisions are made by each local board, and can take up to 12 weeks to process. If you have questions about jurisdictions, please email CLE@seyfarth.com.

Please note that programming under 60 minutes of CLE content is not eligible for credit in GA. programs that are not open to the public are not eligible for credit in NC.

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To kick off the 2026 Trade Secrets Webinar Series, Seyfarth’s Trade Secrets, Computer Fraud & Non-Competes practice group presented 2025 Year in Review: Trade Secrets, Computer Fraud & Non-Competes, a timely discussion examining the most significant legal developments from 2025 and their implications for employers moving forward.

Seyfarth partners Michael Wexler, Dawn Mertineit, and Robyn Marsh provided a comprehensive review of key cases, legislation, and enforcement trends impacting trade secrets, restrictive covenants, and computer fraud at both the federal and state levels. Tailored for general counsel, employment counsel, IP counsel, and HR professionals, the program offered practical guidance for navigating risk and strengthening protections in an increasingly complex regulatory environment.

View the Recording – CLE credit for this recording expires on January 28, 2027.

Key Takeaways

  • While the FTC non-compete ban is dead, overbroad covenants are still subject to FTC and DOJ scrutiny, particularly in certain industries such as healthcare.
  • State laws continue to create a patchwork of specific rules regarding wage thresholds, choice of law/forum requirements, and more, all of which must be considered when drafting agreements for employees in multiple jurisdictions. Several states have additional bills being considered, including state non-compete bans or industry-specific bans.
  • Protecting the secrecy of confidential information and moving promptly to address any theft of such information is more important than ever, as courts closely scrutinize misappropriation claims

Looking Ahead

As the legal landscape governing employee mobility and information protection continues to shift, the themes from 2025 remain consistent: thoughtful drafting, state-specific compliance, and proactive enforcement are critical. Employers that regularly audit their agreements, safeguard confidential information, and stay attuned to regulatory developments will be best positioned to mitigate risk in 2026 and beyond.

To ensure you don’t miss out on this informative session and future webinars, subscribe to our Litigation – Trade Secrets & Non-Competes mailing list for exclusive invitations.

For a tailored approach, our attorneys are available to discuss presenting personalized presentations to your company. Stay well-informed on non-compete laws with our recently updated 50 State Non-Compete Desktop Reference. Subscribe to our Trading Secrets blog, where we delve into topics and issues related to trade secrets and non-competes.

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In a case that should stand as a strong reminder to apportion your damages whenever possible, the Fifth Circuit Court of Appeals affirmed a significant post‑trial ruling in Trinseo Europe GmbH v. Harper, et al., upholding the district court’s decision to vacate a $75 million jury verdict for trade secret misappropriation. 2026 WL 160524 (5th Cir. Jan. 21, 2026). Although the jury found that the defendants misappropriated four of the ten trade secrets Trinseo asserted, the appellate court agreed that Trinseo’s damages model—predicated on misappropriation of all ten alleged trade secrets—left the jury without any legally sufficient basis to apportion damages to the specific secrets actually found misappropriated. Without that foundation, the multimillion‑dollar award could not stand.

The dispute arose from Trinseo’s allegations that several defendants, including KBR, misappropriated various trade secrets related to polycarbonate production in violation of the Defend Trade Secrets Act. Before trial, KBR moved to exclude Trinseo’s damages expert, arguing that the expert failed to apportion damages between misappropriated and non‑misappropriated features of the technology. Although the district court allowed the testimony, it expressly warned that Trinseo’s “all‑or‑nothing” approach would be “totally undermined” unless Trinseo obtained a verdict on all ten trade secrets. Id. at *3, *14. Trinseo nonetheless presented a damages model that bundled all ten trade secrets together without providing the jury any methodology to assign value to each one individually.

After the jury awarded more than $75 million in reasonable royalty and unjust enrichment damages, the district court granted judgment as a matter of law, concluding that Trinseo’s failure to apportion damages—paired with the jury’s decision not to find all ten secrets misappropriated—was “fatal” to the verdict. Id. at *4. The Fifth Circuit affirmed, emphasizing that trade secret damages—like patent damages—must “reflect the value attributable to the infringing features of the product, and no more.” Id. at *6. Where a plaintiff alleges multiple secrets, the jury must be provided a reasonable, non‑speculative basis to apportion value to the specific secrets actually proven at trial.

Beyond damages, the Fifth Circuit affirmed the district court’s permanent injunction barring defendants from using Trinseo’s trade secrets and agreed that Trinseo’s alternative “confidential information” claims are preempted by the Texas Uniform Trade Secrets Act. The court also affirmed the denial of Trinseo’s request for a new trial on damages. But the court’s focal point was clear: damages must be grounded in evidence that ties the monetary award to the particular secrets misappropriated—not to the universe of information a plaintiff hopes to prove. If the plaintiff instead offers a single, bundled number that assumes every alleged secret was misappropriated, the jury has no reasonable, non‑speculative way to award damages limited to the secrets actually proven—and any such award is vulnerable to being vacated.

The decision reinforces a critical takeaway for plaintiffs: parties must ensure whenever possible that their experts valuate each alleged trade secret or provide a methodology for juries to calculate the value of a trade secret or group of trade secrets to withstand post‑trial scrutiny. As the Fifth Circuit’s ruling makes clear, an “all‑or‑nothing” approach may ultimately leave a prevailing plaintiff with nothing at all.

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On February 3, 2026, the Delaware Supreme Court issued a short but highly anticipated order in North American Fire Ultimate Holdings, LP v. Doorly, reversing the Chancery Court’s dismissal of contract claims seeking to enforce restrictive covenants against a former senior executive. The decision clarifies that the existence of consideration supporting restrictive covenants must be evaluated at the time the parties enter into their agreement—not at the time of an alleged breach or at the time the employer seeks enforcement.

Background

As part of a 2021 acquisition, the plaintiff North American Fire granted common equity units to Alan Doorly, a co‑founder of the acquired company. Doorly later exchanged those units for incentive units subject to time‑ and performance‑based vesting under an Incentive Unit Grant Agreement, which contained various restrictive covenants, including confidentiality, non‑solicitation, and non‑competition provisions.

By 2023, Doorly had formed a new competing entity in violation of his non-compete. Upon discovering these activities, North American Fire terminated Doorly for cause, triggering a contractual forfeiture of both his vested and unvested incentive units under his agreement. North American Fire sued Doorly, seeking among other things to enforce his restrictive covenants. The Chancery Court dismissed the contract claims, holding that the covenants lacked consideration because the incentive units—framed by the court as the sole consideration for Doorly’s agreement to abide by the covenants—had been forfeited by the time enforcement was sought.

The Supreme Court’s Decision

The Supreme Court reversed, holding that the Chancery Court applied the wrong legal framework. The Supreme Court reaffirmed a “general principle of contract law” that consideration is assessed at the time the parties form their contract, not at the time of breach or enforcement. In other words, the forfeiture of Doorly’s incentive units after formation did not retroactively eliminate the consideration that existed when he entered into the agreement.

The Supreme Court found that the Chancery Court’s reliance on the forfeiture of Doorly’s vested and unvested units “at the time of enforcement” was improper and emphasized that the units, though contingent, had “actual value” at the time of contract formation. In doing so, the Supreme Court analogized to earlier Chancery Court precedent involving restricted stock units, where contingent equity awards were held to constitute valid consideration despite time or performance conditions to vest.

The Supreme Court remanded the case for further proceedings on the contract claims. The Court did not address North American Fire’s claim that the restrictive covenants were supported by consideration other than the incentive units, apparently finding it unnecessary to address that issue in light of its determination that the question of consideration should be measured at the time of contract formation, notwithstanding the later forfeiture.

Context: Delaware’s Evolving Approach to Restrictive Covenants

Although narrow in scope, the decision arrives as Delaware continues to refine its approach to restrictive covenants in both the employment and M&A contexts. Recent decisions and commentary have signaled an increased willingness by the Chancery Court to closely scrutinize post‑employment restrictions. However, Doorly follows other decisions from the Delaware Supreme Court that have reaffirmed Delaware’s stated policy of freedom of contract that has been in tension with certain rulings by the Chancery Court (see some of our prior discussions here and here).

Against this backdrop, Doorly fits into a larger trend: Delaware courts continue to enforce restrictive covenants when they reflect bargained‑for exchange and reasonable scope, but the Chancery Court has shown an increased readiness to challenge enforceability of such covenants.

Takeaways

While the law continues to evolve, Doorly and its predecessors offer some guidance to businesses that continue to use Delaware law to govern restrictive covenants agreements (whether in the employment context or in the sale of a business):

  • Under Delaware law, the forfeiture of equity after contracting does not retroactively invalidate the consideration that existed when the agreement was executed.
  • Contingent equity awards can be valid consideration for restrictive covenants. Delaware continues to view such equity awards as non‑illusory, even if they are tied to performance or time vesting.
  • Drafting matters. Businesses relying on restrictive covenants should carefully structure grant agreements to reinforce that the award itself—regardless of future vesting or forfeiture—constitutes consideration.
  • Restrictive covenants are being subjected to much greater scrutiny for reasonableness in scope, time and geography than ever before.
  • The broader landscape remains in flux. Delaware courts continue to scrutinize restrictive covenants in both employment and M&A settings, and alternative mechanisms such as forfeiture‑for‑competition clauses may ultimately prove to be a more attractive option for businesses to enforce restrictive covenants in the “First State.”