Senators Chris Murphy (D-Conn.) and Todd Young (R-Ind.) have introduced legislation entitled the Workforce Mobility Act (“WMA”). The WMA, like its prior incarnation from last year, seeks to ban non-compete agreements outside of the sale of a business or dissolution of a partnership. The WMA also follows a similar, unsuccessful, attempt by the federal government to limit non-compete agreements on a national scale earlier this year. Continue Reading Another Year, Another Attempt in the U.S. Senate to Ban Non-Competes Nationwide
It is axiomatic that in order for information to be considered a trade secret, it must have been kept secret. But what if the trade secret is disclosed without the owner’s consent? Such was the issue in Intellisoft, Ltd. v. Wistron Corp. et al., No. H044281, slip op. (Cal. Ct. App. Oct. 16, 2019), a recent unpublished decision from the California Court of Appeal for the Sixth Appellate District. Continue Reading California Appellate Court Rules Publication of Trade Secrets, Even Without Owner Consent, Eviscerates Protection
The Council of the District of Columbia is considering a new bill that would ban the use of non-compete restrictions for workers below certain income thresholds—and impose stiff penalties upon employers who include such restrictions in their agreements. Introduced on October 8, 2019, the Ban on Non-Compete Agreements Amendment Act of 2019 (“the Bill”) places D.C. in line to join a growing number of states where non-compete restrictions upon low-income—and, in some cases, relatively high-income—employees are unenforceable.
The Bill would ban the use of non-compete agreements for employees who work in D.C. and who earn up to three times the D.C. minimum wage: $87,654 annually under current law. The Bill would ban such restrictions not just in written agreements, but also in an employer’s “workplace policy” whether in writing (i.e., through an employee handbook) or as a matter of the employer’s practice. Not only would such restrictions be void as a matter of law, but any employer who had such restrictions in place, regardless of whether or not the employer enforced them, would be separately liable to each affected employee in an amount “not less than $500 and not greater than $1,000.” Employers who attempt to enforce non-compete restrictions that fall below the Bill’s income threshold would be liable to affected employees in an amount “not less than $1,500.” Finally, employers who retaliate against employees for either (1) alleged violations of non-compete restrictions that would be unenforceable under the Bill or (2) inquiring about or informing an employer that the employer’s non-compete restrictions may be unenforceable under the Bill, would be liable to each such employee in an amount “not less than $1,000 and not more than $2,000.” Beyond liability to affected employees, the Bill would also empower the Mayor of the District of Columbia to impose fines for violations of the Bill in an amount up to $500, except for retaliatory conduct for which the fine would be at least $1,000. Continue Reading D.C. Poised to Ban Non-Competes Below Income Threshold
Cross-posted from Workplace Law & Strategy blog.
When an ex-employee goes to a competitor or starts poaching clients or staff, employers often look to a restraint of trade clause to protect key business assets such as client relationships or company confidential information.
Often a quick decision needs to be made: apply to the Court to stop the ex-employee, or wait and sue for breach of contract damages at some later time. Wrapped up in this decision is the important issue of prospects of success—an employer will want to know there is a good chance of a successful outcome. Continue Reading Will We Win? The Odds of Success in Restraint of Trade Cases
Seyfarth Trade Secrets Attorneys are participating in The Sedona Conference Working Group 12 Annual Meeting in Charlotte, North Carolina, November 4–5, 2019.
On November 4, Seyfarth Partner and Trade Secrets, Computer Fraud & Non-Competes Practice Group Co-Chair Robert Milligan is speaking on “The Employee Life Cycle Relating to Trade Secrets” panel, and Seyfarth Partner Erik Weibust is speaking on the “Monetary Remedies in Trade Secret Disputes” panel. Milligan and Weibust are the co-leads of their respective draft teams.
Additional topics at the conference include:
- Identification of Trade Secrets
- Governance and Management of Trade Secrets
- Equitable Remedies in Trade Secrets Disputes
- Protecting Trade Secrets in Litigation about Them
- Trade Secret Issues across International Borders
- Judicial Roundtable
Find more information or register on The Sedona Conference website at https://thesedonaconference.org/node/8588
Over the course of the past several years, several states have banned or severely restricted the ability of businesses to bind low-wage workers to post-employment restrictive covenants. Since 2007, Oregon has banned non-compete agreements for all employees except those who are exempt (as defined by the state’s overtime payment statute) and whose annualized compensation at the time of termination exceeds the median income of a four-person family, as determined by the United States Census Bureau for the most recent year available at the time of the employee’s termination ($56,119 per year based on most currently-available data). In 2016, Illinois passed a statute banning non-compete agreements with low-wage workers (defined in Illinois to be non-governmental workers making less than the greater of the prevailing federal, state, or local minimum wage or $13 per hour). In 2018, contained within a wider-ranging non-compete bill, Massachusetts also banned employers from entering into non-compete agreements with non-exempt employees, as those employees classification is defined by the Fair Labor Standards Act (“FLSA”), as well as employees under age 18, paid or unpaid student interns, or other short-term student employees who are enrolled in school.
While such legislation trickled out over the last several years, 2019 has seen five additional states enact prohibitions on utilizing non-compete agreements for certain low-wage employees, with at least seven other states and the District of Columbia considering similar non-compete legislation.
Seyfarth is pleased to be a Global Sponsor at ITechLaw’s 2019 European Conference in Dublin, October 30–November 1.
ITechLaw is a not-for-profit organization established to inform and educate about the unique legal issues arising from the evolution, production, marketing, acquisition and use of information and communications technology. Founded in 1971, ITechLaw is a worldwide organization representing lawyers and other professionals in the technology sector. The organization’s global membership spans six continents and embodies a broad spectrum of expertise. In addition to serving as a forum for members to discuss a wide range of legal issues, the association regularly organizes conferences that explore cutting-edge issues and trends in both information technology and intellectual property law.
The 2019 European Conference will feature a wide range of programs and invaluable networking opportunities that will focus on cutting-edge legal topics, including artificial intelligence, e-sports, cybersecurity, and blockchain, and will provide practical insight into the latest developments in technology law. Data privacy and intellectual property professionals from across the world will be attending.
Seyfarth Partner Robert Milligan will be speaking on the Cybersecurity panel on Thursday, October 31. The panel of international lawyers and security experts will examine the increasing proliferation of cybersecurity incidents and their sophisticated nature and enterprise-wide measures to manage these risks and the related regulatory burdens, including addressing threats to valuable company trade secrets and intellectual property. This year, Robert Milligan completes his sixth and final year on ITechLaw’s Board of Directors. Seyfarth Partner Daniel Hart is also attending.
Find more information or register on ITechLaw’s website at https://www.itechlaw.org/Dublin2019
Courts have long lamented that “computing damages in a trade secret case is not cut and dry,” Am. Sales Corp. v. Adventure Travel, Inc., 862 F. Supp. 1476, 1479 (E.D. Va. 1994), meaning that “every [trade secret] case requires a flexible and imaginative approach to the problem of damages,” Univ. Computing Co. v. Lykes-Youngstown Corp., 504 F.2d 518, 538 (5th Cir. 1974).
The federal Defend Trade Secrets Act (“DTSA”) and virtually every state’s version of the Uniform Trade Secrets Act (“UTSA”) (only New York has not adopted the UTSA) permits recovery of damages for (1) actual loss caused by the misappropriation; (2) unjust enrichment that is not addressed in computing damages for actual loss; or (3) a reasonable royalty for the misappropriator’s unauthorized disclosure or use of the trade secret. There has been little guidance from the courts, however, as to how to calculate these different, and sometimes competing damages calculations, many relying on the “flexible and imaginative approach” set forth in the Fifth Circuit’s 1974 pre-UTSA University Computing decision. Even more difficult is the case where a plaintiff’s damages are based on the defendant’s anticipated future use of the trade secret, given that those damages necessarily will involve speculation about the revenues the defendant will generate from its use of the trade secret. Continue Reading Can a Party Recover Damages for the Anticipated Future Use of Trade Secrets?
Cross-posted from The Global Privacy Watch blog.
Attorney General Becerra’s office posted the long-awaited draft CCPA regulations a little before 2:00 pm (PST) October 10th. It was a bit of a curve ball, to be perfectly honest (considering the final swath of amendments to the CCPA are not even final until Governor Newsom signs them, or on October 13th). Tellingly, the California Administrative Procedure Act requires the California Department of Finance to approve “major regulations” (and they have 30 days to do that) prior to publication. Based on this, it would seem that these regulations were drafted prior to the amendments to the CCPA going through the legislature. This does not seem like an effective way to draft regulations, but hey, no one should tell the AG he shouldn’t jump the gun! They are now out there so, one reviews anyway.
Topping out at a modest 24 pages (the CCPA itself is 19 pages), the regulations are organized into seven articles. We’re directing our comments to the issues that pop out to us initially, and as always, we’ll post further observations as things progress. Continue Reading And the Wait for CCPA Rules is Over …. Kind Of
What You Need to Know about Protecting Company Assets in the Age of Employee Mobility and Digital Theft
Thursday, November 14, 2019
8:00 a.m. – 8:30 a.m. Central Time: Breakfast & Registration
8:30 a.m. – 10:00 a.m. Central Time: Program
Seyfarth Shaw LLP
233 South Wacker Drive, Suite 8000
Chicago, IL 60606
There is no cost to attend but registration is required and seating is limited.
About the Program
Significant developments in state and federal courts throughout the country, as well as in Congress and State legislatures, have changed the landscape of trade secret protection and restrictive covenant enforcement. Understanding the impact of these changes, and the tools now available to employers for trade secret protection and restrictive covenant enforcement, will help your company safeguard its most valuable assets and maintain its advantage over competitors.
Please join us for a fast-paced and informative discussion that analyzes recent developments in restrictive covenant and trade secrets law, and provides “best practices” for protecting your company’s most valuable assets—trade secrets, intellectual property and employees.
The program will focus on practical responses to the following issues and questions:
- The current flux of Illinois Restrictive Covenant Law due to conflicting opinions from Appellate Courts and how to best position your company in this new Restrictive Covenant environment.
- An update on recent restrictive covenant legislation proposed, and in some cases passed, in Congress and State legislatures.
- The interplay between criminal and civil law, and a discussion about several high profile criminal cases involving trade secret theft.
- Your new hire is bound by a restrictive covenant agreement—what now?
- What to do when a former employee attempts to raid your company’s employees and confidential information?
- How to best protect confidential information and intellectual property in today’s digital age.
- Kristine Argentine
- J. Scott Humphrey
- Katelyn Miller
- Michael Wexler