As readers of this blog well know, there is a growing trend of state legislatures seeking to limit or outright ban non-competes. (See here, here, and here as just a few examples of state efforts to curb non-competes—not to mention the proposed federal legislation and international efforts—in the last six months.) Last week, the Washington Senate jumped on the bandwagon by passing a bill with a 30–18 vote that would severely limit the enforceability non-competes. (Similar efforts failed last year, as we reported here.)  Some of the key features of this year’s bill are as follows: Continue Reading Washington State Lawmakers Seek to Partially Ban Non-Competes

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

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

Please join us for a one-hour CLE webinar on Tuesday, January 29, 2019, at 1:00 p.m. Eastern / 12:00 p.m. Central / 10:00 a.m. Pacific.

On Tuesday, January 29 at 12:00 p.m. Central Time, in Seyfarth’s first installment of its 2019 Trade Secrets Webinar Series, Seyfarth attorneys will review 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 will provide predictions for what to watch for in 2019.
Seyfarth attorneys Michael Wexler, Robert Milligan, and Joshua Salinas will address the following topics:
  • Significant new federal and state court decisions and legislation on non-compete and other restrictive covenants that may impact their enforcement
  • The Defend Trade Secrets Act and tips for navigating the law and an overview of what we know now that it’s been in effect for more than 2 years
  • Discussion of recent trade secret misappropriation decisions
  • Noteworthy data breaches and criminal prosecutions for trade secret misappropriation, data theft, and computer fraud matters and discussion of lessons learned
  • Best practices for updating agreements and policies to adequately protect company assets and trade secrets

As a special feature of our blog—guest postings by experts, clients, and other professionals—please enjoy this blog entry from Donal O’Connell, Managing Director of Chawton Innovation Services Ltd.

Introduction

The purpose of this short paper is to ‘join the dots’ between a director’s fiduciary duties and especially a person holding dual or multiple directorships and trade secrets. Continue Reading Fiduciary Duties with Respect to Trade Secrets for Dual or Multiple Directors

Throughout 2018, Seyfarth Shaw’s dedicated Trade Secrets, Computer Fraud & Non-Competes Practice Group hosted a series of CLE webinars that addressed significant issues facing clients today in this important and ever-changing area of law. The series consisted of seven webinars:

  1. 2017 National Year in Review: What You Need to Know About the Recent Cases/Developments in Trade Secrets, Non-Compete and Computer Fraud Law
  2. Protecting Confidential Information and Client Relationships in the Financial Services Industry
  3. The Anatomy of a Trade Secret Audit
  4. Protecting Trade Secrets from Cyber and Other Threats
  5. 2018 Massachusetts Non-Compete and Trade Secrets Reform
  6. Protecting Trade Secrets Abroad and Enforcing Rights Abroad and in the U.S.
  7. Criminal Trade Secret Theft: What You Need to Know

As a conclusion to this well-received 2018 webinar series, we compiled a list of key takeaway points for each program, which are listed below. For those clients who missed any of the programs in this year’s series, recordings of the webinars are available on the blog, or you may click on the title of each available webinar below for the online recording. Seyfarth Trade Secrets, Computer Fraud & Non-Compete attorneys are happy to discuss presenting similar presentations to your company for CLE credit. Seyfarth will continue its trade secrets webinar programming in 2019, and we will release the 2019 trade secrets webinar series topics in the coming weeks. Continue Reading 2018 Trade Secrets and Non-Competes Webinar Series Year in Review