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

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

Late last spring we reported on the second published decision out of the District of Massachusetts citing the Massachusetts Noncompetition Agreement Act (“MNCA”), NuVasive, Inc. v. Day. On April 8, 2020, the First Circuit issued a decision on the defendant’s appeal, upholding the lower court’s ruling. While the First Circuit’s decision does not directly analyze an agreement that is subject to the MNCA, it is still instructive for out-of-state employers with personnel who may be subject to that law.
Continue Reading The First Circuit Weighs in on the Applicability of Massachusetts’ Non-Compete Law

Continuing our annual tradition, we have compiled our top developments and headlines for 2019 & 2020 in trade secret, non-compete, and computer fraud law. Here’s what you need to know to keep abreast of the ever-changing law in this area.

1. Another Year, Another Attempt in Congress to Ban Non-Competes Nationwide

Senators Chris Murphy (D-Conn.) and Todd Young (R-Ind.) introduced legislation in 2019 entitled the Workforce Mobility Act (“WMA”). The WMA seeks to ban non-compete agreements outside of the sale of a business or dissolution of a partnership.

Not only would the WMA abolish covenants not to compete nationwide, outside of the extremely narrow exceptions highlighted above, but it would also provide the Department of Labor (DOL) and Federal Trade Commission (FTC) with broad enforcement power. If enacted, the legislation would empower the FTC and DOL to enforce the ban through fines on employers who either fail to notify employees that non-compete agreements are illegal or who require employees to sign covenants not to compete. Additionally, the WMA establishes a private right of action for all employees allegedly aggrieved by a violation of the WMA.

The WMA contains a carve out for parties to enter into an agreement to protect trade secrets. As currently drafted, the WMA does not abrogate the scope of protections provided by the Defend Trade Secrets Act.

Presently, there are no generally applicable federal restrictions on non-compete agreements, and enacting such a law would have to pass Constitutional muster. We expect to see continued activity at the federal legislative level to attempt to ban or limit the use of non-competes.

2. New State Legislation Regarding Restrictive Covenants


Continue Reading Top 10 Developments and Headlines in Trade Secret, Non-Compete, and Computer Fraud Law for 2019 & 2020

For the first time in 15 years, the Supreme Judicial Court (“SJC”), Massachusetts’ highest court, issued a decision analyzing the enforceability of non-solicitation covenants, the distinction between such covenants in the context of the sale of a business versus employment, and equitable tolling of restrictive covenants. As set forth below, this decision serves as an important reminder to businesses who impose restrictive covenants governed by Massachusetts law.

Factual Background

While the factual background of the case is long and twisty, only a few key details are necessary to rehash here. The defendant Matthew McGovern (“McGovern”) entered into a restrictive covenants agreement with his former co-shareholders of the Prime Motor Group (“Prime”), in exchange for plaintiffs’ agreement to buy out McGovern’s minority share in Prime with no discount. The agreement, which was made a year after McGovern had been terminated as an employee and as part of a resolution of the parties’ dispute concerning McGovern’s alleged violation of an earlier restrictive covenants agreement, prohibited McGovern from hiring, soliciting, or encouraging Prime employees to leave Prime for 18 months. The agreement contained no tolling provision, but provided that plaintiffs would be entitled to injunctive relief if McGovern breached, without needing to prove irreparable harm.  
Continue Reading Massachusetts’ High Court Pumps the Brakes on Equitable Tolling of Restrictive Covenant

Last summer, after a decade of fits and starts, and just minutes before the end of the 2018 legislative session, the Massachusetts legislature finally passed comprehensive non-compete reform, which went into effect on October 1, 2018. It had become almost a sport watching what the legislature would do at the end of each year with that current year’s version of non-compete reform, which ranged from all out bans to merely codifying the common law. (For a recap of the many twists and turns over the years, here is just a smattering of blog posts on the topic)

If you assumed that we would get 2019 off, you would be mistaken. As we pointed out in the pages of Massachusetts Lawyers Weekly and Law360, the 2018 law caused as much confusion as it did clarity, and we predicted that amendments and clarifications would be necessary. And it didn’t take long for the first such clarification to be proposed. 
Continue Reading That Was Quick—Massachusetts Legislature Seeks to Clarify 2018 Non-Compete Law, and to Exempt Physician Assistants

As we’ve previously written about on this blog, last summer the Massachusetts legislature passed a non-compete reform bill which went into effect on October 1, 2018. Readers of this blog will recall our concerns that the new law is in many ways confusing and may lead to unpredictable results. Now, more than six months after its effective date, we have a second published decision out of the United States District Court for the District of Massachusetts citing the new Massachusetts Noncompetition Agreement Act (“MNCA”), Mass. Gen. Laws ch. 149, § 24L. Like the first published decision, this decision does not directly analyze an agreement that is subject to the Act, but it is still instructive for employers with personnel who may be subject to the MNCA. 
Continue Reading Federal Judge Confirms That Massachusetts’ New Non-Compete Law Does Not Require Garden Leave or Massachusetts Choice of Law

On March 7, 2019, a group of six United States senators from both sides of the aisle submitted a letter to the Government Accountability Office (GAO) requesting a federal investigation into the use of non-compete agreements on the basis that their widening use in recent years raises concerns about their negative impact on both workers and the national economy.  Specifically, the letter asks the GAO to assess the following three questions:

  1. What is known about the prevalence of non-compete agreements in particular fields, including low-wage occupations?
  2. What is known about the effects of non-compete agreements on the workforce and the economy, including employment, wages and benefits, innovation, and entrepreneurship?
  3. What steps have selected states taken to limit the use of these agreements, and what is known about the effect these actions have had on employees and employers?


Continue Reading U.S. Senators Request Review of Non-Compete Agreements by the Government Accountability Office

As we’ve previously written about on this blog, last summer the Massachusetts legislature passed a non-compete reform bill which went into effect on October 1, 2018. Readers of this blog will recall our concerns that the new law is in many ways confusing and may lead to unpredictable results. Now, nearly five months after its effective date, Magistrate Judge Dein of the United States District Court for the District of Massachusetts has issued the first published decision citing the new Massachusetts Noncompetition Agreement Act, Mass. Gen. Laws ch. 149, § 24L—unfortunately, this decision does not analyze an agreement that is subject to the Act, but it does confirm our suspicions that creative practitioners will try to use the new law to attack the enforceability of agreements entered into before the effective date.
Continue Reading For the First Time, a Massachusetts Court Weighs in on the New Noncompetition Agreement Act – Well, Sort Of

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