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

As readers of this blog know, most trade secret misappropriation claims are brought in civil complaints—but a recent case out of Pennsylvania reveals how quickly the tables can turn on a civil plaintiff asserting claims against her former employer, resulting not only in civil counterclaims for trade secret misappropriation, but also in criminal prosecution. This case reveals how defense counsel can—and should—take an aggressive approach to protection of clients’ confidential and trade secret information, not only to preserve clients’ claim that such information is confidential, but to obtain critical leverage in high-stakes litigation. 
Continue Reading Nursing Assistant’s “Self-Help” Attempt to Bolster Her Discrimination and Wage Claims Backfires in Spectacular Fashion

The Alleghany Court of Common Pleas in Pittsburgh, Pennsylvania, recently denied a law firm’s request to enjoin its former partner from retaining a database that contained various information used to file legal actions under the American with Disabilities Act. According to the law firm, the database was a “trade secret” of the firm, and consequently

The Attorneys General of ten states are investigating fast food franchisors for their alleged use of “no poach” provisions in their franchise agreements, according to a press release by the New Jersey Attorney General’s Office, and as reported by NPR.  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 eight fast food companies about their alleged use of such provisions.  The letter states that the Attorneys General “have learned that certain franchise agreements used in our States and the District of Columbia . . . may contain provisions that impact some employees’ ability to obtain higher paying or more attractive positions with a different franchisee.”  In other words, the agreements purportedly prohibit one franchisee of a particular brand from hiring employees of another franchisee of the same brand.  
Continue Reading State Attorneys General Investigate Fast Food Franchisor “No Poach” Agreements

shutterstock_114348199In a landmark ruling of first impression, the Pennsylvania Supreme Court recently held that an employer’s non-competition covenant, which included the employee’s pledge not to challenge the covenant for inadequate consideration, is unenforceable unless it is accompanied by a change in job status or some other significant benefit.  Socko v. Mid-Atlantic Systems of CPA, Inc.

A non-competition covenant prohibited employees of Adhesives Research (AR), a company based in Pennsylvania, from performshutterstock_129702905ing services for a competitor of AR anywhere in the world for two years after termination. Newsom, AR’s western U.S. manager of medical products, worked out of her home in California. When she quit and joined another adhesives manufacturer,

A Florida franchisee executed a franchise agreement (FA) containing a non-compete provision and a Pennsylvania forum selection clause.  Following termination of the FA, the former franchisee’s wife opened a similar business in another part of Florida.  The franchisor filed suit in Pennsylvania against the former franchisee and his wife, and they moved to dismiss or,

A state court issued a preliminary injunction for alleged trade secret misappropriation, but the enjoined parties successfully used post-injunction discovery to convince the court that the complaint was baseless.  Those parties then filed a federal court lawsuit for abuse of process and other torts.  In Peek v. Whittaker, Case No. 2:13-cv-01188 (W.D. Pa., May

Dating comes with its own set of challenges, and apparently, these now include trade secrets!  This month, a speed dating service provider, Speed Date USA Inc. (“Speed Date”) filed a multi-million dollar lawsuit against Match.com (“Match”) in Pennsylvania federal court.

According to the Complaint, the parties had an agreement under which Speed Date would

According to the allegations in a recently filed complaint, Defendant Implementation Management Assistance, Inc. (“IMA”) hired a long-time employee, Liana Hans, away from competitor Plaintiff Triage Consulting Group, Inc. (“Triage”). Hans allegedly had intimate knowledge of Triage’s proprietary systems and allegedly shared that knowledge with IMA, in derogation of her confidentiality agreement with Triage. IMA