Trade Secrets & Employee Mobility

In 2017, there were several cases worth noting under the federal Defend Trade Secrets Act (“DTSA”). These cases addressed (i) time periods covered by the DTSA, (ii) pleading requirements under the DTSA, and (iii) standards for obtaining ex parte seizure orders under the DTSA. We will discuss these three issues in turn.

Timing

The DTSA became effective May 11, 2016, which raised the questions of if, when, and how it might apply to pre-May 11, 2016, conduct. Simply stated, defendants may have a “timing defense” when the alleged misappropriation occurred before the DTSA’s ...

Consider the following scenario: your organization holds an annual meeting with all Research & Development employees for the purpose of having an open discussion between thought leaders and R&D regarding product-development capabilities. This year’s meeting is scheduled outside the United States and next year’s will be within the U.S. with all non-U.S. R&D employees traveling into the U.S. to attend. For each meeting, your employees may be subject to a search of their electronic devices, including any laptop that may contain your company’s trade secrets. Pursuant to a new ...

Of the various types of post-employment restrictions imposed on employees, a restriction on the recruitment of former co-workers (sometimes referred to as a “no-poach” or “anti-raiding” clause) is the type most likely to be enforced by a court. As a result, this is one type of post-employment restriction that is frequently drafted without the careful thought generally put in to traditional non-competes and client non-solicitation clauses.  But in what could be a foreshadowing of closer judicial scrutiny of co-worker non-solicitation clauses nationwide, the Wisconsin ...

Featured on Employment Law This Week:  No relief is expected from the Trump administration on anti-poaching agreements.

2016 guidance from the DOJ and FTC put employers on notice that agreements between companies not to poach employees, or to limit the compensation paid to some employees, could violate antitrust laws. There had been some speculation that President Trump’s DOJ would back away from this policy, but recent comments by the Assistant Attorney General for the Antitrust Division indicated that new administration will support the policy, and promised several ...

Several states in recent years have enacted laws that have been designed, in varying degrees, to limit non-competes, including California, Illinois, and Nevada. Which states and cities are most likely to do the same in 2018?

The New Hampshire and New York City legislatures have introduced bills that seek to prohibit the use of non-compete agreements with regard to low-wage employees. Under New Hampshire’s Bill (SB 423), a “low-wage employee” is defined as one who earns $15.00 per hour or less.  The New Hampshire Bill was introduced on January 24, 2018 and is scheduled for a ...

On October 20, 2016—just about three weeks before the presidential election won by Donald Trump—the Department of Justice and the Federal Trade Commission issued a remarkable document, entitled “Antitrust Guidance for Human Resources Professionals,” which outlined an aggressive policy promising to investigate and punish employers, and even individual Human Resources employees, who enter into unlawful agreements concerning recruitment or retention of employees.  As stated in that document, “[a]n agreement among competing employers to limit or fix the terms of ...

Financial analytics firm Novantas, Inc. and two individual defendants closed out 2017 with a victory, securing the dismissal of claims by rival First Manhattan Consulting Group LLC (“First Manhattan Consulting Group”) [1], which accused them of competing unfairly by poaching First Manhattan Consulting Group’s employees in order to steal its trade secrets.  The result demonstrates the need for plaintiffs in such cases to be able to prove with specificity which trade secrets were taken or threatened by the defendants’ conduct.

The Complaint alleged that Novantas engaged ...

In First Western Capital Management Co. v. Malamed, Case Nos. 16-1434, 16-1465 & 16-1502 (10th Cir. Oct. 30, 2017), the Tenth Circuit Court of Appeals held that a district court erred in issuing a preliminary injunction to a party under federal and state trade secret law where the court presumed that the party would be irreparably harmed absent the injunction.

Ordinarily, in order to obtain a preliminary injunction, a moving party needs to establish, among other things, that it will suffer irreparable harm if the injunction is denied. This requires the party to show that there is a ...

Epstein Becker Green attorneys Peter A. Steinmeyer, Robert D. Goldstein, and Brian E. Spang are pleased to be presenting 2017 Year in Review: Trade Secrets and Non-Compete Developments webinar on Wednesday, December 6, 2017 from 1:00 p.m. — 2:15 p.m. with Practical Law.

This webinar will provide insights into recent developments and expected trends in the evolving legal landscape of trade secrets and non-competition agreements. This webinar will focus on how to navigate this continually developing area and effectively protect client relationships and proprietary ...

Earlier this week, Illinois Attorney General Lisa Madigan sued payday loan company Check Into Cash of Illinois, LLC for allegedly requiring that all of its employees in Illinois, regardless of position or pay, sign a standard non-compete agreement which broadly limits their employment mobility for one year post-termination.

According to the Complaint, Check Into Cash’s standard non-compete agreement effectively precludes employment with any entity that offers any “consumer lending service,” regardless of whether the entity is an actual competitor; it applies within ...