Trade Secrets & Employee Mobility

Judge Ruben Castillo, the Chief Judge for the United States District Court for the Northern District of Illinois, recently declined to follow a widely publicized Illinois Appellate Court decision in which the Appellate Court held that, absent other consideration, two years of employment is required consideration for a restrictive covenant in Illinois.

In a March 5, 2014 verdict, the U.S. Attorney's Office in San Francisco secured the first-ever federal jury conviction on charges brought under the Economic Espionage Act of 1996.

The high profile lawsuit filed on February 11, 2014 by Anschutz Entertainment Group against Shervin Mirhashemi and his new employer, Legends Hospitality, LLC, again raises the question of when a California Court of Appeal will decide whether employee non-solicits are enforceable in California.

A recent federal court decision in California illustrates the care that plaintiffs should take when pleading their own claims in trade secrets cases, lest they provide defendants a ready basis for dismissal.

The New York Appellate Division, Fourth Department, recently held in Brown & Brown v. Johnson, 1109 CA 13-00340 (February 6, 2014) that a Florida choice-of-law provision in an employment agreement among a Florida corporation, its New York subsidiary and a New York based and resident employee containing restrictive covenants is unenforceable because it is "truly obnoxious" to New York public policy.

A federal judge in Chicago recently held that when a corporation enters into a contract with another corporation under which it agrees not to engage in certain competitive activities, that agreement not to compete should not be analyzed like an employer/employee non-compete.

A recent decision from the United States District Court for the Southern District of New York, Reed Elsevier Inc. v. Transitions Holding Co., Inc., provides a useful overview of New York law on restrictive covenants.

A recent federal court decision concerning a company sending a cease and desist letter to a competitor (who had hired an individual formerly employed by the company, but then fired the individual as a result of the letter) underscores the difficulty the individual will face in pursuing a claim against the company of tortious interference with business relationship.

A recent decision by one district of the Illinois Court of Appeals (Fifield v. Premier Dealer Services) significantly altered long-settled understandings regarding the consideration required for an enforceable restrictive covenant in Illinois. In light of that decision, Illinois employers hoping to enforce restrictive covenants within two years after the signing date should be prepared to distinguish Fifield factually or legally. Employers that are concerned about their ability to do so, or that want to err on the side of caution, should act now to address the implications of Fifield.

How can an employee of a national employer not "work" where her employer works? How can such an employee not be subject to suit in the corporation's backyard?