Trade Secrets & Employee Mobility

A bill proposed in the Connecticut House of Representatives to regulate non-compete agreements and codify the common law has been modified to be applied only under circumstances of companies involved in mergers and acquisitions.

Over the last ten days, events unfolded in New Jersey that showed the Justice Department's federal trade secret enforcement initiative, which was announced in February 2013, to be one involving real action.

A recent federal case provides an example of how companies will be stuck with the terms of the restrictive covenants they implement, and may not be able later to interpret those covenants broadly.

A recent case stands as a reminder that there may be liability for writing an "overly zealous" - - and potentially inaccurate - - cease and desist letter.

A bill entitled, "Employer Use of Non-Compete Agreements," pending before the Connecticut House of Representatives, proposes to regulate all Connecticut non-compete agreements entered into, renewed or extended on or after October 1, 2013, and codify the common law.

Saylavee, LLC v. Hunt demonstrates the willingness of Connecticut courts to enforce restrictive covenants that are reasonable in length of time and geographic scope.

On May 2, 2013, the Texas Uniform Trade Secrets Act (UTSA) was signed into law by Governor Rick Perry. The new law becomes effective on September 1, 2013. Nearly every state in the United States now has adopted some variation of the model Uniform Trade Secrets Act; only New York, Massachusetts and North Carolina have not.

The New Jersey Legislature was overwhelmingly in favor of a measure that would have barred employers from obtaining social media IDs and other social media related information from employees and applicants. But Governor Chris Christie vetoed A-2878 because it would frustrate a business's ability "to safeguard its business assets and proprietary information" and potentially conflict with regulatory requirements on businesses in regulated industries such as finance and healthcare. Accommodating these competing interests is not only a legislative challenge, but is one faced by employers and businesses every day.

Practitioners in the area of trade secret protection and employee mobility law are still trying to sort out the impact of a federal court jury verdict in San Francisco last month finding former Korn Ferry executive David Nosal guilty of two criminal counts stemming from his alleged misappropriation of the Company's proprietary information after his departure.

Lawyers and clients alike often believe that it is easier to enforce a non-solicitation agreement than a non-competition agreement. Sometimes, that's true. However, that does not mean that companies can do so without demonstrating a legitimate business interest in the enforcement of that non-solicitation agreement.