Trade Secrets & Employee Mobility

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.

Failure to protect corporate trade secrets had dire consequences for AGC, Inc., a Connecticut aviation component manufacturer forced to file a Chapter 11 bankruptcy on April 16, 2013. AGC blamed its circumstances in substantial part on the theft of its trade secrets by one of its former key executives who joined a rival competitor where he used the valuable proprietary information. AGC obtained little judicial sympathy because it failed to keep its trade secrets secret in the fashion required to be awarded injunctive relief.

Social media has changed the way that companies and employees connect to clients and customers. As new uses for social networking emerge, legal issues in this area are arising.

Earlier this month, the New Jersey Assembly introduced a new bill that proposes to invalidate non-competition, non-solicitation and confidentiality covenants of individuals who qualify for unemployment compensation.

Does the recent spate of antitrust challenges to no-hire agreements mean that negotiated no-hire provisions, which are commonly found in settlement agreements and commercial contracts, face an increased risk of being held unenforceable or, even worse, giving rise to a claim for damages?

A recent court decision affirms that companies and their counsel are shielded, pursuant to the absolute privilege protection, from liability for defamation that may arise from the publication of letters to former employees reminding the employees about post-employment contractual obligations to the company.

Peter Steinmeyer, a Member of the Firm in the Labor and Employment practice and Managing Shareholder of the Chicago office, was quoted in an article in Law360.com titled "5 Tips for Drafting Employment Pacts in the Social Media Era."

A United States Magistrate Judge recently held that a plaintiff had a duty to preserve his Facebook account and that his deletion of it warranted an "adverse inference" jury instruction for failing to preserve it.

In a new case filed by Charles Schwab & Co. Inc. against former employees who staggered their departures to a competitor, we have a prime example of the risks involved when a team departs over time versus simultaneously.

The Obama Administration's "Strategy on Mitigating the Theft of U.S. Trade Secrets," announced on February 20, 2013, encourages companies and industry associations to participate in efforts to develop and adopt voluntary best practices to protect trade secrets.