Trade Secrets & Employee Mobility

This week, in LVRC Holdings LLC v. Brekka, the Ninth Circuit Court of Appeals issued a published opinion rejecting an employer's argument that its former employee violated the Computer Fraud and Abuse Act when he emailed company client lists and financial data to himself for personal use.

In Valentine Capital Asset Management, Inc. v. Agahi, 174 Cal. App. 4th 606, the California Court of Appeals, First District, recently looked at the issue of whether an associated person of a FINRA member could be compelled to arbitrate his company's trade secret and unfair competition claims against former employees who were also associated persons of a FINRA member.

With pending legislation in Massachusetts seeking to do away with non-compete agreements, both sides are struggling to find the solution to the problem. The question is: How can Massachusetts make itself more attractive to the tech community? Is the answer to do away with non-compete agreements or to simply modify them and restrict their duration and scope?

Florida law, specifically section 542.335, Florida statutes, which generally authorizes courts to enforce non-compete and other post-employment restrictive covenants if reasonable, leaves a number of issues unaddressed. Several of those issues are addressed in an opinion issued recently by the Eleventh Circuit Court of Appeals in Proudfoot Consulting Co. v. Gordon (11th Cir., July 30, 2009). The Eleventh Circuit affirmed the district court's injunction, but reversed the $1.66 million damages award to the former employer.

Not many lawsuits under the Employee Retirement Income Security Act (“ERISA”) turn on whether an employer legitimately insisted that an employee sign a no-compete agreement in order to receive benefits, but a federal court lawsuit currently pending in Chicago presents that very scenario.

Specifically, in a case brought by a former Bank of America employee against Bank of America and others, Charles Corbisiero alleges that he was lured into continuing to work for Bank of America by a promise of certain allegedly vested bonuses and other benefits, only to be told upon his ...

A high-profile no-compete case currently pending in Chicago may turn on whether merely "preparing to compete" constitutes "engaging in" contractually prohibited business activities.

We previously wrote concerning a May 22, 2009 temporary restraining order granted by the U.S. District Court for the Southern District of Ohio against three former employees of UBS Financial Services Inc. ("UBS"), in effect pending an arbitration hearing before the Financial Industry Regulatory Authority ("FINRA"). On June 3, 2009, UBS successfully moved the District Court to expand the TRO and for a preliminary injunction on the basis of additional evidence. The expanded TRO shows that even a plaintiff who has secured temporary injunctive relief from a court need not wait for a scheduled FINRA injunctive hearing if its business interests continue to be threatened in the interim.

Although issues involving misappropriation of trade secrets are frequently litigated, they rarely result in criminal charges. However, according to recent stories in The Chicago Tribune, Reuters.com, and other media outlets, a former employee of Goldman Sachs was recently arrested by the FBI for allegedly stealing trade secrets (software code regarding a proprietary trading system) worth millions of dollars.

A recent decision of the United States District Court, Southern District of New York, illustrates the importance for employers of making sure non-competition agreements are correctly executed by employees.

A recent article in Lawyer USA discusses how litigation over noncompetition and nonsolicitation agreements has been on the rise in recent years.