2015 Trade Secrets and Noncompetes Year in Review

Newspaper StandsIn anticpation of speaking at the Boston Bar Association’s 16th Annual Intellectual Property Year in Review earlier this month, with some assistance from several of my colleagues (Nicole Daly, Hannah Joseph, and Will Haddad), I prepared a paper discussing a number of the developments in trade secrets law and noncompete law around the country in 2015.

The topics covered in the paper are set forth below. Note that, since speaking on at the Year in Review, there have been a handful of developments on certain of the topics; they will be covered in the next post.

  • Congressional efforts to amend the Economic Espionage Act, most recently through the Defend Trade Secrets Act of 2015.
  • The continuing saga of mixed interpretations of the scope of the Computer Fraud and Abuse Act, focusing (for the paper) on the Obama Administration’s proposal for “modernizing the Computer Fraud and Abuse Act” and the Second Circuit’s decision in the highly-reported “Cannibal Cop” case, United States v. Valle, 807 F.3d 508 (2nd Cir. 2015).
  • The European Commission’s most recent efforts to develop a unified approach to trade secrets law in Europe (the so-called, “Directive of the European Parliament and of the Council on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure”).
  • The recent Trans-Pacific Partnership Agreement (referred to as the “TPP”), which, if adopted in each of the countries, will enhance, among other things, companies’ ability to protect their trade secrets in the signatory Pacific Rim countries.
  • The new amendments to discovery rules 26 and 37(e) of the Federal Rules of Civil Procedure (given the heavily reliance on electronic discovery in trade secrets cases).
  • Recent cases applying Atlantic Marine Construction Company, Inc. v. United States District Court for the Western District of Texas, 134 S.Ct. 568 (2013) to the enforcement of forum selection clauses in trade secrets cases – including decisions addressing international implications.
  • Continued Massachsuetts legislative efforts to ban or modify Massachusetts noncompete law and to adopt the Uniform Trade Secrets Act in Massachusetts.
  • Alabama’s new noncompete law (effective January 1, 2016) that retains much of the old law, but establishes a presumption that a two-year duration of a noncompete is reasonable and requires mandatory judicial reformation of overbroad noncompetes.
  • Arkansas’s modification of its noncompete law.
  • Hawaii’s ban on noncompetes and nonsolicitation agreements for workers in a technology business.
  • New Mexico’s ban on noncompetes for dentists, physicians, podiatrists, osteopathic physicians, and certified registered nurses.
  • Oregon’s amendment of its noncompete law to limit the duration to 18 months (from the prior two-year maximum).
  • Bills to ban noncompetes in Michigan, Pennsylvania, and Washington (as well as two other bills in Washington: one to ban the use of noncompetes for low-income employees and persons involuntarily terminated without cause and one that would ban the use of noncompetes for physicians).
  • A bill in New York to “clarify” its existing law.
  • A bill in Wisconsin to make it easier to enforce noncompetes, including by adding presumptions of what is and is not a reasonable duration and by permitting the courts to modify overly broad restrictions (as opposed to having to invalidate them in their entirety).
  • The SEC’s first cease and desist order against a company finding that the company’s confidentiality statement (a confidentiality requirement imposed in connection with internal investigations) interfered with Rule 21F-17 (“Staff communications with individuals reporting possible securities law violations”) promulgated by the SEC as of August 12, 2011, in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act. (See In the Matter of KBR, Inc., Administrative Proceeding File No. 3-16466.).
  • A federal bill entitled, the “Mobility and Opportunity for Vulnerable Employees Act” (or the “MOVE Act“), that would prohibit the use of covenants not to compete (defined in the bill) for “low- wage employees,” i.e., employees earning the greater of (subject to inflation) $15 per hour or the applicable state or local minimum wage rate or $31,200 per year, but excluding any salaried employee earning (subject to inflation) more than $5,000/month for 2 consecutive months.

  • A federal bill entitled the “Limiting the Ability to Demand Detrimental Employment Restrictions Act” (the “LADDER Act”), which is virtually identical to the MOVE Act, but broadens somewhat the definition of the employees that are considered low-wage employees and tweaks the inflation adjustment language.

  • A federal bill entitled the “Freedom for Workers to Seek Opportunity Act” (“FWSOA”). Although not having quite as catchy an acronym as the MOVE Act or the LADDER Act, FWSOA does win on creativity in that it seeks to ban the use of noncompetes for grocery store workers (only).

The paper is available here.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s