The tension between encouraging free and fair competition and protecting competitive advantages derived from hard work and ingenuity is at the very heart of trade secrets law. Among other things, this tension manifests itself in the gray areas endemic to any legal analysis of what information may constitute a “trade secret.” In comparison, assessing the behavior of those accused of misappropriating trade secrets can sometimes be a much more straightforward exercise. And it seems that the more egregious (and less “gray”) the behavior, the more likely a court is to exercise its limited discretion to restrain competition at the preliminary relief stage to prevent disclosure and use of misappropriated trade secrets. The 3rd Circuit’s recent decision in Matthews International Corp. v. Lombardi(October 12, 2022) is a timely example of this principle.

Continue Reading One Bad Apple Won’t Spoil the Rest of the Bunch’s Ability to Fairly Compete in Matthews International Corp. v. Lombardi

On July 27, 2022, Mayor Muriel Bowser signed into law the Non-Compete Clarification Amendment Act of 2022, scaling back certain aspects of D.C.’s original Ban on Non-Compete Agreements Amendment Act of 2020. As we previously reported, the original ban included some of the most substantial non-compete restrictions in the country, including prohibiting the use of non-compete agreements for nearly all employees working in D.C. and banning anti-moonlighting policies. Here are some key takeaways from the Amendment:

Continue Reading The District of Columbia Revises Ban on Non-Competes

Over the past two years, employee mobility seems to be at an all-time high.  In fact, the labor market is so fluid that pundits and experts often refer to it as the “Great Resignation.”  Although employee mobility can be a great opportunity for both employees and prospective employers, employers hiring new employees should always beware of potential problems such as restrictive covenants, which may follow an employee to a new job.
Continue Reading Void vs. Voidable: The Distinction That Can Make or Break a Tortious Interference Claim in Light of the Great Resignation

Employers faced with an apparent trade secret misappropriation by former employees must decide what jurisdiction to bring suit in.  For an employer headquartered outside of California who employs California residents  working primarily in California, choice of law and forum selection clauses favoring states other than California may be ineffective against them unless they had counsel who negotiated the provisions on their behalves.  (Cal. Lab. Code § 925.)  A recent California Court of Appeal decision highlighted this point, and found that where a California employee is sued by the employer for trade secret misappropriation in a separate state based on an out-of-state forum selection clause, the employee may separately sue in California to void the provision, despite the ongoing litigation in a sister state (See LGCY Power, LLC v. The Superior Court,  75 Cal. App. 5th 844 (2022).)
Continue Reading California Labor Code Section 925: A Word of Caution for Out-of-State Employers of California Employees

This month, the Ninth Circuit’s decision in DePuy Synthes Sales v. Howmedica Osteonics  held that a U.S. district court in California properly invalidated a foreign choice-of-law and forum selection provision under California Labor Code § 925, and denied a motion to transfer the case to a different venue.  While this might seem at first blush like a technical issue of federalism and contractual interpretation, the decision indicates that federal courts in the Ninth Circuit will also apply California’s partial prohibition on the use of foreign forum-selection and choice-of-law clauses as to employees.
Continue Reading Ninth Circuit Upholds Application of California Labor Code To Contractual Forum-Selection and Choice-of-Law Clause To Keep Dispute Over Non-Compete Clause in California

In July 2021, President Biden signed an Executive Order directed at promoting competition in the U.S. economy.  As part of that overarching goal, the Biden Administration tasked the Federal Trade Commission (“FTC”) with curtailing the use of non-compete clauses “and other clauses or agreements that may unfairly limit worker mobility.”  While the FTC has only recently initiated informal proceedings on the issue, the agency – and perhaps Congress as well – seems poised to move forward in 2022 to address restrictive covenants.

Continue Reading FTC reviews non-compete agreements: An Update On The Future Of Restrictive Covenants Following The Biden Administration’s Proposed Curtailment and Safeguarding of Proprietary Information

With tightening labor markets and the increasing mobility of healthcare workers, including physicians, now is a good time to revisit non-compete agreements to ensure they are enforceable.  Texas courts will generally enforce non-compete agreements as long as they are ancillary or part of an otherwise enforceable agreement and do not contain restraints greater than necessary to protect the employer’s legitimate interests.  These interests include business good will, trade secrets, or other confidential  and proprietary information.

Continue Reading Healthcare Agreements – Key Issues Impacting the Enforceability of Non-Compete Clauses for Texas Physicians

No-hire or “no-poaching” agreements have recently come under increasing scrutiny by the federal government, as well as various state regimes.  However, a recent Ninth Circuit decision upholding a no-poach agreement highlights the various hurdles an antitrust claimant will face in bringing such a claim.

Continue Reading Illegal Deal? Ninth Circuit Rejects Attempt to Revive No-Poaching Claims

In an important decision on August 19, 2021, the Ninth Circuit Court of Appeals in Aya Healthcare Services, Inc. v. AMN Healthcare, Inc. affirmed the grant of summary judgment in favor of AMN, finding that the non-solicitation provision in the parties’ agreement was not an unreasonable restraint in violation of the federal antitrust law known as the “Sherman Act.”  Instead, the Court ruled that the non-solicitation provision was “reasonably necessary to the parties’ pro-competitive collaboration” and that Aya failed to show the non-solicitation provision had a “substantial anticompetitive effect.”[1]

Continue Reading Ninth Circuit Denies Sherman Act Challenge To No-Poach Provision