In Seyfarth’s sixth installment, attorneys Michael Baniak and Paul Freehling discussed the significant statutory changes to several jurisdictions’ laws regarding trade secrets and restrictive covenants and pending legislation proposed in additional jurisdictions over the past year. As trade secrets and non-compete laws continue to evolve from state to state in piecemeal fashion, companies should continually revisit their trade secrets and non-compete strategies in light of the evolving legal landscape and legislative trends.
As a conclusion to this well-received webinar, we compiled a list of key takeaway points, which are listed below.
- Enforceability of non-compete, non-solicit, and confidentiality covenants in employment agreements depends primarily on the applicable statutes, and pertinent judicial decisions and conflict of laws principles, regarding (a) the acceptable breadth of such covenants, and (b) appropriate balancing of the legitimate business interests of employers, employees, and the public; enforceability requires constant vigilance in updating the covenants as the law, business and employment evolve, often very rapidly.
- Because each jurisdiction’s version of the Uniform Trade Secrets Act as enacted — it has been adopted in one form or another in the District of Columbia and each of the 50 states except New York and Massachusetts– is unique, all relevant jurisdictions’ versions must be analyzed.
- Oddities in the law of restrictive covenants include the following: (a) hostility in a few states to non-competes and/or non-solicit covenants in general, (b) in some states (whether by statutory provision or judicial fiat), certain employees are exempt from such covenants, (c) there are disparities in various courts’ willingness to “blue pencil,” reform, or invalidate covenants deemed overbroad as written, and (d) there are variations in different courts’ views as to whether only actual disclosure, or also threatened or inevitable disclosure, of trade secret or confidential information will be enjoined.