Restrictive Covenants, Confidentiality and IP

This Article discusses post-termination non-competition provisions in executive employment agreements. It includes an analysis of the law in California, Florida, Illinois, New York and Texas on the reasonableness of duration and geographic scope restrictions, as well as examples of recent executive employment agreements with links to each underlying agreement. This Article also includes an expert Q&A with Katherine E. Perrelli of Seyfarth Shaw LLP, discussing considerations for employers with an online presence and the use of other types of restrictive covenants.

A Checklist outlining steps employers can take at the beginning of the employment relationship to avoid potential claims from former employers for theft of trade secrets and unfair competition, and to protect the new employer's confidential, proprietary and trade secret information.

A Q&A guide to state law on trade secrets and confidentiality for private employers in West Virginia. This Q&A addresses the state-specific definition of trade secrets and the legal requirements relating to protecting them. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Trade Secret Laws: State Q&A Tool).

A Q&A guide to state law on trade secrets and confidentiality for private employers in Virginia. This Q&A addresses the state-specific definition of trade secrets and the legal requirements relating to protecting them. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Trade Secret Laws: State Q&A Tool).

A Q&A guide to state law on trade secrets and confidentiality for private employers in Texas. This Q&A addresses the state-specific definitions of trade secrets and the legal requirements relating to protecting them. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Trade Secret Laws: State Q&A Tool). On May 2, 2013, Texas enacted the Texas Uniform Trade Secrets Act, which takes effect on September 1, 2013 and replaces the common law governing trade secret misappropriation. For a recent update on this development, see Related Content on the right.

This tool enables subscribers to search and compare PLC's Trade Secret Law State Q&A resources. Questions and answers cover state-specific definitions of trade secrets, reasonable efforts to maintain secrecy, misappropriation, defenses, remedies and more. Simply select the questions and the jurisdictions that you are interested in and click the "Submit" button. To see all of PLC's State Q&As on Trade Secret Laws, see State Q&A Guide to Trade Secret Laws. To see all of PLC's State Q&As, including relevant Legal Updates since the publication date (under Related Content), see individual Q&As on the Labor & Employment State Q&As landing page.

A Q&A guide to state law on trade secrets and confidentiality for private employers in Pennsylvania. This Q&A addresses the state-specific definitions of trade secrets and the legal requirements relating to protecting them. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Trade Secret Laws: State Q&A Tool).

A Q&A guide to state law on trade secrets and confidentiality for private employers in Oklahoma. This Q&A addresses the state-specific definition of trade secrets and the legal requirements relating to protecting them. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Trade Secret Laws: State Q&A Tool).

A Q&A guide to state law on trade secrets and confidentiality for private employers in North Carolina. This Q&A addresses the state-specific definition of trade secrets and the legal requirements relating to protecting them. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Trade Secret Laws: State Q&A Tool).

A Q&A guide to state law on trade secrets and confidentiality for private employers in New Jersey. This Q&A addresses the state-specific definitions of trade secrets and the legal requirements relating to protecting them. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Trade Secret Laws: State Q&A Tool).

A Q&A guide to state law on trade secrets and confidentiality for private employers in Nevada. This Q&A addresses the state-specific definition of trade secrets and the legal requirements relating to protecting them. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Trade Secret Laws: State Q&A Tool).

A Q&A guide to state law on trade secrets and confidentiality for private employers in Mississippi. This Q&A addresses the state-specific definition of trade secrets and the legal requirements relating to protecting them. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Trade Secret Laws: State Q&A Tool).

A Q&A guide to state law on trade secrets and confidentiality for private employers in Michigan. This Q&A addresses the state-specific definition of trade secrets and the legal requirements relating to protecting them. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Trade Secret Laws: State Q&A Tool).

A Q&A guide to state law on trade secrets and confidentiality for private employers in Maryland. This Q&A addresses the state-specific definition of trade secrets and the legal requirements relating to protecting them. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Trade Secret Laws: State Q&A Tool). For a recent update on Maryland's new User Name and Password Privacy Protection and Exclusions law, see Related Content on the right.

A Q&A guide to state law on trade secrets and confidentiality for private employers in Kentucky. This Q&A addresses the state-specific definition of trade secrets and the legal requirements relating to protecting them. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Trade Secret Laws: State Q&A Tool).

A Q&A guide to state law on trade secrets and confidentiality for private employers in Iowa. This Q&A addresses the state-specific definition of trade secrets and the legal requirements relating to protecting them. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Trade Secret Laws: State Q&A Tool).

A Q&A guide to state law on trade secrets and confidentiality for private employers in Illinois. This Q&A addresses the state-specific definition of trade secrets and the legal requirements relating to protecting them. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Trade Secret Laws: State Q&A Tool).

A Q&A guide to state law on trade secrets and confidentiality for private employers in Georgia. This Q&A addresses the state-specific definition of trade secrets and the legal requirements relating to protecting them. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Trade Secret Laws: State Q&A Tool).

A Q&A guide to trade secrets and confidentiality law for private employers in the District of Columbia. This Q&A addresses the District of Columbia definition of trade secrets and the legal requirements related to protecting them. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Trade Secret Laws: State Q&A Tool).

A Q&A guide to state law on trade secrets and confidentiality for private employers in Colorado. This Q&A addresses the state-specific definition of trade secrets and the legal requirements relating to protecting them. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Trade Secret Laws: State Q&A Tool).

A Q&A guide to state law on trade secrets and confidentiality for private employers in Arizona. This Q&A addresses the state-specific definitions of trade secrets and the legal requirements relating to protecting them. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Trade Secret Laws: State Q&A Tool).

Originally, non-competition agreements were predominately limited to competition activities within the country where employees have previously performed their work duties. In the global marketplace, these agreements are now increasingly concluded in the context of cross-border labour mobility. This article considers the two principal concerns that arise for employers and their companies in this international context when considering applying and enforcing non-competition agreements: The law the employer and the employee have chosen to apply to the non-competition agreement may not apply. In the event of a legal dispute, the appealed local court may not have jurisdiction to settle the dispute. The authors examine these risks and solution strategies by scrutinising the legal framework for cross-border mobility connected to at least one of the EU member states, outlining some key actions to take to build a successful strategy for handling these challenges from a European law perspective. For a full list of recommended labour and employee benefits lawyers and law firms, please visit PLC Which lawyer? This chapter is part of the PLC multi-jurisdictional guide to labour and employee benefits. For a full list of contents visit www.practicallaw.com/labour-mjg  

In Aqua Connect, Inc. v. Code Rebel LLC, the US District Court for the Central District of California dismissed a remote-access software company's claim that one of its customers violated the California Trade Secrets Act (CTSA) when it downloaded and reverse engineered a trial version of the company's software. The court emphasized that CTSA's definition of "improper means" trade secret misappropriation specifically states that reverse engineering alone is not an improper means of acquiring trade secret information. The court rejected the software company's argument that the prohibition on reverse engineering in its End User License Agreement (EULA) made the activity an improper means of obtaining the trade secret information. The court also rejected the software company's argument that its EULA created a duty for its customers to maintain the secrecy of company trade secrets.

This Note describes trade secrets and confidential information protections available to employers. It examines trade secret definitions and legal recourse, including misappropriation, tortious interference and breach of duty of loyalty and/or fiduciary duty claims. It also explores relevant restrictive covenants and best practices. This Note provides a general overview of federal law in this area. For information on state law, see the State Law Q&A Tools under Related Content to the right.

A Note describing the steps an employer can take to prepare to successfully litigate a non-compete action, the primary options for enforcing a non-compete agreement and the strategic decisions involved with each option. This Note discusses gathering evidence, key steps to assess the enforceability of a non-compete, factors to consider before initiating legal action, cease and desist letters, declaratory judgments, seeking damages and requesting injunctive relief. This Note is jurisdiction neutral. For information on state law requirements, see the State Q&A Tool under Related Content to the right.

This Law Firm Publication by Ogletree, Deakins, Nash, Smoak & Stewart, P.C., discusses HB 1270, a new law effective July 14, 2012, which requires New Hampshire employers to provide job applicants with non-compete and non-piracy agreements either before or at the time they offer them a job or a change in their job classification. The law voids any agreements that are not entered into in compliance with the law. It is intended to protect employees from discovering after accepting a job or a promotion that they must sign restrictive covenants.

This Law Firm Publication by Ogletree Deakins discusses Indiana's blacklisting statute in the context of the Indiana Supreme Court's decision in Loparex v. MPI Release Technologies, LLC, et al. In Loparex, the court for the first time offered a definition of blacklisting under the statute. Applying this definition, the court concluded that the statute does not cover suits brought by former employers to enforce noncompetes or protect alleged trade secrets.

This Law Firm Publication by Ogletree, Deakins, Nash, Smoak & Stewart, P.C. discusses the Massachusetts Superior Court decision in Grace Hunt IT Solutions, LLC v. SIS Software holding that a change in compensation is a material change requiring the execution of new non-compete agreements. In Grace Hunt IT Solutions, a successor company asked its new employees to sign new restrictive covenants and offered a new bonus structure. The employees refused to sign the restrictive covenants and left for a competitor software company. The court found it "extremely significant" that the successor offered new agreements, signaling that the old agreements were being replaced by a new arrangement. Furthermore, the court found that the change in compensation was a material change that would void the previous non-compete agreement.

This Standard Clause provides sample language for a California-compliant non-solicitation of employees provision. It can be used as a stand-alone provision or incorporated into a written agreement with current or departing employees. This Standard Clause has integrated drafting notes with important explanations and drafting tips.

This Standard Clause provides sample language for a California-compliant non-compete provision in connection with the merger or sale of a business, including its goodwill, as authorized by Sections 16600 to 16602.5 of the California Business and Professions Code. It can be used as a stand-alone provision or incorporated into a written agreement with the seller of a business entity. This Standard Clause has integrated drafting notes with important explanations and drafting tips.

A Q&A guide to non-compete agreements between employers and employees for private employers in West Virginia. This Q&A addresses enforcement and drafting considerations for restrictive covenants such as post-employment covenants not to compete and non-solicitation of customers and employees. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Non-compete Laws: State Q&A Tool).

A Q&A guide to non-compete agreements between employers and employees for private employers in Virginia. This Q&A addresses enforcement and drafting considerations for restrictive covenants such as post-employment covenants not to compete and non-solicitation of customers and employees. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Non-compete Laws: State Q&A Tool).

A Q&A guide to non-compete agreements between employers and employees for private employers in Texas. This Q&A addresses enforcement and drafting considerations for restrictive covenants such as post-employment covenants not to compete and non-solicitation of customers and employees. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Non-compete Laws: State Q&A Tool).

This tool enables subscribers to search and compare PLC's Non-compete Laws State Q&A resources. Questions and answers address state-specific issues of enforcement, drafting, choice of law, reasonableness of restrictions, remedies and more. Simply select the questions and the jurisdictions that you are interested in and click the "Submit" button. To see all of PLC's State Q&As on Non-compete Laws, see State Q&A Guide to Non-compete Laws. To see all of PLC's State Q&As, including relevant Legal Updates since the publication date (under Related Content), see individual Q&As on the Labor & Employment State Q&As landing page.

A Q&A guide to non-compete agreements between employers and employees for private employers in Pennsylvania. This Q&A addresses enforcement and drafting considerations for restrictive covenants such as post-employment covenants not to compete and non-solicitation of customers and employees. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Non-compete Laws: State Q&A Tool).

A Q&A guide to non-compete agreements between employers and employees for private employers in Oklahoma. This Q&A addresses enforcement and drafting considerations for restrictive covenants such as post-employment covenants not to compete and non-solicitation of customers and employees. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Non-compete Laws: State Q&A Tool).

A Q&A guide to non-compete agreements between employers and employees for private employers in North Carolina. This Q&A addresses enforcement and drafting considerations for restrictive covenants such as post-employment covenants not to compete and non-solicitation of customers and employees. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Non-compete Laws: State Q&A Tool).

A Q&A guide to non-compete agreements between employers and employees for private employers in New Jersey. This Q&A addresses enforcement and drafting considerations for restrictive covenants such as post-employment covenants not to compete and non-solicitation of customers and employees. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Non-compete Laws: State Q&A Tool).

A Q&A guide to non-compete agreements between employers and employees for private employers in Nevada. This Q&A addresses enforcement and drafting considerations for restrictive covenants such as post-employment covenants not to compete and non-solicitation of customers and employees. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Non-compete Laws: State Q&A Tool).

A Q&A guide to non-compete agreements between employers and employees for private employers in Missouri. This Q&A addresses enforcement and drafting considerations for restrictive covenants such as post-employment covenants not to compete and non-solicitation of customers and employees. Federal, local or municipal law may impose additional or different requirements. Answer to questions can be compared across a number of jurisdictions (see Non-compete Laws: State Q&A Tool).

A Q&A guide to non-compete agreements between employers and employees for private employers in Minnesota. This Q&A addresses enforcement and drafting considerations for restrictive covenants such as post-employment covenants not to compete and non-solicitation of customers and employees. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Non-compete Laws: State Q&A Tool).

A Q&A guide to non-compete agreements between employers and employees for private employers in Maryland. This Q&A addresses enforcement and drafting considerations for restrictive covenants such as post-employment covenants not to compete and non-solicitation of customers and employees. Federal, local or municipal law may impose additional or different requirements. Answer to questions can be compared across a number of jurisdictions (see Non-compete Laws: State Q&A Tool).

A Q&A guide to non-compete agreements between employers and employees for private employers in Kentucky. This Q&A addresses enforcement and drafting considerations for restrictive covenants such as post-employment covenants not to compete and non-solicitation of customers and employees. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Non-compete Laws: State Q&A Tool).

A Q&A guide to non-compete agreements between employers and employees for private employers in Iowa. This Q&A addresses enforcement and drafting considerations for restrictive covenants such as post-employment covenants not to compete and non-solicitation of customers and employees. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Non-compete Laws: State Q&A Tool).

A Q&A guide to non-compete agreements between employers and employees for private employers in Illinois. This Q&A addresses enforcement and drafting considerations for restrictive covenants such as post-employment covenants not to compete and non-solicitation of customers and employees. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Non-compete Laws: State Q&A Tool).

A Q&A guide to non-compete agreements between employers and employees for private employers in Georgia. This Q&A addresses enforcement and drafting considerations for restrictive covenants such as post-employment covenants not to compete and non-solicitation of customers and employees. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Non-compete Laws: State Q&A Tool).

A Q&A guide to non-compete agreements between employers and employees for private employers in the District of Columbia. This Q&A addresses enforcement and drafting considerations for restrictive covenants such as post-employment covenants not to compete and non-solicitation of customers and employees. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Non-compete Laws: State Q&A Tool).

A Q&A guide to non-compete agreements between employers and employees for private employers in Colorado. This Q&A addresses enforcement and drafting considerations for restrictive covenants such as post-employment covenants not to compete and non-solicitation of customers and employees. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Non-compete Laws: State Q&A Tool).

A Q&A guide to non-compete agreements between employers and employees for private employers in the Arkansas. This Q&A addresses enforcement and drafting considerations for restrictive covenants such as post-employment covenants not to compete and non-solicitation of customers and employees. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Non-compete Laws: State Q&A Tool).

A Q&A guide to non-compete agreements between employers and employees for private employers in Alabama. This Q&A addresses enforcement and drafting considerations for restrictive covenants such as post-employment covenants not to compete and non-solicitation of customers and employees. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Non-compete Laws: State Q&A Tool).

In U.S. Auto Parts Network, Inc. v. Parts Geek, LLC, the US Court of Appeals for the Ninth Circuit joined other circuits in adopting the Restatement (Second) of Agency's three-prong test for determining whether a copyrightable work is created by an employee within the scope of employment, and therefore a work made for hire owned by the employer.

New Mexico recently enacted the No Social Media Access for Employers Act (SB 371), which prohibits employers from requesting or requiring that a prospective employee provide a password or access to the prospective employee's social networking account.

The New Jersey Trade Secrets Act has been signed into law by Governor Christie. This law creates specific remedies for employers to protect trade secrets from misappropriation.

Arkansas recently enacted Act 1480, which prohibits an employer from requiring or requesting a current or prospective employee to disclose his username or password for a social media account.

This article considers how and when IFAs emerged, the characteristics of IFAs and the extent to which they are legal instruments. The international nature of IFAs and their development are also considered. This article is part of the PLC multi-jurisdictional guide to employment and employee benefits. For a full list of contents visit www.practicallaw.com/employment-mjg.

This Fisher & Phillips LLP memorandum discusses Wrigg v. Junkermier, Clark, Campanella, Stevens, P.C. In this decision, the Montana Supreme Court held that an employer that ended an employment relationship without cause lacked a legitimate business interest in preventing a former employee from competing. This decision marks the first time the Montana Supreme Court has expressly addressed the requirement that an employer demonstrate a legitimate business interest in enforcing a non-compete.

This Law Firm Publication by Epstein Becker & Green, P.C. discusses a Wisconsin Court of Appeals decision in Engedal v. Menard, Inc., upholding an arbitration provision in an employment agreement that included a non-compete clause. After Menard, Inc. (Menards) terminated Jeffrey Engedal, he sued, requesting a declaratory judgment that the provision was unenforceable. The circuit court held the arbitration provision was unconscionable because the non-compete clause would put Engedal out of a job for two years if he refused to sign it. The Wisconsin Court of Appeals reversed, holding the circuit court's decision conflicted with its own findings that Menards would have offered Engedal a different position in the company if he refused to sign the agreement, his managerial, supervisory and organization skills were transferable outside the industry, and Engedal was subsequently able to find a job as a general manager for a company in another industry. 

This Law Firm Publication by Epstein Becker & Green, P.C. discusses the Ohio Supreme Court's new decision in Acordia of Ohio, L.L.C. v. Fishel. In its first Acordia decision, the court held that a corporate merger triggers the running of a non-compete's restrictive period. Following a motion for reconsideration by the employer, the court recently held that a non-compete agreement transfers to a successor company after a corporate merger. The absorbed company becomes a part of the resulting company following a merger and the successor can enforce the merged company's non-compete agreements.

This Law Firm Publication by Epstein Becker & Green, P.C., discusses the recent Missouri Supreme Court decision in Western Blue Print Co., LLC v. Roberts, affirming a tortious interference verdict against a manager who left to join a competitor. The court affirmed the verdict in large part because the manager convinced other employees to leave with her and deleted documents before resigning, hindering her former company's ability to compete with her new company.

This Law Firm Publication by Epstein Becker & Green, P.C. discusses the Connecticut Supreme Court's recent holding in University of Connecticut v. Freedom of Information Commission that a public agency may create and maintain trade secrets that are exempt from disclosure under Connecticut's Freedom of Information Act (FOIA). The decision gives public agencies, including public universities, the same rights as a private person to profit from research, investment and development of trade secrets under the Connecticut Uniform Trade Secrets Act.

An agreement between an employer and an employee limiting an employee's competitive activities for a specified period of time after the employment relationship ends.  This Standard Document is drafted in favor of the employer. It is jurisdiction neutral. This Standard Document has integrated notes with important explanations and drafting tips. For information on state law requirements regarding non-competes and trade secret laws, see the State Q&A Tools under Related Content to the right.

An agreement between an employer and an employee concerning confidentiality and appropriate handling of the employer's commercially valuable information, compliance with relevant security rules and policies, and protection of the employer's intellectual property assets. Agreements of this type have various titles, which may use the term "non-disclosure" in place of "confidentiality," or "intellectual property" in place of "proprietary rights." This Standard Document is drafted in favor of the employer. It is based on federal law. For information on state law requirements, see the State Q&A Tools under Related Content to the right. This Standard Document has integrated notes with important explanations and drafting tips.

A Checklist outlining best practices for employers drafting employee confidentiality agreements, sometimes referred to as confidentiality and proprietary rights agreements. This Checklist is jurisdiction neutral.

A model letter for an employer to send or provide to a departed or departing employee's new employer to inform it of the employee's continuing obligations to the former employer. These obligations may include compliance with restrictive covenants, including non-compete, non-solicit and non-disclosure provisions, and the continuing duty of loyalty. This Standard Document includes integrated notes with important explanations and drafting tips. It complies with federal law. State or local law may impose additional or different requirements.

In WEC Carolina Energy Solutions v. Miller, the US Court of Appeals for the Fourth Circuit held that an employer failed to state a claim against a former employee under the Computer Fraud and Abuse Act (CFAA) where the employee allegedly used confidential information to help the employer's competitor. The employer authorized the employee to access the information, but argued that the employee's unauthorized use of the information violated the CFAA. The Fourth Circuit held that the CFAA only prohibits unauthorized access to information stored on a computer.