A Massachusetts federal jury awarded $452 million against a South Korean company after concluding it had stolen secrets related to a wearable insulin patch. Nuclear verdicts are determined as ones that exceed $10 million have grown over recent years.
While the recent nuclear verdicts have mainly been in personal injury situations, this highlights risks associated with theft of trade secret information. This also highlights the need to perform internal audits on protection of sensitive information. A key to protecting valuable information is taking proactive steps to restrict access to certain proprietary information, including designs of products not readily available in the public setting.
In a recent ruling, The Louisiana Court of Appeal, First Circuit recently ruled that an employee non-solicit/no-poaching agreement is not subject to the Louisiana non-compete statute but, nevertheless, to be valid, must have a temporal limitation that is reasonable in scope to be enforceable. Because the agreement at issue was open-ended with no temporal limitation, the court ruled it was void and unenforceable.
Employers should review and, if necessary, revise their employee non-solicitation provisions to make sure they comply with the finding in this case.
On August 20, 2024, Judge Ada Brown of the US District Court for the Northern District of Texas set aside the Federal Trade Commission’s rule that effectively prohibited the use of non-compete agreements. Interpreting the Administrative Procedure Act, which provides for judicial review of the actions of federal agencies like the FTC, the court found that the FTC’s non-compete ban was unlawful.
As previously reported, the US District Court for the Northern District of Texas issued an injunction prohibiting the Federal Trade Commission (FTC) from enforcing its non-compete ban, which is set to take effect on September 4. That ruling, however, was limited to the plaintiffs in that case. Similarly, the US District Court for the Eastern District of Pennsylvania had a request before it and denied issuing an injunction against the FTC. It found that the plaintiff, ATS Tree Services, LLC, could not show irreparable harm, but, more importantly, it also found that plaintiff failed to show a likelihood of success on its claims that (1) the FTC does not have authority to issue a nationwide non-compete ban, and (2) the FTC Act unconstitutionally delegates legislative power to the FTC. The Pennsylvania court’s decision on “likelihood of success” is at odds with the finding of the Texas district court, which is an indication that the fate of the FTC non-compete ban will likely be resolved by the federal appellate courts and potentially the US Supreme Court. The Texas district court is scheduled to issue a final decision in the case on August 30, which could negate the non-compete ban for all employers — at least until the appeals courts and the Supreme Court have a say in the matter.
If you have questions regarding the effects of these decisions on your non-compete agreements, please contact a member of our trade secret team.
With large swaths of the workforce working remotely, some employers have growing concerns about employee productivity, as well as information security and confidentiality. In today’s remote work era, organizations face significant challenges in balancing employee monitoring with safeguarding confidential information and trade secrets. This article explores key insights and strategies for HR professionals navigating these complex issues.
As previously reported, the consolidated lawsuits challenging the Federal Trade Commission’s (FTC) non-compete ban sought a preliminary injunction and a stay until litigation is resolved concerning the FTC’s non-compete ban. On July 3, 2024, a federal judge in the US District Court for the Northern District of Texas decided that a preliminary injunction was appropriate and temporarily enjoined the non-compete ban from going into effect. It is important to note, however, that the court declined to issue a nationwide injunction to nonparties of the suit. In other words, the FTC’s non-compete ban is still set to take effect on September 4, for any employer that is not a party in the Ryan, LLC vs. The Federal Trade Commission lawsuit.
The Louisiana Legislature unanimously passed Act No. 273. Governor Jeff Landry signed the act into law on May 28, 2024 and the act becomes effective on January 1, 2025.
On April 23, 2024, the Federal Trade Commission (FTC) issued its Final Non-Compete Agreement Rule (Final Rule), banning non-compete agreements between employers and their workers. The Final Rule will go into effect 120 days after being published in the Federal Register. This Final Rule will impact most US businesses, specifically those that utilize non-compete agreements to protect their trade secrets, confidential business information, goodwill, and other important intangible assets.
Joe Lavigne, a partner in Jones Walker LLP’s Labor & Employment Practice Group and founding member of Jones Walker’s Trade Secret Insider blog, was quoted in the TechTarget article “Election might decide fate of FTC noncompetes ban” on April 26, 2024. In the article, Joe discusses how the Federal Trade Commission’s ban on noncompete agreements affects employers and how any changes to this rule could make operations more challenging for business if reversed following the 2024 presidential election. The rule is expected to take effect 120 days after being published in the Federal Register.
The Federal Trade Commission voted 3-2 today to ban noncompete agreements between employers and employees. A full analysis of the final rule will be forthcoming, but key takeaways are:
Final rule becomes effective 120 days after it is published in the Federal Register.
All noncompete agreements between employers and “workers,” whether entered into before or after the effective date, will be invalid, unenforceable, and unlawful.
Noncompete agreements with “Senior Executives” entered into before the effective date are not invalid, unenforceable, or unlawful. “Senior Executives” is defined as someone making more than $151,164 annually and who are in a “policy making position.”
Does not appear to affect noncompete agreements in the sale of a business context.
The final rule will almost certainly be challenged and its enforcement during the pendency of that challenge is uncertain.
We look forward to bringing you more information about this groundbreaking final rule in the coming days. If you have questions on how this rule affects you or your business, please reach out to a member of the Jones Walker trade secrets, unfair competition, and noncompetes team.
