Joe Lavigne and Tom Hubert, partners in the Labor & Employment Practice Group in the New Orleans office, authored “(Not-So) Amicable Separations: Preventing, Investigating, and Responding to Trade Secret Misappropriation by Departing Employees” published by IPWatchdog. Joe and Tom shared helpful tips to protect company trade secrets and confidential information from theft, liability, and employee mishandling of trade secrets or proprietary information during each stage in the hiring, employment, and separation process.
A Broken Marriage: Bridal Designer Cannot Compete but Regains Control of Social Media Accounts
In the case JLM Couture Inc. v. Gutman, in the U.S. Court of Appeals for the Second Circuit, a bridal designer signed an employment agreement that barred her from competing with her employer – JLM Couture Inc. (JLM) – following her employment. The designer also agreed to give certain rights to JLM related to a bridal line created in the designer’s own name in exchange for compensation and JLM’s investment in the brand. The agreement also prevented the designer from using variations of her name to market bridal wear.
Things went south, however, when JLM tried to renegotiate the parties’ deal by expanding the designer’s social media job duties. When negotiations fell apart, the designer locked JLM out of social media pages, and she started one or more new social media accounts under a slightly different trade name. JLM then sued for breach of contract, unfair competition, and conversion of social media accounts, among other things.
A federal district court judge enforced the non-compete even though it went so far as to prevent the bridal designer from using variations of her own name to earn a living. But the trial court went too far, according to the appellate court, when it ordered the bridal designer to transfer sole control of business-related social media accounts to JLM, ownership over which the parties fiercely disputed. Though the bridal designer’s right to compete was limited by her JLM employment agreement, she “never forfeited her right to keep property that is legally hers,” according to U.S. Circuit Judge Michael H. Park. Notably, a dissenting appellate judge found that the injunction against the bridal designer went too far because not only did it prohibit her from using her name for marketing bridal wear, i.e. the business in which she was engaged by JLM, but it also restricted her from using her name to market any product.
This case reminds employers that non-competes should be tightly drafted because they often must withstand a high degree of scrutiny. This case is also a cautionary tale against resting exclusive access to social media accounts in the hands of one employee.
Hubert and Kee Present on Protecting Company Information
Tom Hubert and PJ Kee, partners in the Labor & Employment Practice Group, presented “Don’t Let The Grim Reaper Hack Into Your Trade Secrets” during the Louisiana Chapter of the Association of Corporate Counsel October CLE on October 29, 2021. The presentation featured a discussion on proper techniques and best practices to protect yourself from trade secret/confidential information theft and from potential liability for trade secret/confidential information theft.
Visit the Trade Secret Insider Services page to learn more about our trade secrets team.
Kee Published in New Orleans CityBusiness on Non-Competition Agreements Under Louisiana Law
P.J. Kee, a partner in the Labor & Employment Practice Group and a member of the trade secrets and fair competition team, authored the article “Do’s and Don’ts for Non-Competition Agreements Under Louisiana Law” featured in New Orleans CityBusiness. P.J. provides an outline of La. Rev. Stat. § 23:921, and the courts interpreting it, to better ensure these agreements are enforceable.
Apple Sues Former High-Level Employee for Trade Secret Use, Disclosure
Earlier this month, Apple filed suit in federal court in San Jose against its former employee, Simon Lancaster, for trade secret theft. The lawsuit alleges that Lancaster worked for Apple until November 1, 2019, as an Advanced Materials Lead and Product Design Architect, which is described as a “senior role” with the company. In this role, Apple claims Lancaster was tasked with “evaluating materials and prototyping innovations to enable future generations of products.”
Although the lawsuit does not go into specifics regarding the alleged trade secret information at issue, Apple generally argues that Lancaster divulged certain secret information to an unnamed journalist and media correspondent, who allegedly provided Lancaster with certain benefits in exchange for the information. Aside from this alleged disclosure, Apple also claimed that Lancaster may be continuing to use its information on behalf of his new employer, an unnamed Apple vendor.
District of Columbia to Ban Non-Competition Agreements
On January 11, 2021, the mayor of the District of Columbia signed an Act prohibiting non-competition provisions in employment agreements entered into after the date of passage. While under the peculiar rules of the District of Columbia, Congress has a 30-day window to disapprove the Act, it appears likely that this Act will pass. The effect of passage is significant, in that this widely-used tool to protect ongoing businesses will be taken away.
Tips to Remember for Protecting Trade Secrets and Confidential Information
We hope you and your employees had a festive holiday season and happy New Year! It is always helpful to review your company policies and procedures on an annual basis, and policies and procedures on protection of trade secrets and confidential information are no different. Below are some tips to remember and questions to consider as you conduct your review this year.
Lavigne and Kee Discuss Employee Productivity, Information Security, and Confidentiality on HR Works Podcast
Trade Secret Insider co-founders Joe Lavigne and P.J. Kee were guests on the recent HR Works Podcast episode “HR Works 128: Employee Monitoring and Protecting Trade Secrets.” During the episode, Joe, P.J., and show host Jim Davis discuss issues employers have while monitoring remote employee productivity as well as how employers can protect their trade secrets and confidential information when employees work remotely.
Zooming In: How Using Zoom Improperly Can Destroy Trade Secret Protections
In April, our editor, Joe Lavigne, explained how employers can ensure trade secret protections while allowing employees to work from home during the pandemic. The article advised employers to restrict the transmission of trade secrets through social media platforms like Zoom. A recent decision out of Delaware confirmed that the failure to use Zoom privacy and security settings may result in the loss of trade secret protections.
Three Appellate Court Decisions Provide Valuable Lessons for the Enforceability of Restrictive Covenants in Employment Agreements
Recently, the US Court of Appeals for the First Circuit, Fifth Circuit and Sixth Circuits reached decisions that analyze the enforceability of restrictive covenants in employment agreements. These decisions ultimately offer employers some valuable lessons when drafting employment agreements that contain restrictive covenants. An analysis of the decisions can be found here.
