On January 5, 2023 the Federal Trade Commission released a Notice of Proposed Rule that would essentially ban all non-compete agreements between employers and employees. If the proposed rule or a similar rule is adopted by the FTC, it would have a profound impact on all US businesses and particularly those businesses that utilize non-compete agreements to protect their trade secrets and confidential business information. This article provides a summary of the proposed rule and actions you can take to have your opinion heard regarding the likely impacts of the proposed rule on your business.
Jones Walker LLP recently released the findings of our 2022 Ports and Terminals Cybersecurity Survey. Since 2018, we have surveyed key US infrastructure industries including the greater maritime industry in 2018 and the midstream oil and gas industry in 2020. The economic effects of the COVID-19 pandemic, geopolitical events, supply chain disruptions, labor shortages, rising inflation, and unstable energy prices make cybersecurity a growing concern for owners and operators of US ports and maritime terminals.
Andrew R. Lee, a partner in the Litigation Practice Group and co-chair of the firm’s privacy & data security team, and James Kearns, special counsel in the Maritime Practice Group, authored the article “OP-ED: Cybersecurity training is key to cybersecurity resiliency” published by Marine Log on July 19.
Andy and Jim remind industry stakeholders to devote sufficient time and other resources to refreshing the cybersecurity training of their employees, at least annually and preferably more often, in order to detect and thwart cyber-attacks.
Most banks and their service providers are familiar with the final rule governing notice for “notification incidents” and “cyber security incidents.” With compliance due by May 1, 2022, the rule establishes standards and deadlines for service providers to notify banks of such incidents and for banks to notify their primary federal regulator “as soon as possible and no later than 36 hours” after the bank “determines” that a notification incident has occurred. (For more, see this summary.) However, a recently enacted law requiring new rulemaking by the Cybersecurity and Infrastructure Security Agency (or CISA for short) within the Department of Homeland Security could upend a key compromise made during the finalization of the banking rules.
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.
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.
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.
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.
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.
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.