- Posts by Richard M. ReicePartner
Richard Reice, L&E partner, is an experienced labor and employment law counselor and litigator with both law firm and in-house counsel experience. Recruited from a large New York law firm as a senior L&E associate, he was appointed ...
Companies in competitive niche industries use non-compete agreements and other forms of restrictive covenant agreements to protect their trade secrets and limit the ability of their employees to work for a competitor. But what happens when one competitor aggressively recruits employees from another? Can those efforts be so targeted and intense that they give rise to a claim of unfair competition? No, ruled SDNY Judge Paul Crotty in Creative Circle v. Susan Norelle Bortone, et. al., SDNY Case No 18:7333.
Lex Machina, a Silicon Valley-based legal data analytics firm now owned by LexisNexis, recently published its first Trade Secret Litigation Report. Drawing statistics from about 800 or so federal district court cases, presumably brought via statute and diversity, the report by the legal data analytics firm examines a number of case-related metrics. While the lack of detail somewhat limits the report’s utility, the report does provide some useful information about case timing and win/loss statistics. Trade Secret Litigation Report 2018 (Lex Machina, July 2018).
The regulation of restrictive covenants seems to be moving from the courtroom to the statehouse. While some states have enacted laws to codify non-competition laws that favor businesses in its effort to sustain such agreements (e.g., Florida, Georgia, Wisconsin, etc.), activity in recent months indicate a counter-trend: legislation to limit employers’ use of non-compete agreements- an unsurprising result given much of the negative press about non-competes and the White House’s May 2016 report criticizing their overuse. 
The defection of a team of high-level executives to a competing business is a crisis for almost any company. Savvy businesses can try to mitigate the effects of such departures by entering into restrictive covenants, including non-competition and non-solicitation agreements, with their high-level employees. However, as a recent New York restrictive covenant case illustrates, courts remain skeptical of agreements that excessively restrict the freedom of employees to move between jobs.
In perhaps the mother of present day trade secret cases, Waymo LLC, a subsidiary of Alphabet Inc. (parent company to Google), has sought a preliminary injunction against Uber for alleged misappropriation of self-driving car technology, called LiDAR, a laser system which allows self-driving cars to “see” the world around them. Waymo sued under the DTSA (about which we have previously written) for theft of trade secrets and for infringement.
- Creative Circle’s Effort to Obtain TRO on the Basis of “Excessive Recruiting” Shot Down by the SDNY
- The Defend Trade Secrets Act–A Sea Change In The Fight Against The Misappropriation Of Trade Secrets
- New Study Yields Information On Trade Secret Litigation Metrics
- More States Considering Limitations On Non-Competes Through Legislation
- Court Explains Limits Of Restrictive Covenants In Lift Out Of Executive Team
- A “Bet The Company” Trade Secret Case: Waymo LLC V. Uber Technologies, Inc.
- Non-Competes Are Not For Everyone
- Data Misappropriation–Where To Sue
- Jumping Ship And Getting Sued For It: Nike V. Ralph Lauren
- The White House Opines On Non-Competes
- December 2018
- September 2018
- August 2018
- February 2018
- January 2018
- May 2017
- March 2017
- January 2017
- December 2016
- October 2016
- September 2016
- February 2016
- January 2016
- June 2015
- April 2015
- February 2015
- December 2014
- October 2014
- September 2014
- March 2014
- February 2014
- January 2014
- October 2013
- August 2013
- July 2013