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Non-Compete Blog

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.

If properly drafted and used, restrictive covenants (non-competition agreements) can be terrific and enforceable tools.  However, recent government scrutiny of their use and impact on employee mobility and wages make it clear that their use should be limited to key employee and executive personnel and/or those with significant client and marketplace relationships.

Determining where your data is stored for purposes of “venue” (where you can bring suit) is a relatively new issue not resolved in current case law. Traditionally, courts have focused on the location of the relevant server. But in this age of the cloud, where there are multiple and redundant servers to enhance access and security, we argue that the place where data is managed and controlled is the locus of the property and proper venue.

Two days, Nike Inc., filed a breach of a restrictive covenant suit against Matthew Millward, its senior apparel designer.  The action was commenced after Millward jumped ship to work and design for an arch competitor of Nike’s, Ralph Lauren’s Club Monaco brand.  The suit caught our attention not only because of the notable parties, it is also the type of case that we routinely handle for our own clients.

In May 2016, the White House released the report “Non-Compete Agreements: Analysis of the Usage, Potential Issues, and State Responses,”[1] discussing the growing prevalence of non-compete agreements in employee contracts, their potential misuse by employers and the negative effects it may have on the economy.  The report is meant to provide a “starting place for further investigation of the problematic usage of one institutional factor that has the potential to hold back wages–non-compete agreements.”

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