Restrictive Covenants Archives

Part 29 of “The Restricting Covenant Series”: From Reliable to Unpredictable: Navigating Post-Employment Restrictive Covenants in Delaware

Once considered a reliable “go-to” state for enforcing noncompetes and nonsolicitation agreements, Delaware is now a minefield of unpredictability. Historically, if a noncompete’s geographic, temporal or business activity scope was too broad, Delaware courts used the “blue-pencil” doctrine¹ to render them reasonable and enforceable. Those days are largely gone. Blue-penciling is not a reliable safety net for employers in the First State. Today, Delaware courts are more likely to strike overly broad restrictions than to rewrite them, exposing employers to competitive risks if their agreements are not precisely tailored or carefully crafted.

Something is Afoot in the First State

Delaware’s reputation as the jurisdiction of choice for business is rooted in its robust and employer-friendly corporate laws. It is a “contractarian state,” meaning its courts respect and enforce the bargains struck by parties – whether in employment, merger, stock or partnership agreements – so long as those bargains are not unconscionable or contrary to public policy. This contractarian philosophy has long offered businesses predictability and reliability, making Delaware a preferred state of incorporation.

Continue reading “Part 29 of “The Restricting Covenant Series”: From Reliable to Unpredictable: Navigating Post-Employment Restrictive Covenants in Delaware”

Health Care Practitioner Noncompete Ban Signed Into Pennsylvania Law

On July 17, 2024, Gov. Josh Shapiro signed the Fair Contracting for Health Care Practitioners Act into Pennsylvania law. The Act prohibits the enforcement of certain noncompete covenants entered into after January 1, 2025, by health care practitioners and their employers, subject to limited, but important, exceptions. Therefore, Pennsylvania health care employers should review their employment agreements and revise them to ensure compliance.

To view the full alert, visit the Faegre Drinker website.

Trade Secret Remedies After Motorola Solutions, Inc. v. Hytera Communications Corp. Ltd.

In Motorola, the Seventh Circuit provided useful direction on navigating complex remedies issues in trade secret cases. In light of this decision, the plaintiff in trade secret cases should consider preserving conflicting damages models through trial to allow for the recovery of the largest award. Likewise, a trade secret plaintiff should consider utilizing the burden-shifting approach to recover unjust enrichment sales. The trade secret plaintiff can also rely — at least in circumstances like those in Motorola — on unjust enrichment damages to calculate exemplary damages. In addition, the court can consider a defendant’s litigation conduct in deciding the scope of the injunctive relief ordered.

To view the full alert, visit the Faegre Drinker website.

Seventh Circuit Confirms Extraterritorial Reach of the Defend Trade Secrets Act

Under Motorola v. Hytera, a trade secret plaintiff can recover damages in the United States even on infringing sales that occurred outside the United States. The Seventh Circuit in Motorola confirmed that the Defend Trade Secrets Act can reach all of a defendant’s worldwide sales caused by the misappropriation, so long as — in the words of 18 U.S.C. § 1837(2) — “an act in furtherance” of the misappropriation was committed in the United States. As a result of the expansive reach of the Defend Trade Secrets Act, even in cases where the trade secret theft occurs mostly outside the United States, trade secret owners should consider whether they are still able to recover damages for foreign infringing sales in a U.S. court under the statute.

To view the full alert, visit the Faegre Drinker website.

FTC Issues Final Rule Banning Employment Noncompete Agreements

On April 23, 2024, in a 3-2 vote along party lines, the U.S. Federal Trade Commission issued a final rule that will ban essentially all employment noncompete agreements nationwide. This alert dives into the key takeaways and what to expect next.

To view the full alert, visit the Faegre Drinker website.

The FTC Non-Compete Rule – It’s Finally Here (Almost)!

Yesterday, the Federal Trade Commission (FTC) announced that, next Tuesday, April 23, it will be releasing the final version of its proposed rule largely prohibiting employee non-competition restrictions. See FTC Announces Special Open Commission Meeting on Rule to Ban Noncompetes | Federal Trade Commission. The announcement will be preceded by a vote by the five FTC commissioners on whether to “authorize public disclosure of the proposed final rule.” Assuming that disclosure is authorized, which is expected, the FTC will present the rule and then vote to issue it. As of yet, there has been no indication whether the final rule will be the same as the proposed rule or, if not, what the changes will be.

Continue reading “The FTC Non-Compete Rule – It’s Finally Here (Almost)!”