Trade Secret Attorney, Non-Compete Agreement Attorney

Who Other than the Employee Should Receive the Non-Compete Threat Letter?

Often times when an employee leaves for employment at a competing business and is under a non-compete, the question arises who other than the employee should receive the threat letter to cease and desist violation of the non-compete?  Often times, the former employer will consider sending a threat letter to the new employer.  At other times if the non-compete language is suggestive of such, customers in the industry might also receive a threat letter.  Recently, there was a case decided in the Eastern District of Michigan, Bonds v Philips Electronic North America, where the former employee sued his former employer for sending a letter to his new employer causing his termination.  The Court ultimately decided in favor of the former employer, but the analysis leaves the door open for a former employee to sue his former employer in the event that the non-compete threat letter crosses the line. 

Lobbyist Gear Up To Initiate Further Federal Protections For Trade Secrets

Big businesses and their lobbyist have been working hard toward pushing the 113^th Congress to do more to protect trade secrets, particularly, on the international front. There are a number of bills pending, including legislation under the Economic Espionage Act of 1996 (EEA) that currently only provides for criminal prosecution for violations, but would allow trade secret owners the opportunity to bring civil actions against foreign defendants or defendants located outside the United States for trade secret misappropriation.  Another bill under the EEA would also provide for a private cause of action for trade secret theft against defendants who are located in the United States.   These private rights of action under the EEA, if passed, would assist companies that face trade secret theft both domestically and internationally.  The end result would provide greater intellectual property rights over sensitive or proprietary data.  Consumer data has become a more important tangible asset to many businesses and appears to be the impetus for these pending bills under the EEA.

Another pending bill in Congress is under the Cyber Economic Espionage Accountability Act (CEEAA) and would permit the President to identify and penalize foreign officials that commit or aid in cyber-spying or trade secret theft through a variety of diplomatic and economic sanctions.  There is also legislation being debated under the Computer Fraud and Abuse Act (CFAA) to include criminal penalties and additional damages related to critical infrastructure computers such as those that control chemicals or electricity.  

How to Best Obtain a Non-Compete Agreement?

Employers often obtain non-compete agreements or non-competition agreements from their employees.  However, the employees are often in a position to successfully challenge the validity or reasonableness of the non-compete.  Employers often ask, “How do I best obtain a valid non-compete agreement?”  The best and most effective way to obtain a valid non-compete agreement by an employer from an employee is to do it with the offer of employment to the employee. 

There is legislation pending and being debated in Michigan that would require employers to obtain a non-complete agreement from the employer and include it with the offer of employment, otherwise it would be invalid.  Absent the passage of the legislation, the most effective way to obtain a valid non-compete is to still include it with an offer of employment.   This does several things.  It avoids the argument from the employee that the non-compete agreement was made without consideration because the employee will understand that it is a condition of the employment.  It will remove the stigma of unfairness as the employee will no longer be able to argue that he or she did not know what they were getting into in executing the non-compete agreement.  It will also go a long way towards an employee attempting to argue that the non-compete agreement is unreasonable in both scope and duration, which is otherwise a requirement for a valid a non-compete, because the employee executed the agreement at the same time he or she was offered employment, making the reasonableness argument much more difficult.  Finally, it will take the away the sympathy factor from a judge who is often moved by the fate of the employee who indicates that “I was faced with signing the non-compete or losing my existing employment”. 

What is the best way to obtain a non-compete agreement?   The best way to obtain a valid non-compete agreement is to offer the non-compete agreement at the same time you make an offer of employment to the employee.