Trade Secrets: Protecting Your Assets

Significant developments in Illinois and Congress have changed the landscape of trade secret and restrictive covenant enforcement. For example:

Congress’ enactment of The Defend Trade Secrets Act (DTSA) in May 2016 created Federal protection for trade secrets
Federal and state regulators have increased their scrutiny of restrictive covenant agreements in certain industry settings
Illinois Restrictive Covenant Law is now in a state of flux due to conflicting opinions from local and Appellate Courts

Understanding the impact of these changes in Illinois (and each state where your company is located or does business), and the tools now available to employers for trade secret and restrictive covenant enforcement and protection, will help your company safeguard its most valuable assets and maintain its advantage over competitors.

Read on to access Seyfarth’s resources, including our recently released guides; registration for our November 3rd Breakfast Briefing; and FAQs on Illinois Restrictive Covenant Law.

Our one-stop desk reference surveys many of the questions, highlighted below, related to the use of employee covenants and intellectual capital protection in all 50 states.

Are employee non-competes allowable?

What state statutes govern employee non-competes?

Are employee non-solicitation agreements allowable?

Are customer non-solicitation agreements allowable?

Is continued employment sufficient consideration?

Are blue penciling or reformation permissible?

Are covenants enforceable against discharged employees?

Has the state adopted the UTSA?

Are there applicable statute of limitations (UTSA and breach of contract)?

Has the state adopted inevitable disclosure doctrine?

Have restrictive covenants been extended for violation?

The Defend Trade Secrets Act Guide

What does the 2016 passage of the Defend Trade Secrets Act (DTSA) mean for your company? For one, it “federalizes” trade secret law by creating a federal claim for trade secret misappropriation. The DTSA also creates new remedies, including ex parte seizure orders to recover misappropriated trade secrets.

Seyfarth’s DTSA Desktop Reference guide describes the DTSA’s unique legal structure and remedies. We also provide tips and strategies in light of the passage of the DTSA.

Click below to download our free DTSA Desktop Reference Guide.

FAQ: Illinois Restrictive Covenants

People tell me that restrictive covenant agreements that prohibit an employee from working for a competitor or soliciting customers after they leave our company are unenforceable in Illinois. Is this true?

No. Illinois courts routinely enforce restrictive covenants that prohibit a former employee from working for a competitor, soliciting customers of his/her former employer, and/or soliciting his/her former co-workers when the restrictive covenants protect a legitimate business interest and do not impose an undue hardship on the former employee.

What does “legitimate business interest” mean in terms of an Illinois Restrictive Covenant?

Illinois courts have not developed or identified a bright line test as to what is (and is not) a “legitimate business interest.” However, the protection of confidential information and near permanent customer relationships are two items that courts routinely consider to be legitimate business interests worthy of restrictive covenant protection.

What does “not impose an undue hardship on the former employee” mean?

It means the restrictive covenant must be reasonable in time, territory and scope. In simpler terms, a restrictive covenant that covers what the employee did for the company and lasts for a specific duration (such as one year) is more likely to be enforced by an Illinois court than a restrictive covenant that covers everything the company does and lasts for several years.

What about independent contractors? Can they be covered by a restrictive covenant?

Yes, Illinois courts will enforce restrictive covenants against independent contractors. The analysis for whether the restrictive covenant is enforceable against an employee or independent contract is the same.

How can I learn more about enforcing restrictive covenants in Illinois?

Register for Seyfarth Shaw LLP’s Breakfast Briefing on November 3, 2016. During the briefing, leaders of Seyfarth’s Trade Secrets, Computer Fraud and Non-Competes Practice Group will discuss the state of Illinois Restrictive Covenant Law and best practices for drafting and enforcing restrictive covenants.

In-Person Breakfast Briefing

Please join us for a fast-paced and informative discussion that clarifies recent developments in restrictive covenant and trade secrets law, and provides “best practices” for protecting your company’s most valuable and confidential assets.

The program focuses on practical responses to the following issues and questions:

The current flux of Illinois Restrictive Covenant Law due to conflicting opinions from Appellate Courts and how to best position your company in this new Restrictive Covenant environment.
Your new hire is bound by a restrictive covenant agreement—what now?
What to do when a former employee attempts to raid your company's employees and confidential information?
How do you protect confidential information and intellectual property?
What you need to know about the Federal Defend Trade Secrets Act of 2016?
Working with federal prosecutors and their law enforcement partners: How can you make your case attractive to the “Feds”?

When & Where

Date:
Thursday, November 3, 2016

Location:
Seyfarth Shaw LLP
131 South Dearborn Street
Suite 2400
Chicago, Illinois 60603

Agenda

Breakfast & Registration:
8:00 a.m. – 8:30 a.m.

Program:
8:30 a.m.. – 10:00 a.m.

*There is no cost to attend, but seating is limited. Please register to ensure your space at this event.

Speakers:

		Andrew S. Boutros Seyfarth Shaw Partner, National Co-Chair White Collar, Internal Investigations, and False Claims Team aboutros@seyfarth.com
	J. Scott Humphrey Seyfarth Shaw Partner National Steering Committee Trade Secrets, Computer Fraud & Non-Competes Practice Group shumphrey@seyfarth.com
	Michael D. Wexler Seyfarth Shaw Partner, National Chair Trade Secrets, Computer Fraud, and Non-Competes Practice Group mwexler@seyfarth.com

Trade Secrets Group Chairs

		Robert B. Milligan Seyfarth Shaw Partner, National Co-Chair Trade Secrets, Computer Fraud, and Non-Competes Practice Group rmilligan@seyfarth.com
		Michael D. Wexler Seyfarth Shaw Partner, National Chair Trade Secrets, Computer Fraud, and Non-Competes Practice Group mwexler@seyfarth.com