Recent Blog Posts
- No Insurance Coverage In Trade Secrets Lawsuit Insurance coverage is not something which comes to mind when thinking about trade secret misappropriation. In fact, since this blog was started in 2009, I cannot recall a single post about an insurance coverage issue.
That being said, one of the first things prudent defense counsel will do when a client is sued for alleged trade secret misappropriation is to instruct their client to notify their insurance carrier and inquire as to whether there is coverage for some or all of... More
- Employer’s Waiver Of Non-Compete Period In Order To Avoid $1 Million Payment Held Ineffective In Reed v. Getco, LLC, the Illinois Court of Appeals was recently faced with an interesting situation: under a contractual non-compete agreement, the employer was obligated to pay the employee $1 million during a six month, post-employment non-competition period. This was, in effect, a form of paid “garden leave” — where the employee was to be paid $1 million to sit out for six months – perhaps to finally correct his golf slice or even learn the fine art of... More
- Illinois Passes Law Banning Noncompete Agreements for Low Wage Workers Illinois recently became one of the first states to ban non-compete agreements for low wage workers when it passed the Illinois Freedom to Work Act. The law, which takes effect on January 1, 2017 and applies to agreements signed after that date, bars non-compete agreements for workers who earn the greater of 1) the Federal, State, or local minimum wage or 2) $13.00 an hour. At present, because the State minimum wage is below $13.00 per hour, $13.00 an hour... More
- Defend Trade Secrets Act Signed Into Law On May 11, 2016, President Obama signed into law the Defend Trade Secrets Act (“DTSA”), which became effective immediately. The DTSA provides the first private federal cause of action for trade secret misappropriation, and it allows parties to sue in federal court for trade secret misappropriation—regardless of the dollar value of the trade secrets at issue.
Although the DTSA’s remedies largely overlap with those in the 48 states that have adopted some version of the Uniform Trade Secrets Act, the DTSA will... More
- In Today’s Environment, What Is “Adequate Consideration” for a Restrictive Covenant Signed by an Existing Employee? Employers seeking to require an existing employee to sign a restrictive covenant should consider current litigation trends surrounding what constitutes “adequate consideration.” Under the traditional rule followed by a majority of states, continued employment, standing alone, is adequate consideration for a restrictive covenant signed by an at-will employee. Several courts, however, have recently reexamined this issue, so employers must be aware of differences among the states as to whether some consideration beyond mere continued at-will employment is required.
Fifield v. Premier... More
- Sixth Circuit Affirms $3.7 Million Award And Permanent Injunction In Trade Secret/Breach Of Duty Of Loyalty Case In Nedschroef Detroit Corp. et al. v. Bemas Enterprises et al., the U.S. Court of Appeals for the Sixth Circuit recently affirmed an award of nearly $3.7 million in damages against two individuals found to have engaged in misconduct related to the operation of a business which competed with their employer.
Nedschroef Detroit Corporation (“Nedschroef”) services and provides replacement parts for fastener machines made by an affiliate in Europe. Without Nedschroef’s knowledge, two of its employees formed a business – under... More
- Ambiguous Allegations, Lack of Imminent Harm, and a Delay in Taking Action Doom Request for a Temporary Restraining Order Peter A. Steinmeyer
In Bridgeview Bank Group v. Meyer, the Illinois Appellate Court recently affirmed the denial of a temporary restraining order (“TRO”) against an individual who joined a competitor and then, among other things, allegedly violated contractual non-solicitation and confidentiality obligations.
As a threshold matter, the Appellate Court was troubled by what it described as Bridgeview’s “leisurely approach” to seeking injunctive relief. The Appellate Court noted that Bridgeview filed the lawsuit three months after Meyer joined a competitor, waited two more... More
- Another Federal District Court Judge In Illinois Refuses To Apply The Illinois Appellate Court’s Fifield Decision Readers of this blog know that long settled understandings regarding what constitutes adequate consideration for a restrictive covenant in Illinois were turned upside down when the First District Appellate Court in Illinois held in Fifield v. Premier Dealer Services Inc., 2013 IL App. (1st) 120327 that, absent other consideration, two years of employment are required for a restrictive covenant to be supported by adequate consideration, regardless of whether the covenant was signed at the outset of employment or after, and regardless... More
- Pennsylvania Supreme Court Holds That Mere Continued Employment Is Not Adequate Consideration To Support A Restrictive Covenant Weighing in on an issue that is drawing attention nationwide, the Pennsylvania Supreme Court recently held, in Socko v. Mid-Atlantic Systems of CPA, Inc., that the mere continuation of employment is not sufficient consideration to support a restrictive covenant. Rather, for there to be sufficient consideration, the Court held that the employee must receive “some corresponding benefit or a favorable change in employment status.” As examples of such sufficient additional consideration, the Court cited “a promotion, a change from part-time... More
- Illinois Appellate Court Strikes Down Overbroad Noncompete, Nonsolicit, and Confidentiality Provisions and Also Refuses to Judicially Modify Them In a decision issued in late October, AssuredPartners, Inc. et al. v. William Schmitt, 2015 IL App. (1st) 141863 (Ill. App. 2015), the Illinois Appellate Court struck down as overbroad and unreasonable, the noncompete, nonsolicit and confidentiality provisions in an employment agreement. The Court then refused to judicially modify or “blue pencil” these provisions because the Court deemed their deficiencies “too great to permit modification.” This decision is essentially a primer on current Illinois law regarding restrictive covenants and confidentiality agreements.