Russell Beck and Hannah Joseph in the Boston Bar Journal on Protecting Trade Secrets

Russell Beck and Hannah Joseph’s article about strategies to protect trade secrets while office employees are largely working from home was recently published by the Boston Bar Journal.

Their article, titled “Protecting Trade Secrets During (and After) a Global Pandemic: Practical Tips for Employers” provides practical steps for employers to ensure the protection of their trade secrets and other legitimate business interests.

According to the article, COVID’s disruption to the workplace “created a precarious environment for trade secrets, as well as customer relationships and other legitimate business interests. Employees working from home have more opportunity to convert company information and customers, and some, particularly those facing involuntary unemployment, may feel driven to do so.”

Russell and Hannah further explain that, “Whether during or after the pandemic, it is vital for companies to have strong measures in place for protecting their trade secrets and other legitimate business interests, rather than to solely rely on after-the-fact litigation.”

In the article, Russell and Hannah outline specific steps that companies should take now to protect their trade secrets:

  • Know your trade secrets
  • Firm up policies and procedures
  • Educate your employees
  • Monitor your workforce

The Boston Bar Journal is a peer-reviewed, online publication of the Boston Bar Association. It presents timely information, analysis, and opinions to more than 10,000 lawyers in nearly every practice area. The Boston Bar Journal is governed by a volunteer Board of Editors dedicated to publishing outstanding articles that reflect their authors’ independent thought.

For up-to-the-minute analysis of legal issues concerning noncompete agreements in Massachusetts and across the United States, read Russell Beck’s blog, Fair Competition Law.

eck Reed Riden LLP is among the leading authorities in trade secret, noncompete, and unfair competition law, and our experience handling these matters is backed by our extensive employment law and business litigation experience. Our hand-picked team combines attorneys with complementary expertise and practical experience.

The Wall Street Journal featured Beck Reed Riden LLP’s noncompete agreement experience. In 2016, the White House issued a report entitled, “Non-Compete Agreements: Analysis of the Usage, Potential Issues, and State Responses,” relying in part on Beck Reed Riden LLP’s research and analysis, including its 50 State Noncompete Survey.

Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and employment.

We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legal and business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.

 

Mid-Year Trade Secret Case Roundup and Legislative Updates

There have been several significant trade secret cases this year. In their “Trade Secrets – Annual Year in Review (2020),” which was accepted by the American Intellectual Property Law Association for its Virtual Annual Meeting, Russell Beck and Hannah Joseph summarize some of the key case holdings and legislative developments from across the country over the past year.

Recent trade secret cases covered by the article focus on issues including standing, spoliation, the level of specificity required in identifying alleged trade secrets, the extraterritorial reach of the Defend Trade Secrets Act, calculation of damages, jury instructions, and others.

In addition, there have been several potentially far-reaching trade secret-related developments. In particular, a decade-plus divide over the application of the Computer Fraud and Abuse Act is heading to the Supreme Court. And the federal government has been considering federal regulation of noncompetes.

The full version of the article can be accessed here.

eck Reed Riden LLP is among the leading authorities in trade secret, noncompete, and unfair competition law, and our experience handling these matters is backed by our extensive employment law and business litigation experience. Our hand-picked team combines attorneys with complementary expertise and practical experience.

Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience working with clients ranging from Fortune 500 companies to start-ups and individuals.

We focus on business litigation and employment. We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legaland business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.

Beck Reed Riden LLP in Law360 for Preliminary Injunction Win

An article in Law360 higlights Beck Reed Riden LLP’s success in defeating a bid to enforce a noncompete agreement. The article is titled “Facebook Beats AI Startup’s Bid To Shield Trade Secrets.”

The article summarizes a decision by the United States District Court for the District of Massachusetts:

An artificial intelligence startup has failed to prove that its first employee ran off with the company’s trade secrets when he took a job at Facebook, a Massachusetts federal judge said, denying the firm’s request to block the former worker’s ongoing research at the social media giant.

U.S. District Judge Denise J. Casper … denied Neural Magic’s bid for an injunction, saying it wasn’t clear whether the work that Aleksandar Zlateski did for Facebook even qualifies as a trade secret.

The article explains that:

Aleksandar Zlateski is represented by Russell Beck, Stephen D. Riden, and Hannah Tso Joseph of Beck Reed Riden LLP.

The case is Neural Magic Inc. v. Facebook Inc. et al., case number 1:20-cv-10444, in the U.S. District Court for the District of Massachusetts.

The article is by Brian Dowling.

eck Reed Riden LLP is among the leading authorities in trade secret, noncompete, and unfair competition law, and our experience handling these matters is backed by our extensive employment law and business litigation experience. Our hand-picked team combines attorneys with complementary expertise and practical experience.

Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and employment. We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legaland business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.

Russell Beck Quoted in Massachusetts Lawyer Weekly on Trade Secrets Decision

A recent issue of Massachusetts Lawyers Weekly features Russell Beck in an article titled “Trade Secret Misappropriation Judgment Reversed.”

The article covers a decision by the United States Court of Appeals for the First Circuit overturning a lower court’s decision concerning allegations that the plaintiff’s former employee misappropriated a proprietary “tax arbitrage” strategy. The case is titled TLS Management and Marketing Services, LLC v. Rodríguez-Toledo, et al.

As described in the article, the First Circut found

that while client information may not have been available to the public, the plaintiff did not prove it had trade secrets.

“[A]ny trade secrets in the CPR were not identifiable because TLS did not ‘separate the [purported] trade secrets from the other information … known to the trade,’” Judge Timothy B. Dyk wrote for the panel, adding that the U.S. Possession Strategy consisted of public knowledge as well.

Massachusetts Lawyers WeeklyIn the article, Russell Beck is quoted as follows:

Boston attorney Russell Beck said the decision is a big deal for lawyers like himself who handle trade secret and nondisclosure cases.

“Appellate decisions involving trade secrets or nondisclosure agreements are not a frequent occurrence,” Beck said. “And when the 1st Circuit speaks, we all take note.”

More specifically, Beck said the case shows that courts will not reflexively find misappropriation of trade secrets when employees walk out the door with company materials; that plaintiffs must identify trade secrets with specificity before moving forward with discovery; and that the 1st Circuit will take a skeptical view of broad nondisclosure agreements.

The article was written by Massachusetts Lawyers Weekly reporter Eric T. Berkman.

For up-to-the-minute analysis of legal issues concerning noncompete agreements in Massachusetts and across the United States, read Russell Beck’s blog, Fair Competition Law.

eck Reed Riden LLP is among the leading authorities in trade secret, noncompete, and unfair competition law, and our experience handling these matters is backed by our extensive employment law and business litigation experience. Our hand-picked team combines attorneys with complementary expertise and practical experience.

The Wall Street Journal featured Beck Reed Riden LLP’s noncompete agreement experience. In 2016, the White House issued a report entitled, “Non-Compete Agreements: Analysis of the Usage, Potential Issues, and State Responses,” relying in part on Beck Reed Riden LLP’s research and analysis, including its 50 State Noncompete Survey.

Russell Beck’s work in this area is well recognized, and includes:

  • Over twenty five years of working on trade secret, noncompete, and unfair competition matters
  • Assisting the Obama White House as part of a small working group to develop President Obama’s Noncompete Call to Action
  • Authoring the book Negotiating, Drafting, and Enforcing Noncompetition Agreements and Related Restrictive Covenants (5th ed., MCLE, Inc. 2015), used by other lawyers to help them with their noncompete matters
  • Authoring the book Trade Secrets Law for the Massachusetts Practitioner (1st ed. MCLE 2019), covering trade secrets nationally, with a focus on Massachusetts law
  • Drafting and advising on legislation for the Massachusetts Legislature to define, codify, and improve noncompetition law
  • Teaching Trade Secrets and Restrictive Covenants at Boston University School of Law
  • Founding and administrating the award-winning blog, Fair Competition Law
  • Establishing and administrating the Noncompete Lawyers and Trade Secret Protection groups on LinkedIn, with over 1,600 members around the world
  • Founded and chaired the Trade Secret / Noncompete Practice for an AmLaw 100 firm

In addition, Russell was honored for his work in this area of law in the 2019 Chambers USA Guide, which stated that Russell Beck is a “terrific” attorney, who “is an excellent choice of counsel regarding noncompete agreements and the resolution of restrictive covenant disputes.” Chambers noted that Russell “basically wrote the new Massachusetts statute on noncompetes” and that “he’s an expert in employee mobility and nonrestrictive covenants.”

Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and employment. We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legal and business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.

Russell Beck and Erika Hahn in Massachusetts Lawyers Weekly on Protecting Trade Secrets

Russell Beck and Erika Hahn‘s article about strategies to protect trade secrets while office employees are largely working from home was recently published by Massachusetts Lawyers Weekly.

Their article, titled “Protecting trade secrets during and after stay-at-home orders,” provides practical steps for establishing a proper trade secret protection program (TSPP).

According to the article, “[t]he ability to protect trade secrets (and other legitimate business interests, including customer goodwill) has been hit by a perfect storm caused by the current coronavirus pandemic.” Beck and Hahn explain that,

At its core, a trade secret protection program is a set of protocols to protect a company’s confidential information — protocols that are not only expected by courts, but, more important, protocols that are designed to prevent the misappropriation of a company’s information in the first place.

While “reasonable” efforts are the legal touchstone for protecting trade secrets, that mandate should not be the motivation. Rather, effective and efficient prevention of misappropriation should be the lodestar.

Few trade secrets are like Coca-Cola, requiring heroic measures for their protection. In most instances, companies can achieve a reasonable balance, preventing misappropriation while enabling employees to use the company’s information for legitimate business purposes.

The goal should be to ensure that protecting the information is the easy path. If the balance tips too far toward preventing misappropriation, making it difficult for employees to get their work done efficiently, they will find a workaround. In contrast, the less resistance, the more likely compliance will happen naturally.

Massachusetts Lawyers Weekly

In the article, Russell and Erika outline specific steps for the establishment of a trade secret protection program, including the following:

Step 1: Understand the landscape

Step 2: Evaluate and update protections

Step 3: Evaluate third-party implications

Step 4: Special considerations in connection with work-from-home (WFH) and other remote work environments

Step 5: Communicate and reinforce expectations

Step 6: Monitor compliance

Step 7: Exit practices and procedures

Step 8: When all else fails, have a plan and implement it

For up-to-the-minute analysis of legal issues concerning noncompete agreements in Massachusetts and across the United States, read Russell Beck’s blog, Fair Competition Law.

eck Reed Riden LLP is among the leading authorities in trade secret, noncompete, and unfair competition law, and our experience handling these matters is backed by our extensive employment law and business litigation experience. Our hand-picked team combines attorneys with complementary expertise and practical experience.

The Wall Street Journal featured Beck Reed Riden LLP’s noncompete agreement experience. In 2016, the White House issued a report entitled, “Non-Compete Agreements: Analysis of the Usage, Potential Issues, and State Responses,” relying in part on Beck Reed Riden LLP’s research and analysis, including its 50 State Noncompete Survey.

Russell Beck’s work in this area is well recognized, and includes:

  • Over twenty five years of working on trade secret, noncompete, and unfair competition matters
  • Assisting the Obama White House as part of a small working group to develop President Obama’s Noncompete Call to Action
  • Authoring the book Negotiating, Drafting, and Enforcing Noncompetition Agreements and Related Restrictive Covenants (5th ed., MCLE, Inc. 2015), used by other lawyers to help them with their noncompete matters
  • Authoring the book Trade Secrets Law for the Massachusetts Practitioner (1st ed. MCLE 2019), covering trade secrets nationally, with a focus on Massachusetts law
  • Drafting and advising on legislation for the Massachusetts Legislature to define, codify, and improve noncompetition law
  • Teaching Trade Secrets and Restrictive Covenants at Boston University School of Law
  • Founding and administrating the award-winning blog, Fair Competition Law
  • Establishing and administrating the Noncompete Lawyers and Trade Secret Protection groups on LinkedIn, with over 1,600 members around the world
  • Founded and chaired the Trade Secret / Noncompete Practice for an AmLaw 100 firm

In addition, Russell was honored for his work in this area of law in the 2019 Chambers USA Guide, which stated that Russell Beck is a “terrific” attorney, who “is an excellent choice of counsel regarding noncompete agreements and the resolution of restrictive covenant disputes.” Chambers noted that Russell “basically wrote the new Massachusetts statute on noncompetes” and that “he’s an expert in employee mobility and nonrestrictive covenants.”

Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and employment. We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legal and business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.

 

General Counsel News Features Russell Beck’s Article About Protecting Trade Secrets

General Counsel Newsrecent post from General Counsel News features Russell Beck’s article about protecting trade secrets in the current workplace environment.

The post quotes Russell’s reminder to employers that trade secrets are vulnerable when work shifts from offices to homes:

“The ability to protect trade secrets (and other legitimate business interests, including customer goodwill) has been hit by a perfect storm caused by the current coronavirus pandemic,” warns Russell Beck in Fair Competition Law.

According to its website, “GeneralCounselNews.com provides news, content and announcements to our core audience of general counsel, executives, other in-house attorneys and private practice attorneys throughout the United States.”

Russell’s article provides practical guidance for companies on how to manage their trade secrets (and other legitimate business interests) – both generally and particularly while employing a remote workforce – thereby avoiding preventable problems by having a plan in place to address problems when they arise, which they inevitably will.

For up-to-the-minute analysis of legal issues concerning noncompete agreements and trade secrets in Massachusetts and across the United States, read Russell Beck’s blog, Fair Competition Law.

eck Reed Riden LLP is among the leading authorities in trade secret, noncompete, and unfair competition law, and our experience handling these matters is backed by our extensive employment law and business litigation experience. Our hand-picked team combines attorneys with complementary expertise and practical experience.

The Wall Street Journal featured Beck Reed Riden LLP’s noncompete agreement experience. In 2016, the White House issued a report entitled, “Non-Compete Agreements: Analysis of the Usage, Potential Issues, and State Responses,” relying in part on Beck Reed Riden LLP’s research and analysis, including its 50 State Noncompete Survey.

Russell Beck’s work in this area is well recognized, and includes:

  • Over twenty five years of working on trade secret, noncompete, and unfair competition matters
  • Assisting the Obama White House as part of a small working group to develop President Obama’s Noncompete Call to Action
  • Authoring the book Negotiating, Drafting, and Enforcing Noncompetition Agreements and Related Restrictive Covenants (5th ed., MCLE, Inc. 2015), used by other lawyers to help them with their noncompete matters
  • Authoring the book Trade Secrets Law for the Massachusetts Practitioner (1st ed. MCLE 2019), covering trade secrets nationally, with a focus on Massachusetts law
  • Drafting and advising on legislation for the Massachusetts Legislature to define, codify, and improve noncompetition law
  • Teaching Trade Secrets and Restrictive Covenants at Boston University School of Law
  • Founding and administrating the award-winning blog, Fair Competition Law
  • Establishing and administrating the Noncompete Lawyers and Trade Secret Protection groups on LinkedIn, with over 1,600 members around the world
  • Founded and chaired the Trade Secret / Noncompete Practice for an AmLaw 100 firm

In addition, Russell was honored for his work in this area of law in the 2019 Chambers USA Guide, which stated that Russell Beck is a “terrific” attorney, who “is an excellent choice of counsel regarding noncompete agreements and the resolution of restrictive covenant disputes.” Chambers noted that Russell “basically wrote the new Massachusetts statute on noncompetes” and that “he’s an expert in employee mobility and nonrestrictive covenants.”

Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and employment. We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legal and business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.

The Legal 500 Recommends Beck Reed Riden LLP

Beck Reed Riden LLP has been recognized by The Legal 500 United States 2020, an analysis of law firms based on surveys and interviews of more than 300,000 clients. The firm has been recommended in the category of “Trade secrets (litigation and non-contentious matters).” Only 33 law firms in the United States appear on this list.

Russell Beck was specifically recommended in The Legal 500 United States 2020 editorial.

The following is the independent editorial write up from The Legal 500 on the firm’s ranking:

Beck Reed Riden LLP is a boutique litigation practice based in Boston, recognized by clients for its ‘unparalleled’ expertise in trade secrets litigation. Headed by Russell Beck, the firm advises both Massachusetts-based clients, such as Staples, on a national basis, and also acts for out-of-state clients in trade secrets matters in Massachusetts. Beck is praised by clients as ‘an expert in the field of trade secret and restrictive covenant law‘, and is also noted for his ‘ability to adjust and come up with successful solutions‘.

Practice head(s):

Russell Beck

Testimonials

‘The Beck Reed Riden attorneys are very responsive to our needs. They are true subject matter experts with respect to non-competition agreements. We rely heavily on this firm for their expertise in this particular area. As a firm, we find that their fees are fair and reasonable for the services provided.’

‘The team at Beck Reed Riden is very “hands on”. They are fully engaged in the matters that we bring to them. Russell Beck and Nicole Daly are excellent attorneys who communicate well with our leadership team while providing outstanding advice and counsel to our company.’

‘When considering law firms, I reached out to state reps working to pass intellectual property law, as well as lawyers I knew, for recommendations. Beck Reed Riden was overwhelming the firm recommended. Upon engaging them it became clear why. Their knowledge of not only intellectual property law, but employment issues in general, was at the core of navigating my legal matter to a successful conclusion. In addition, their immediate attention to all matters and the care and passion they showed me throughout my ordeal went above my highest expectations.’

Key clients

    • Staples
    • Novartis Pharmaceuticals
    • Syneos Health
    • SharkNinja
    • Blue-Grace Logistics
    • Fortive
    • UG2
    • Nuvectra Corp.
    • Intellia Therapeutics
    • Ideal Image

Work highlights

    • Acting as trade secrets counsel to Staples.
    • Acting as counsel to Novartis Pharmaceuticals Corporation in ongoing issues.
    • Defended Nuvectra Corporation in litigation against Boston Scienfitic Corporation, related to the alleged theft of trade secrets.
    • Representing Syneos Health in connection with three separate trade secrets cases.
    • Providing counsel to Intellia Therapeutics on trade secrets issues.

Russell Beck is a business, noncompete, and trade secrets litigator, nationally recognized for his trade secrets and noncompete experience. He was invited to the Obama White House to develop guidelines for the proper use of noncompetes and has been cited as an expert on trade secrets and noncompetes by The New York Times, The Wall Street Journal, the White House, the Treasury Department, National Public Radio, PBS, the BBC World News Service, and many others.

The Legal 500 US provides impartial, third-party opinions on leading lawyers and law firms across the country. The Legal 500 relies upon a sophisticated methodology to determine which firms and attorneys are included in its list.

Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and employment.

Beck Reed Riden LLP is among the leading authorities in trade secret, noncompete, and unfair competition law. We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legal and business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.

Hannah T. Joseph to Speak at BBA’s IP Year in Review

Hannah T. Joseph will be speaking on a panel about trade secrets at the Boston Bar Association’s 20th Annual Intellectual Property Year in Review. The event will be held at the Boston Bar Association on January 23, 2020, from 12:00 to 5:45 p.m., with a reception to follow. More information is available here.

The 20th Annual IP Year in Review is sponsored by the BBA’s Intellectual Property Section.

This year’s Trade Secrets panel also includes the following speakers:

Hannah Joseph is an attorney with the firm’s litigation group, focusing her practice on the growing areas of trade secrets law, restrictive covenants, employee mobility, and unfair competition. She has counseled both corporate and individual clients on the use and enforceability of noncompete, nonsolicitation, and nondisclosure agreements, and successfully litigated cases on both sides regarding the enforcement of such agreements. Hannah also represents corporate and individual clients in disputes involving breach of contract, breach of fiduciary duty, and intra-corporate matters.

eck Reed Riden LLP is among the leading authorities in trade secret, noncompete, and unfair competition law, and our experience handling these matters is backed by our extensive employment law and business litigation experience. Our hand-picked team combines attorneys with complementary expertise and practical experience.

Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience at large law firms, working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and employment. We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legal and business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.

Russell Beck and Erika Hahn Featured in Law360 on Federal Noncompete Reform

Russell Beck and Erika Hahn‘s analysis of the misconceptions underlying various efforts to reform, and even ban, noncompete agreements was published by Law360 under the title, “Noncompete Misconceptions May Be Inhibiting Reform.”

The full analysis is also available (without subscription) at Fair Competition Law as “Federal Noncompete Initiatives: When you can’t convince the states, ask the feds.

The analysis discusses recent efforts at the federal level to restrict or ban noncompetes, which follows on the heels of several years of legislative efforts across myriad states to modify noncompete laws. Although very few states have enacted laws that ban noncompete agreements outright, recently-filed federal legislation seeks to just that.

According to Russell and Erika’s analysis, much of the push for restrictions or a ban is premised on:

  • The mistaken assumption that Silicon Valley is the epicenter of tech because California bans noncompetes;
  • Recent preliminary, inconclusive and somewhat inconsistent studies, the nuances of which are ignored;
  • The mistaken belief that trade secret laws and nondisclosure agreements provide adequate protections for trade secrets;
  • The mistaken belief that noncompetes prevent employees from using their general skill and knowledge; and
  • The prevalence of abuses in the use and drafting of noncompetes.

As discussed in the article, Russell Beck submitted testimony to the United States Senate Committee on Small Business and Entrepreneurship hearing on “Noncompete Agreements and American Workers.”

In his testimony and in the article, Russell made the five following recommendations:

  1. Ban noncompetes for low-wage workers.

As a group, low-wage workers rarely have the level of exposure to trade secrets or depth and breadth of customer relationships that might warrant the enforcement of a noncompete, given the countervailing issues.

  1. Ban noncompetes for medical professionals.

The use of noncompetes for doctors, nurses and other health care providers has received substantial scrutiny in the past few years, with many states changing their noncompete laws to ban such agreements. Given the overwhelming public interest in patients having the ability to select who provides their medical care, exempting medical professionals is certainly a rational policy.

  1. Require employers to provide advance notice if they wish employees to sign a noncompete.

One of the other major criticisms of noncompetes is that they are often sprung on employees the day they show up to work. A simple way to eliminate that problem, while retaining the potential benefits of negotiated noncompetes . . ., is to require advance notice.

  1. Adopt the so-called purple pencil approach for overly broad noncompetes.

That approach is a hybrid of the reformation approach (where courts rewrite overly broad agreements) and the red pencil approach (where courts void an overly broad noncompete in its entirety). Specifically, it requires courts to void an overly broad noncompete unless the language reflects a good faith intent to draft a narrow restriction, in which case the court may reform it

  1. Expressly authorize springing noncompetes.

To the extent that one of the goals is to encourage companies to limit their use of noncompetes generally, employers must have a viable remedy for when employees violate other, less-restrictive, obligations such as nondisclosure agreements and nonsolicitation agreements, misappropriate trade secrets, or breach their fiduciary duties to the company. In Massachusetts, the new noncompete law expressly authorizes courts to do this, essentially by imposing a noncompete.

These recommendations were among those suggested by the Obama administration in its 2016 call to action on noncompetes and adopted by many of the states making changes to their laws in the past few years.

In July 2019, Law360 published Russell Beck’s analysis of misconceptions in the noncompete debate.

____

For up-to-the-minute analysis of legal issues concerning noncompete agreements in Massachusetts and across the United States, read Russell Beck’s blog, Fair Competition Law.

eck Reed Riden LLP is among the leading authorities in trade secret, noncompete, and unfair competition law, and our experience handling these matters is backed by our extensive employment law and business litigation experience. Our hand-picked team combines attorneys with complementary expertise and practical experience.

The Wall Street Journal featured Beck Reed Riden LLP’s noncompete agreement experience. In 2016, the White House issued a report entitled, “Non-Compete Agreements: Analysis of the Usage, Potential Issues, and State Responses,” relying in part on Beck Reed Riden LLP’s research and analysis, including its 50 State Noncompete Survey.

Russell Beck’s work in this area is well recognized, and includes:

  • Over twenty four years of working on trade secret, noncompete, and unfair competition matters
  • Assisting the Obama White House as part of a small working group to develop President Obama’s Noncompete Call to Action
  • Authoring the book Negotiating, Drafting, and Enforcing Noncompetition Agreements and Related Restrictive Covenants (5th ed., MCLE, Inc. 2015), used by other lawyers to help them with their noncompete matters
  • Drafting and advising on legislation for the Massachusetts Legislature to define, codify, and improve noncompetition law
  • Teaching Trade Secrets and Restrictive Covenants at Boston University School of Law
  • Founding and administrating the award-winning blog, Fair Competition Law
  • Establishing and administrating the Noncompete Lawyers and Trade Secret Protection groups on LinkedIn, with over 1,600 members around the world
  • Founded and chaired the Trade Secret / Noncompete Practice for an AmLaw 100 firm

In addition, Russell was honored for his work in this area of law in the 2019 Chambers USA Guide, which stated that Russell Beck is a “terrific” attorney, who “is an excellent choice of counsel regarding noncompete agreements and the resolution of restrictive covenant disputes.” Chambers noted that Russell “basically wrote the new Massachusetts statute on noncompetes” and that “he’s an expert in employee mobility and nonrestrictive covenants.”

Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience at large law firms, working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and employment. We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legal and business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.

 

$91.3M Verdict Serves as Cautionary Tale for Trade Secrets Holders and Prospective Buyers

Woman Wearing White Long-sleeved ShirtIn the case of Liqwd, Inc. and Olaplex LLC v. L’Oréal USA, Inc., et al., a Delaware jury recently awarded Olaplex $91.3 million after finding that L’Oréal had willfully misappropriated Olaplex’s trade secrets, breached the parties’ nondisclosure agreement (NDA), and willfully infringed two of Olaplex’s patents. In addition to paying a hefty award, L’Oréal will have to pull several of its products from the shelves. The case, which is now on appeal, is a cautionary tale about a potential acquisition gone awry.

The Case

In June 2014, Olaplex, a California-based haircare products startup, launched products designed to strengthen and protect hair bonds during the coloring process. In November of that year, Olaplex began selling its products through wholesale distributor Salon Centric, a wholly-owned subsidiary of L’Oréal. By January 2015, the success of Olaplex’s products had caught the attention of L’Oréal, and L’Oréal reached out to Olaplex about potentially acquiring the company.

The parties executed an NDA, pursuant to which Olaplex disclosed to L’Oréal its unpublished patent applications, detailed business information, and information concerning its product testing and methodologies. After receiving this information, L’Oréal informed Olaplex that it no longer wished to acquire Olaplex and, subsequently, released three sets of products that directly competed with Olaplex’s niche line.

Several Laboratory GlassesOn January 5, 2017, Olaplex filed suit against L’Oréal in the U.S. District Court for the District of Delaware, alleging that L’Oréal had willfully used Olaplex’s trade secrets to develop its own, competing products, and infringed Olaplex’s patents. L’Oréal asserted – among other things – that it had not used Olaplex’s information but, rather, independently arrived at its products, which it had been developing since late 2014.

On August 12, 2019, the jury found for Olaplex and awarded it an astounding $91.3 million in damages. The jury also found that L’Oréal’s conduct with respect to the misappropriation and patent infringement was willful (allowing for the award of multiple damages). After reviewing the verdict, the court reduced the award to just under $50 million, and entered a permanent injunction barring L’Oréal from using, making, or selling its infringing products. The case is now on appeal.

Takeaways

The L’Oréal case is an extreme example of an acquisition gone awry, and teaches us that – in the acquisition context – both the acquisition target and potential buyer must approach information exchange with caution, even where there is an NDA in place.

For both parties, there exists a tension between the need to properly evaluate a potential acquisition and the desire to avoid against a trade secret dispute. On the one hand, a potential buyer cannot properly evaluate an acquisition deal without understanding the underlying business and its assets. On the other, a potential buyer that is already developing products or services that are similar to the products or services of the acquisition target, possibly opens itself to a misappropriation claim if it seeks out the acquisition target’s trade secrets. Similarly, information exchange during the evaluation stage benefits the acquisition target to show potential profitability. However, companies looking to sell must be vigilant in protecting their trade secrets, or risk losing them altogether.

While there is no perfect solution, here are some takeaways from the L’Oréal case:

  • Both parties should think about limiting their exchange of information to only that information that is necessary to properly evaluate the acquisition.
  • Further, they should consider sharing information in stages, saving the most important information for last – when both parties have demonstrated commitment to effecting the acquisition.
  • If the potential buyer is also in the process of or considering developing competitive products or services, it should notify the acquisition target of such (in writing) and consider disclosing the general steps it is taking to develop such products or services, so as to put the acquisition target on notice.
  • Finally, both parties should endeavor to ensure that their NDA is detailed, comprehensive, and tailored to the specific needs of the parties.

Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience at large law firms, working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and employment. We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legal and business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.

 

 

 

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