In the First Circuit, restrictive covenants are governed predominately by statute (with the exception of Puerto Rico, which governs such agreements through common law). Within the last year, Maine, Rhode Island, and New Hampshire have amended their restrictive-covenant statutes to prohibit employers from requiring lower-wage earners to sign noncompete agreements. A recently proposed amendment to Massachusetts law, if passed, would render all noncompetition agreements void and unenforceable effective January 1, 2021. These efforts reflect increasing hostility towards, and increased scrutiny of, restrictive covenants in the First Circuit.

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As in other states, the enforceability of restrictive covenants or non-compete clauses in the Sixth Circuit turns primarily on the reasonableness of the restriction’s geographic and temporal scope. Michigan has enacted a statute explaining when non-competes may be enforced. In Kentucky, Ohio and Tennessee, enforcement is determined entirely by common law. In Ohio and Tennessee, courts will consider the public interest in addition to the interests of the parties involved.

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After posts considering confidentiality protections under the EU Trade Secrets Directive 2016/943 when litigating in various jurisdictions, we next turn to how these issues arise in the context of arbitration.

Where trade secrets are protected by a contract, an opportunity arises for parties to consider alternative dispute resolution mechanisms including arbitration and whether to adopt express rules in arbitration that protect confidentiality.
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In our next post on the EU Trade Secrets Directive 2016/943, we turn to the Netherlands. In the Netherlands, the EU Trade Secrets Directive was implemented in 2018 by the Act on the Protection of Trade Secrets (Wet bescherming bedrijfsgeheimen) and led to amendments to Dutch procedural law including those related to confidentiality clubs. For example, access to alleged trade secrets introduced in proceedings is granted to at least one person of the opposing party and that party’s lawyer under confidentiality restrictions. (Article 1019ib, Dutch Code of Civil Procedure). Depending on the nature of the trade secret, however, the court may order that access to certain documents be limited to only a lawyer or another authorized representative but not a representative of the opposing party. (Article 22a(3), Dutch Code of Civil Procedure).
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The EU Trade Secrets Directive 2016/943 contains a variety of confidentiality protections expressly protecting the publicity of the proceedings because “[t]he prospect of losing the confidentiality of a trade secret in the course of legal proceedings often deters legitimate trade secret holders from instituting legal proceedings to defend their trade secrets, thus jeopardising the effectiveness of the measures, procedures and remedies provided for.  For this reason, it is necessary to establish, subject to appropriate safeguards ensuring the right to an effective remedy and to a fair trial, specific requirements aimed at protecting the confidentiality of the litigated trade secret in the course of legal proceedings instituted for its defence.”  Article 9 of the Directive specifically required EU member states to implement rules creating such protections, such as by restricting access to hearings and creating so-called “confidentiality rings” or “confidentiality clubs” limiting the dissemination of confidential information and documents to designated persons.

The United Kingdom’s implementing law, the Trade Secrets (Enforcement, etc.) Regulations 2018, requires that the court have the power to restrict access to documents containing alleged trade secrets and to hearings. s. 10(5).  There is already significant maturity in the kinds of confidentiality protections available in English litigation so this is unlikely to lead to significant change.  Although the principle of open justice is a fundamental feature of the legal system and departures are permitted only if necessary in the interests of justice, exceptions and restrictions to openness and respect for confidentiality are actually already well-established in the United Kingdom. See McKillen v Misland (Cyprus) Investments Ltd and others [2012] EWHC 1158 (Ch).
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In Food Marketing Institute v. Argus Leader Media, the Supreme Court strengthened the federal government’s ability to protect trade secrets and confidential business information from disclosure in response to a Freedom of Information Act (“FOIA”) request. Food Mktg. Inst. v. Argus Leader Media, __ U.S. __, 139 S. Ct. 2356, 2366 (June 24, 2019). Under the facts of that case, the Court held that where the government received a third-party’s commercial and financial information and this information was treated confidentially, the information was exempt from disclosure and the government could not disclose it in response to a FOIA request. Many predict that this decision, which we previewed earlier this year, will help protect companies that provide sensitive information to government agencies and make it more difficult for the general public (including journalists and competitors) to access this information.
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Pay equity continues to be one of the most significant workforce issues facing employers today. Pay equity laws aim to increase transparency into employers’ pay practices – with the ultimate goal of ensuring that employees are paid fairly regardless of demographic factors including race and gender. However, they may also require employers to release sensitive, propriety information about internal pay practices – which arguably constitute trade secrets – potentially compromising employers’ ability to remain competitive in hiring and retaining top talent. See, e.g., In re High-Tech Employee Antitrust Litig., No. 11-cv-02509, 2013 WL 163779, at *2, 5 (N.D. Cal. Jan. 15, 2013) (explaining that trade secrets include “sources of business information that might harm a litigant’s competitive standing,” including “confidential information regarding . . . recruitment strategies, policies, and procedures, [and] quantitative data concerning those topics”).
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On June 28, 2019, the Luxembourgish Mémorial published the Law of June 26, 2019 on the protection of undisclosed know-how and business information better known as trade secrets implementing the EU Trade Secrets Directive 2016/943 after a one year delay. The recent Luxembourgish Law is a literal transposition of the EU Directive and provides a legal definition of “trade secrets,” which was up until now only defined by the courts. The EU Directive defined “trade secret” as information that (i) is secret, i.e. not publicly known or readily accessible to persons normally dealing with this kind of information, (ii) has commercial value because it is and remains a secret, and (iii) has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret. This definition thus includes any kind of sensitive business information that is kept secret by reasonable measures, such as market studies, business plans, pricing information, etc.
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States within the Fourth Circuit vary in their enforcement of restrictive covenants. Virginia, Maryland, and South Carolina govern the use of restrictive covenants through common law while North Carolina governs through statute. Despite the variations in governing authority, many of the factors used in these states will be familiar, given the widely accepted “reasonableness” standard

On April 1st, 2019, the Greek Law 4605/2019 implementing the Trade Secrets Directive 2016/943 was published in the Official Gazette. This new law creates a framework for the protection of business information and know-how. Before that date, Greek law did not provide for any legal protection against the expropriation or theft of for example software