January 13, 2023

Managing IP Quotes Tom Wallerstein on Non-compete Bans and What They Would Mean for Trade Secrets

1 min

On January 13, 2023, Tom Wallerstein was quoted in Managing IP regarding non-compete bans and what they would mean for trade secrets.

According to the article, the Federal Trade Commission (FTC) proposed a new rule that would ban employers from imposing non-competes on their workers. However, non-competes have been completely unenforceable in California since 2008, when the California Supreme Court invalidated the narrow-restraint exception to non-competes – which some courts used to enforce agreements that only prevented an employee from working for a direct competitor.

Wallerstein sees a lot of trade disputes in California, cautioning that if non-competes are banned elsewhere, companies will turn to trade secret litigation instead.  The change in policy would also affect the types of arguments companies make in trade secret disputes.  Wallerstein says defendants in California courts pretty much always argue that plaintiffs aren’t really concerned about trade secrets and are just trying to prevent former employees from competing. He said these types of arguments will become more common in all courts if non-competes are banned.