Trade Secret Litigation Rises as Economy Tanks

Recession seems imminent, leading to layoffs and downturn in business. But the looming recession also means more activity in other areas. Employment360 cites experts who believe the current recession will increase the amount of intellectual property legal work, including enforcement of noncompetition and nondisclosure agreements. The view is that companies are more likely to pursue former employees who violate their noncompete and confidentiality agreements during economic downturns as companies increase efforts to protect their assets.

For employers, now is the time to be reviewing what measures you need to institute to protect their business interests. Key employees should have enforceable noncompete and confidentiality agreements in place to prevent them from posing a threat should they leave employment. To better ensure enforcement of the agreements, multi-state employers also should include a requirement that the case be litigated in a state that enforces these types of agreements. Some states such as California will not enforce noncompete agreements, while other states such as Georgia, Texas and Illinois are reluctant to uphold the agreements in their entirety. Delaware continues to be a favorite forum for enforcement of noncompete and confidentiality agreements because of its business friendly environment and accessibility to the courts.

Employers also must implement proper screening measures to make certain that new hires are not subject to noncompete agreements that will ensnare them in trade secret litigation. All applicants should be asked whether they had confidentiality or noncompete agreements with their former employer so that preventative steps can be taken before they commence employment.

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