In case you missed the news splash over the past 48 hours, MA Governor Patrick this week announced that he is introducing legislation to abolish employee noncompete agreements except in very limited circumstances.  The proposed legislation would have Massachusetts join California as one of the very few states that generally prohibit these post-employment restrictions.   The proposed law is part of a larger bill — the Growth and Opportunity Act of 2014 —… More

            Judge Peter M. Lauriat of the Massachusetts Superior Court decided late last year that an employee who takes confidential documents from her employer’s electronic document system to use in a discrimination lawsuit against her employer is not liable to the employer under the Computer Fraud and Abuse Act (CFAA), especially when the employer knew about the lawsuit but nonetheless did not restrict the employee’s access to those documents while she was working for the employer. … More

            Late last month, Judge Cornelius J. Moriarty of the Massachusetts Superior Court granted summary judgment for a defendant company and two individual defendants on a trade secret misappropriation claim because the plaintiff company did nothing to protect what it claimed were trade secrets.  One element of a trade secret claim is that the plaintiff must demonstrate that it took sufficient actions to protect its trade secret from unauthorized disclosure. … More

            Over the past two months, several interesting items of Computer Fraud and Abuse Act (CFAA) and noncompete news have crossed my desk.  Below are summaries of the two most important items:

            1. Encryption Can Be a CFAA Violation: In early December, Judge Denise J. Casper of the U.S. District Court in Massachusetts ordered a former employee of a company to, among other things, disclose the password that he put on an important file on the company’s server because the company was likely to prevail on its CFAA claim against the employee under the “preliminary injunction”… More

            Echoing a new theme in the federal district court in Massachusetts, last month Chief Magistrate Judge Leo T. Sorokin refused to dismiss a Computer Fraud and Abuse Act (“CFAA”) claim brought against the former CEO of a company, but did so without prejudice, meaning that the defendants could ask the Court to dismiss the claim again later in the case.  Under the CFAA, “[a] defendant is liable where he or she ‘knowingly and with intent to defraud,… More

An Op-Ed in last Sunday’s Boston Globe joins the chorus of advocates for noncompete reform in Massachusetts.  The author, Jeremy Hitchock, CEO of New Hampshire-based Dyn, prefers California’s “prohibition” approach (in which employee noncompetes generally aren’t enforceable) , arguing that California’s model  “has created a unique employment ecosystem that thrives on employee movement.”  Conceding that this model “reduces the protection of an individual company’s business know-how,” Hitchcock asserts that “major trade secrets”… More

            Earlier this month, Judge Dennis J. Curran of the Massachusetts Superior Court decided that a noncompete clause in an employment agreement that had, by its terms, expired after the employee turned 65 could not be enforced even though the employee continued to work for the employer before moving to another company.  The agreement explicitly stated that it terminated when the employee turned 65, and the noncompete clause in it stated that the employee could not compete with the employer within a 50 mile radius of the employer for two-and-a-half years “after the final termination of this Agreement.” … More

Earlier this month, the Joint Committee on Labor and Workforce Development of the Massachusetts state legislature held a hearing during which it discussed a proposal to limit the enforcement of noncompetes.  The bill, in both its House and Senate versions, provides, with certain exceptions relating to acts by the employee, a presumption that noncompetes for no longer than six months are reasonable (and enforceable), but noncompetes that are longer than six months are presumed to be unreasonable (and not enforceable to the extent they last longer than six months). … More

The “material change” defense is clearly the issue du jour in the world of Massachusetts noncompete law.  This week the Boston Business Journal devoted  a front page piece largely to this topic, under the headline that noncompetes are “getting harder to enforce.”   Earlier this month, my colleague and fellow blogger, Brian Bialas, expanded on the topic (among others) in analyzing a particularly interesting recent court decision in the Massachusetts Lawyers Journal.   … More

            A Wall Street Journal article published yesterday states that litigation over employee noncompetes has risen by more than 60% in the past decade, and this increase is affecting entrepreneurs who are unable to leave their current jobs to start new businesses or hire employees.  This generally is the argument in favor of reform legislation, such as what has been proposed in Massachusetts, to limit or even eliminate noncompetes,… More