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14 Am. U. Bus. L. Rev. 711 (2024-2025)
Without Noncompete Agreements, Can Employers Keep a (Trade) Secret?

handle is hein.journals/aubulrw14 and id is 747 raw text is: WITHOUT NONCOMPETE AGREEMENTS, CAN EMPLOYERS KEEP A (TRADE) SECRET? CYNTHIA DAHL* Data, algorithms, and proprietary information and processes are critical assets for increasing numbers of companies. Since information assets often cannot be protected through patent, companies may instead rely on trade secret law. To meet the legal standard of a trade secret, companies must show that their information assets confer a competitive advantage to them by virtue of the secret status, and that they have taken reasonable measures to preserve the secrecy. One of the reliable methods companies use to maintain secrecy, and to show that they have taken the required reasonable measures, is the use ofrestrictive covenants. Traditionally, companies have relied heavily on contracts, especially nondisclosure agreements and noncompete agreements. However, now that a number of states have greatly limited the enforceability of noncompete clauses and agreements, or banned them entirely, using noncompete clauses and agreements to secure trade secrets is risky. A proposed Federal Trade Commission (FTC) ban on all noncompete agreements in 2024 almost removed the practice as an optionforever. Although the FTC rulemaking was halted at the eleventh hour, companies that rely on noncompete agreements to protect their trade secrets do so at their peril. At a time when information assets are ubiquitous as well as critical to a company's competitive position, companies must instead build out a system of corporate policies, technological solutions, and other more enforceable contractual provisions to protect their trade secrets going forward. I. In tro du ctio n ..................................................................................7 12 II. Trade Secret Law as a Critical Protection Rubric in an Information * Cynthia Dahl is Practice Professor of Law at the University of Pennsylvania Carey School of Law, where she directs the Detkin Intellectual Property and Technology Legal Clinic. She would like to thank Andy Lang, Tim Von Dulm, Ben Carlson, and Mary Shelly for invaluable research support. 711

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