Benjamin Dryden on Noncompete Ban – Expect Trade Secret Litigation Increase in ‘Volume and Nastiness’

Foley & Lardner LLP partner Benjamin Dryden offered insight on the specific impact to the manufacturing sector of the U.S. Federal Trade Commission’s (FTC) recently issued final rule banning noncompete agreements in the Manufacturing Dive article, “How the FTC’s noncompete ban could impact manufacturing operations and innovation.”

Dryden, who is vice-chair of Foley’s Antitrust & Competition Practice Group, explained that those covered in the manufacturing sector could include everyone from factory line workers to engineers in research and development roles and sales personnel.

“Some manufacturers use noncompetes to protect investments in training,” Dryden said. “Another use that we see all the time is sales personnel. The noncompete is protecting something else entirely – protecting your relationships.”

Dryden emphasized that companies should be prepared to increase investments in trade secret litigation, which he expects to increase in both “volume and nastiness.”

“I don’t want to say the sky is falling and this is the end of innovation,” Dryden commented. “But from the perspective of a particular company, you just will no longer be able to rely on the clean, self-executing fact that your R&D team is not going to up and join a competitor tomorrow.”

He suggested that given the blurry future of noncompetes, manufacturers should look to other labor agreement tools, including nonsolicitation agreements, nondisclosure agreements, and other confidentiality forms, to continue protecting trade secrets and innovation.