Safeguarding Trade Secrets and IP in a Time of Rising Frauds and No Non-Competes

Note from the Editor

In the spring of 1998, Volkswagen AG made headlines by acquiring Rolls-Royce for nearly $1 billion, only to find that the Rolls-Royce trademark wasn’t part of the deal. Rival BMW quickly seized the opportunity, purchasing the valuable trademark for just $65 million. This incident underscores the vital role intellectual property (IP) plays in mergers and acquisitions (M&A).

From patents to trademarks and trade secrets, IP can greatly impact the value of a transaction, presenting both opportunities and challenges. To navigate a successful M&A process, companies must manage IP diligently through thorough due diligence, strategic integration, and leveraging advanced tools like contract AI to minimize risks and enhance value.

In a major employment law ruling on August 20, 2024, the United States District Court for the Northern District of Texas deemed the Federal Trade Commission’s (FTC) broad non-compete ban (the Final Rule) unlawful, preventing it from taking effect on September 4, 2024, as scheduled. This decision is nationwide, meaning the FTC’s Final Rule cannot be enforced by employers anywhere in the U.S. at this time.

Does this mean the non-compete ban is entirely off the table? How can employers protect their trade secrets and intellectual property in its absence? While non-compete agreements are one way to safeguard confidential information, employers should also consider implementing robust confidentiality agreements.

In Canada, there is no nationwide ban on employment non-competes, but enforcing such restrictions remains challenging for employers. How does this proposed rule stack up against Canadian law?

As fraud continues to affect U.S. companies, whistleblowers are becoming increasingly vital in uncovering these incidents. According to the Association of Certified Fraud Examiners’ 2024 Report to the Nations, over 40% of fraud cases are revealed by whistleblowers.

This alarming statistic — and its potential impact on businesses—should encourage executives and HR professionals to understand how to effectively and responsibly utilize whistleblower reports.

This month, we will be delving into these topics. We will examine how they would impact organizations and what HR can do to alleviate the concerns. We hope the insights from the industry thought leaders will provide answers to your most pressing problems in hand.

Happy Reading!
 

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