Posted on May 6, 2009 by James P. Flynn

How Employers Can Use CFAA to Get Back Laptops

Employers looking to protect their intellectual property and proprietary information, and wondering whether they can punish the departing employees that ignore demands to return laptops and other transportable electronic devices that hold such data, may now have a newly invigorated weapon at their disposal — the Computer Fraud and Abuse Act.  A recent federal district court decision found that an employer establishes the required “loss” and “damage” elements of a CFAA claim against a former employee by showing that such employees “refused to return their computers” when requested, that such employees “deleted information from their computers,” and that the employer “had to perform a forensic investigation to determine what information was deleted from” these laptops. Because the CFAA provides a statutory claim that applies to all electronically stored information (confidential or not), provides for federal court subject matter and allows for the recovery of a variety of damages and costs, including those related to expert fees, employers and intellectual property owners may find it attractive. For further details and analysis of these issues, see, by clicking here, the May 5, 2009 article by Jim Flynn appearing in IP Law 360 and Employment Law 360.

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Posted on April 23, 2009 by David L. Barron and Daniel J. Schuch

Texas Supreme Court Makes It Easier To Enforce Noncompete Agreements

On April 17, 2009, the Texas Supreme Court removed a hurdle to the enforcement of noncompete agreements and clarified what is required for a valid agreement in the state of Texas.

In Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 2009 WL 1028051 (Tex. 2009), the court addressed the question of whether a noncompete in an at-will employment relationship is enforceable when the employee expressly promises to not disclose confidential information but the employer makes no express return promise to actually provide confidential information. The court held that, as long as the employment for which the employee is hired will reasonably require the company to provide confidential information to the employee for the accomplishment of the contemplated job duties, it is reasonable to imply a promise to make such a disclosure in the covenant not to compete. The court made clear that this holding is contingent upon other requirements of the Texas Covenant Not To Compete Act being satisfied.

This case addresses the lingering question of whether the lack of an affirmative promise by an employer to provide confidential information to an at-will employee voids a noncompete agreement for lack of consideration because the employer could theoretically terminate the employee at any time, without ever providing confidential information. This decision does away with this argument and allows enforcement of the noncompete agreement as long as the employer actually provides confidential information to the employee during employment.

This decision is the second opinion from the Texas Supreme Court in recent years that makes it easier for employers to enforce noncompetes in the state of Texas. It appears that the Texas Supreme Court is signaling to lower courts that future cases should focus more on the reasonableness of the noncompete agreement, and less on hypertechnical legal arguments. Nonetheless, clients using noncompete agreements in the State of Texas should annually review their agreements to ensure they are in compliance with this ever-changing area of law.
 

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