In the past, noncompete agreements were a common way for business owners to protect their intellectual property (IP). Employees often needed access to this IP as part of their job, making it difficult to keep trade secrets entirely confidential. Noncompete agreements helped ensure that workers couldn’t leave their job and take that valuable information to a competitor or start another business by using that intellectual property themselves.
However, the Federal Trade Commission (FTC) has banned noncompete agreements in almost all cases. With rare exceptions for certain executives who have existing contracts, the FTC now prohibits business owners from requiring employees to sign noncompete agreements.
Additionally, if employees have already signed such agreements, courts will no longer uphold them if they are broken. New noncompetes cannot be used, and old ones are often invalidated.
Other ways to protect your business
This change does not mean you can’t protect your intellectual property. It simply means you have lost one method of doing so. It is essential to understand the other options available to safeguard your business.
For instance, obtaining proper patents for your products or inventions is crucial. Even if an employee learns about your products while working for you and then joins a competitor, they are legally barred from using your patented designs.
While it may be more challenging to keep confidential information secret, other business owners still cannot use your IP without permission. They would need to acquire a license or purchase the patent in order to do so.
That said, IP violations can and do occur. Be sure you understand the legal steps to take if your intellectual property is infringed upon.