Why the Prohibition of Non-Compete Agreements Does Not Lead to an Increase in Trade Secret Litigation
Can you keep a secret? Banning noncompetes does not increase trade secret litigation
This study examined the conventional wisdom that banning non-compete agreements (NCA) increases labor mobility and thus trade secret infringement litigation. By analyzing state-level data on NCA bans for high-wage and low-wage workers and trade secret litigation data from Westlaw and Courthouse News Service, it was found that, in the long term, trade secret lawsuits decrease. This decline is not due to decreases in cases where NCA and trade secret claims are simultaneously filed or weakened reliance on trade secrets; companies rather rely more on trade secret protections after NCA prohibitions. Furthermore, the introduction of the inevitable disclosure doctrine leads to increases in both NCA and trade secret litigation, suggesting the two protection measures are complementary.