Massachusetts Noncompete and Trade Secret Law Reform Update

Mark Whitney attended a panel discussion on the status of the Massachusetts Noncompete and Trade Secret Law Reform efforts on September 16, 2014 at the Boston Bar Association.  In attendance were the two state legislators who are primarily responsible for pushing the reform agenda on Beacon Hill, Representative Lori Ehrlich and Senator Will Brownsberger, as well as representatives from Governor Patrick’s office, the venture capital industry, and the legal community.

The panel discussion took place in the wake of the Massachusetts Legislature failing to take any action on noncompete and trade secret reform efforts (see recent article).  The discussion centered on the three possible outcomes that have been debated on Beacon Hill for the past six years with regard to noncompete law:  (1) do nothing, and leave the law as it currently stands; (2) the “California” option, meaning implement a ban on all noncompetes; or (3) some sort of compromise, meaning regulate noncompetes more agressively but don’t ban them outright.  For reference, the last version of the compromise bill can be found here (H. 4401).

There was much debate about the pros and cons of all three options, and the panel also discussed a potential new 4th option: banning noncompetes except in cases where the former employer can show proof of violation (i.e., that the former employee used or disclosed confidential information of trade secrets in their new position, or that they acted to impair the former employer’s goodwill by seeking to calitalize on valuable business relationships).  Thus far, this 4th option has not appeared in any bills.

The one thing that was clear from the discussion was that the legislators will renew their efforts to reform noncompete and trade secret law when the Legislature reconvenes its next formal session in January 2015.

As always, stay tuned ….