The right to a jury trial is one of the most important features of modern trade secrets law. But as a recently issued Order from the Texas Fourth Court of Appeals (“Court of Appeals”) illustrates, the jury trial right is only as good as the jury instructions that execute that right. READ MORE
Shawn Butte is a managing associate in the New York office. His practice focuses on representing clients in high-stakes employment litigation, including restrictive covenant and trade secret matters, and conducting internal investigations.
Shawn's practice involves crafting creative, practical solutions to complex legal challenges faced by corporations and emerging companies in a range of industries, including media, software, insurance, financial services, retail and pharmaceuticals.
Shawn regularly handles litigation involving employee mobility, employee raiding, trade secret misappropriation, unfair competition, and class and collective actions. Shawn has experience in both federal and state court, as well as in alternative dispute forums such as the American Arbitration Association, and has represented both plaintiffs and defendants in TRO and preliminary injunction hearings.
In addition to his litigation practice, Shawn advises management on a variety of workplace issues, including employee mobility, trade secret protection, wage and hour policies, employee classification, and internal investigations. He also frequently serves as outside counsel to both domestic and international startups trying to expand in the U.S. market. Shawn uses his experience as a litigator to help clients proactively avoid protracted legal disputes. Shawn has also advised clients on employment issues in connection with mergers, acquisitions and other corporate transactions.
Shawn is an editor and contributing author of Orrick's trade secrets blog, Trade Secrets Watch. Shawn regularly writes about trending issues in restrictive covenant and trade secrets litigation.
Shawn is recognized by Super Lawyers as a New York Metro area "Rising Star” (2018-2020).
Posts by: Shawn N. Butte
During the course of a trade secrets litigation, neglecting to preserve electronically stored information (“ESI”) may result in a finding of spoliation. In a recent Order issued by Judge Edward Davila (United States District Court, Northern District of California), two startups in the autonomous vehicle industry, WeRide and AllRide, learned that failure to adequately preserve ESI can also lead to terminating sanctions. READ MORE
After a busy year for non-compete regulation at the state level, the Federal Trade Commission (FTC) held a public workshop last Thursday in Washington D.C. to examine the legal basis and economic support for a contemplated FTC rule restricting the use of non-compete clauses in employment agreements. A link to the FTC’s webpage with details about the workshop is located here: https://www.ftc.gov/news-events/events-calendar/.
The workshop brought together experts from academia, organized labor and the private sector to discuss the impact of non-competes on the American workforce and overall economy. Multiple panels involved presentations of academic studies taking the position that non-competes negatively impact workers and the labor market. In particular, there appeared to be broad consensus among panel presenters that non-competes restrict worker mobility, limit the exchange of information, and cause a suppression of wages. One study estimated that an outright ban on non-competes clauses would cause wages of workers in the U.S. to increase, on average, by approximately 7%.
There was also discussion about the potentially positive impact of non-compete agreements for certain categories of employees, such as physicians and CEOS. In particular, one study found that physician groups that utilized non-competes saw doctors make significantly more patient referrals within the physician group and led to higher overall earnings. Moreover, the study found CEOs bound by non-compete clauses tend to be more accountable and typically receive higher compensation.
There was also significant discussion regarding the FTC’s authority to promulgate a rule regulating the use of non-compete agreements. Several participants noted that the FTC has broad statutory authority to regulate unfair competition. Non-competes could theoretically fall within the FTC’s authority pursuant to the FTC’s view that non-compete agreements are anti-competitive and an unfair restraint on the ability of employers to compete for labor.
Overall, workshop participants agreed that more empirical evidence is needed before there can be meaningful discussion about an outright ban of non-compete agreements. Other proposals for an FTC rule included setting a nationwide minimum earnings threshold for workers against whom a non-compete may be enforced and requiring employers to disclose the terms of a non-compete with an offer of employment (not after an offer has been accepted).
To aid its continuing analysis of non-competes, the FTC is seeking public comments on several questions aimed to determine how the Commission should focus its rulemaking efforts. Public comments are due by February 20, 2020. More information about submitting a public comment to the FTC can be found at the link above. Trade Secrets Watch will continue to monitor developments from the FTC.
In the midst of nationwide efforts to reform the use of non-compete restrictions, a recent decision from the Eastern District of Pennsylvania illustrates the broad approach courts may take when enforcing restrictive covenants against high-level executives. READ MORE
The start of September means that summer is unofficially over. However, the end of beach season also means that big changes to state non-compete laws are on the horizon.
In the past three months, Maryland, Maine, New Hampshire, and Rhode Island have all passed legislation directly aimed at curtailing the use of non-compete agreements. This flurry of activity reflects a growing national concern about the fairness of non-compete restrictions and their impact on the U.S. workforce. For tangible evidence of this increasing concern, look no further than the preambles of the new laws in Maine and Maryland, both of which declare non-compete agreements as “against public policy.”
On Wednesday, a federal jury in the Eastern District of Texas declined to award any damages to Huawei Technologies Co., the world’s largest telecommunications company, stemming from its allegations of trade secret theft, employee poaching, and restrictive covenant violations against former employee Yiren Ronnie Huang (“Huang”) and startup CNEX Labs, Inc. (“CNEX”). Huang and CNEX, in turn, asserted counterclaims of trade secret theft against Huawei. Although the jury found Huang violated his post-employment obligations to Huawei and that Huawei misappropriated CNEX’s trade secrets, the jury did not award damages to either party. The verdict came after a contentious three-week trial before Judge Amos Mazzant on the parties’ dueling trade secret claims.