PROTECTING COMPANY CONFIDENTIAL DATA IN A FREE EMPLOYEE MOBILITY STATE: WHAT COMPANIES DOING BUSINESS IN CALIFORNIA NEED TO KNOW IN LIGHT OF RECENT DECISIONS AND EVOLVING WORKPLACE TECHNOLOGY

By Bradford K. Newman¹

I. INTRODUCTION

California’s long standing public policy of encouraging employee mobility is a hallmark of the state’s start-up, tech-focused industry, and it is well understood that California Business & Professions Code section 16600 prohibits "every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void[.]" However, when it comes to protecting a company’s intellectual property ("IP"), and particularly trade secrets, from potential "insider" (i.e. employee) threats, employee mobility that includes the movement of employees to and from competitors poses unique challenges. The legal limits of specific measures designed to protect IP can be unclear and confusing. And many companies are not aware of the latest developments concerning protective measures they have long taken for granted as permissible. This article addresses some of steps companies should be utilizing to protect their valuable trade secrets, and explains a very recent but important change in the law regarding the enforceability of employee non-solicitation agreements.

II. ACCOUNTING FOR CORE TRADE SECRETS—WHAT PRECISELY WARRANTS PROTECTION?