Thursday, September 12, 2013

Competition On Noncompetes

In law school intellectual property classes, a comparison is commonly made between the unenforcability of noncompetition agreements in California and their enforceability in Massachusetts.  These two states have traditionally dominated in high technology and biotechnology industries in the United States.  Right Coast Massachusetts now appears to be tipping towards the Californian Left Coast mentality that noncompetes hinder worker mobility, thereby hampering entrepreneurship.  On September 10, 2013, Massachusetts Secretary of Housing and Economic Development, Gregory Bialecki, testified at hearings held by the Massachusetts Legislature's Joint Committee on Labor and Workforce Development that Massachusetts should both end the enforcement of noncompetition agreements and adopt the Uniform Trade Secrets Act.  Here is an excerpt from his testimony:
We want innovative businesses. A priority of this Administration has been to support and enhance the innovation economy. Massachusetts has long had a vibrant and leading edge in research and the innovative community. Many of the fundamental technological advances like the Internet economy and digital media had beginnings in Massachusetts in the past couple of decades. However, we could do more. We need more start-ups, especially in the technology and bio-tech sectors. Start-ups are good; they create jobs, push innovation to new heights, and retain talent. Many of our current employers, larger and small, report they are unable to attract lateral or advanced talent due to our current laws limiting the mobility of our workforce... 
The Uniform Trade Secret Act (UTSA) has been adopted in 47 other states and the District of Columbia. The UTSA and other tools protect an employer’s trade secrets and proprietary  information, which is fundamentally important. Patents, confidentiality agreements, and trade secrets are more than sufficient to protect legitimate company interests against former employees. Even without non-compete agreements, companies still have a disproportionate ability to litigate against the individual...
For these reasons, we support outright elimination of enforceability of non-comp[eti]tive agreements in Massachusetts combined with adoption of the Uniform Trade Secrets Act.
Though many businesses will have misgivings about these reforms, influential members of the Massachusetts Bar support them.  Perhaps this legal innovation will finally provide the technological edge necessary to solve Massachusetts' most intractable challenge:  how to pahk yah cah in Hahvahd Yahd.

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