Understanding the implications of the FTC’s decision and how businesses can continue to protect trade secrets.
On September 5, 2025, the Federal Trade Commission (“FTC”) ended its quest to enact a nationwide ban of non-compete agreements. Specifically, the FTC voted to dismiss its appeal in Ryan, LLC v. FTC, No. 24-10951 (5th Cir.) and Properties of the Villages v. FTC, No. 24-13102 (11th Cir.), and acceded to vacating the Non-Compete Clause Rule. This is good news for the business community, specifically businesses’ ability to protect and preserve confidential and trade secret information.
Trade secrets are governed and protected by state and Federal law, include information that is not generally known to the public, and provide an economic benefit to the owner. One important requirement to preserve trade secret protection is that the owner must take “reasonable measures” to ensure the secrecy of the information. There are a variety of legitimate reasons for having key employees agree to a non-compete provision prior to their employment, including but not limited to top salespersons having access to valuable sales information, important research and development personnel involved in developing new products, and persons having access to valuable proprietary information.
Although California, Minnesota, North Dakota, and Oklahoma ban non-compete agreements, businesses in the remaining states can utilize non-competes to protect their valuable information subject to some states’ restrictions. As noted, non-compete agreements are a valuable tool in a company’s toolkit to protect the company’s trade secrets because they restrict an employee’s ability to work for a competitor or start a competing business after leaving their current employer. The non-compete agreement is considered a “reasonable measure” that a company can take to make sure the valuable information is maintained in secrecy by a former employee.
For the time being, non-compete agreements appear to be safe— at least from a nationwide ban. However, recent trends at the state level have been to narrow and restrict the use of non-compete agreements. Employers should take this opportunity to review their intellectual property, and take stock of the alternative tools available, such as non-disclosure and non-solicitation agreements, to ensure that systems are in place to safeguard and restrict access to trade secrets and other confidential business information.
This IP Advisory was prepared by Lando & Anastasi, LLP. The information provided in this Advisory does not, and is not intended to, constitute legal advice; instead, all information, content, and materials are for general informational purposes only. Readers should contact an attorney to obtain legal advice with respect to any particular legal matter.
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