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Recent Increase in Government Activities that Affect Innovation
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Near Total Ban on Non-Compete Agreements Approved
In a divided vote of 3-2 among commissioners, the U.S. Federal Trade Commission (FTC) voted to adopt a rule that essentially bans non-compete agreements that restrict workers from moving to other jobs within the same industry, including those for executives, and render existing non-compete agreements for lower-level workers unenforceable when the rule goes into effect—120 days after publication in the Federal Register. The final rule would also require companies to let current and past employees know that they will not enforce the non-compete agreements. The only exceptions to the rule are: “senior executives” making more than $151,164 a year in “policy-making” roles who have existing non-compete agreements in place (estimated to represent only 1% of all workers) and employees of non-profits or franchises.
Although there may be more legal challenges to the rule in the future and its ultimate status is unclear, the recent trend at both the federal and state levels has been to narrow and limit the use of non-compete agreements. Employers should take this opportunity to review their intellectual property and the procedures they have in place to protect their assets. They should evaluate the alternative tools that are available to them including, for example, non-disclosure, non-solicitation, and trade secret agreements, ensuring that systems are in place to safeguard and restrict access to trade secrets and other confidential information.
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IP ADVISORY: FTC Approves Near-Total Ban on Non-Compete Agreements but Faces Future Legal Challenges
Read the Advisory
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If innovation is the key to economic growth, why are recent government proposals—and inaction—creating obstacles?
Recent government initiatives promise to add challenges to several innovation-influencing factors in the United States. The most problematic proposals from the past year include a near ban on non-compete agreements and other restrictive covenants, and the consideration of exercising potential “March-In” rights to require licensing of technology developed with federal funding. These proposed actions will hurt innovation throughout the country by making the protection of confidential/proprietary information and trade secrets significantly more difficult. Another issue that could harm innovation is the government’s failure to extend the R&D tax credit, which has long been an important policy tool for encouraging businesses to invest in research and development activities.
Collectively, if enacted, these actions would detrimentally affect innovation and the economy. This would not only hamper the competitiveness of U.S. businesses, but these proposals also would negatively impact those factors that influence innovation, such as the importance of research and development and policies that encourage investments. Reconsideration of these initiatives is warranted if the U.S. wishes to maintain its position as a global leader in innovation and economic growth and its ability to create long-term prosperity.
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Government Proposals Threaten Innovation & Prevent Economic Progress
By Peter C. Lando, published in Innovation & Tech Today and Deer Isle Group's News & Views
Read the Article
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Highlighting Recent News in Intellectual Property Law and Important IP Issues to Watch
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The USPTO has issued a proposal to add a new requirement for terminal disclaimers (TD) filed to overcome non-statutory double patenting rejections. Under the proposed requirement, a patent subject to a TD would be held unenforceable in its entirety if a prior patent referenced in the TD contains a claim that is subsequently deemed unpatentable or invalid over prior art. If enacted, the rule would unfairly compromise the enforceability of any patent subject to a TD through unrelated legal actions. While the proposed requirement would only apply to TDs filed on or after the effective date of the final rule, practitioners and patent owners are encouraged to implement patent portfolio strategies that limit exposure to non-statutory double patenting rejections and to consider alternative options for response to these rejections that avoid submission of a TD. Read More | |  |
In an opinion held by the Federal Circuit in LKQ Corp. v. GM Glob. Tech. Operations LLC, the Rosen-Durling test for design patent non-obviousness determinations was overturned as being inconsistent with the Supreme Court’s decision in KSR v. Teleflex. Effective immediately, the evaluation of obviousness in design applications will follow the KSR approach. This approach gives Examiners the flexibility to cast a wider net when considering prior art. Post-KSR, the evaluation of obviousness in utility patent applications became a much greater hurdle during examination. Practitioners are concerned that the decision in LKQ will produce a similar effect in the evaluation of design patent applications, which have historically benefitted from a more straightforward determination of non-obviousness. Read More | | |
Concerns about plagiarism in the entertainment industry have been amplified by the extraordinary advances in AI technology. Generative AI tools make it easy to produce screenplays with usable content rivaling human-written scripts. In fact, AI models can be trained on available screenplays and prompted to generate scripts that may contain similar characters, ideas, and themes. Future copyright infringement claims against AI-generated scripts will face thorny issues concerning what it means to "copy." Writers complain that both the input and output of AI systems violate copyright laws, arguing that the use of their works to train AI models constitutes copyright infringement. AI companies disagree, arguing that the use of copyrighted material to train AI models is fair use. Plagiarism allegations are difficult to prove, and these issues foreshadow the challenges screenwriters will face when confronted with similar scripts generated by AI. Read More | | |
March-In Rights would grant the government the authority to intervene in cases where patented technologies resulting from federally funded research were not being made available to the public on “reasonable terms,” including pricing. This ambiguity concerning the potential for control based on “unreasonable pricing” is a departure from the established understanding that these rights were not to be used to influence or regulate market pricing. It would appear to undermine incentives for private companies to invest in research and development, particularly where possible government intervention introduces uncertainty regarding the exclusivity of intellectual property rights and the ability of companies to retain their competitive advantage. Read More | | |
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We are pleased to announce the addition of Gary C. Ganzi to our team. Gary joins the firm as Senior Counsel from long-time client Evoqua Water Technologies (now part of Xylem Inc.) Gary brings to his legal practice both corporate management experience and applied technical expertise in the fields of chemical engineering, materials science, polymers, electrochemistry, and water and wastewater treatment/reuse. >>
Read this Q&A to learn more about Gary and his approach to IP strategy.
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L&A has been recognized in prestigious legal rankings for excellence in IP law and several of our practitioners have also received individual accolades.
We are proud to be included among some of the country's largest firms in Chambers USA; the Managing IP Americas Awards and IP Stars; World Trademark Review's WTR 1000; and the IAM Patent 1000: The World's Leading Patent Professionals. >>
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Counsel Tom McNulty and team successfully recovered attorneys’ fees and costs—in addition to judgment— for client FabriClear LLC, after more than four years of litigation against Harvest Direct LLC. The suit alleged that the defendant breached its license and confidentiality agreements with the plaintiff, and the plaintiff asserted claims for breach of the implied covenant of good faith and fair dealing, trade secret misappropriation, unjust enrichment, false designation of origin in violation of the Lanham Act, and unfair trade practices. >> | |
For the latest firm news, events, and publications visit LALaw.com: | | | |
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Client Innovation Highlights:
Milestones and Accolades
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Groundbreaking biomaterial company RevBio secured approval from the US Food and Drug Administration to start a first-in-human clinical trial for its regenerative bone adhesive for use in craniotomy procedures. Their Tetranite technology is the only patented biomaterial which satisfies both the required and desired properties for a bone adhesive. | | |
Visionary surgical robotics company CMR Surgical surpassed a milestone of 22,000 surgical procedures performed globally using its Versius robot – meaning more patients around the world are experiencing the benefits of robotic assisted minimal access surgery. | |
Among the 500 companies listed in TIME magazine's World's Most Sustainable Companies of 2024, are three L&A clients: Schneider Electric (#1), Agilent (#19), and Xylem (#345). Involving a rigorous 4-step methodology with evaluations based on more than 20 key data points, the ranking sets a benchmark for other businesses, fostering transparency and accountability, and encouraging the integration of sustainability into core corporate strategies. | | |
Public safety technology firm RapidSOS announced a partnership with Google that will roll out RCS (Rich Communication Services) based text-to 911 to emergency call centers across the U.S. this winter. The partnership aims to make it easier for emergency callers to describe their situations to dispatchers and will provide benefits to people who are deaf or have speech impediments or other disabilities. | |
ITW EAE, a division of global industrial manufacturer Illinois Tool Works (ITW), earned a 2024 New Product Introduction (NPI) Award for its Electrovert Deep Wave option for wave soldering machines. The innovative Deep Wave option provides many benefits to manufacturers looking to optimize production throughput, and provides flexibility in demanding production environments. | | |
Innovative clinical-development company 3Daughters triumphed recently in several pitch competitions including first place among 13 finalists at the Mansfield Bio-Incubator Pitch Competition and first place in BioLabs’ second annual Investor Day. These wins mark more significant steps forward in their mission to revolutionize women's healthcare with their frameless IUD design. | |
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University Licensing: A Cautionary Tale
The liquid inside that ubiquitous orange cooler on every football game sideline and poured over coaches' heads after a big win has a surprisingly complicated history. At the heart of Gatorade's winding road to commercial success are questions of inventorship; royalty deals gone awry; and a compelling case study in the importance of establishing strong intellectual property protection at the very beginning of the product development cycle.
This article from The Hustle delves into Gatorade's beginnings at the University of Florida and tells a fascinating tale of innovation before university IP policies became commonplace; how one inventor cashed in on the success of a once-struggling football team; and a university's poor business decisions.
Why the University of Florida gets a ~$20m cut of Gatorade profits every year.
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EYE ON IP EDITORIAL TEAM
Nicole Palmer
Amanda Cardona
Jessica Tallman
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OTHER L&A PUBLICATIONS
D. Mass. IP Litigation Blog
By: Tom McNulty
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