The FTC'S Ban on Noncompete Agreements: Setting Sail on a Sea of Doubt

The FTC'S Ban on Noncompete Agreements: Setting Sail on a Sea of Doubt

Journal article

1 online resource (pages 101-103)

In this essay, Professor Jeffery Cross covers the impact of the recently published Federal Trade Commission rule banning employer/employee noncompetes on longrecognized benefits to competition of noncompete agreements. In that rule, the FTC concluded that noncompete agreements were an unfair method of competition under Section 5 of the FTC Act. This essay considers the FTC’s rule in the historical context of Judge William Howard Taft’s decision in United States v. Addyston Pipe & Steel Co. Judge Taft identified noncompete agreements entered between an employer and his or her prospective employee as one kind of restraint that could have procompetitive benefits such as encouraging employers to hire and thoroughly train employees without fear the employees might exploit the company’s trade secrets. The new FTC rule gives a nod to such benefits by finding that protecting trade secrets, confidential information, and other intellectual property is an insufficient justification for noncompete agreements, as employers have less restrictive alternatives for safeguarding such information. These alternatives, which include reliance on trade secret law and nondisclosure agreements, reasonably accomplish the same purpose as noncompete agreements and burden competition to a less significant degree.

Crossref

John Marshal Review of Intellectual Property Law, Volume 24, Issue 2, 2025, page 101-103

John Marshal Review of Intellectual Property Law

[Chicago, Illinois] : UIC Review of Intellectual Property Law, 2025.

eng

https://repository.law.uic.edu/cgi/viewcontent.cgi?article=1528&context=ripl

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