Cry me a river. If knowledge of some particular employees worth so much to the quant firms, then they should pay them not to leave accordingly.
The proposal is just to ask firms to put money where their mouths are.
They should pay him 500k just because he knows a secret? even if he's making just 50k to the company?
In practice, trade secrets are protected by other mechanisms. Patents are one of them because, by definition, patents are public knowledge so they are no longer secret.
As a corollary, you may read a patent and now have the knowledge of a product. But you don't have the same legal right to create and sell that product. That right is protected by the patent owner.
I am no expert here but my understanding is that the case law around this is much more well trodden in patent land than it is for noncompetes
If they had not patented whatever it is they had, anyone could replicate the information/item in question with no penalty.
If it did not provide value to tell the employee the secret then it follows that company would/should not tell the employee the secret.
If it's truly patented (different from a trade secret), you can't produce it, even if your invention is slightly different. For example, if I hold a patent on a "car" and you make a "car with a radio," you still can't produce it because it infringes on my patent. You can't make your product without covering the totality of my claim. That's why people try to make patent claims as broad as possible.
Sure, I suppose someone could develop/copy something in parallel with no knowledge. But that's not really the case in the discussion here as it comes to former employees.
If you worked for Company A which uses a proprietary algorithm for trading and somehow created the same for Company B later, would you really expect a jury to think the two are unrelated? As stated above, the threshold is "more likely than not" that your work for Company B is related to knowing the trade secrets of Company A. If you had never worked for Company A, maybe, but again that's not the case here because a noncompete would never enter the picture.
The OP was about how non-competes make sense in an IP-intensive field, like quant finance. The reason is that these contracts help protect the IP by explicitly stating their case. Your comment goes against the very foundation of IP law: creating reasonably fair commercial opportunities. If I can extort you because you hired me and I learned your secrets, I think that pushes the scales beyond "reasonable."
I mean that’s a tad disingenuous as to how it worked before patents. Patents were meant to dissuade others from copying inventions for a certain set period. It was much rarer to see independent development of the same technology (not that it didn’t happen).
I guess I'm not seeing the point made. If you agree it wasn't developed in parallel, you copied it from your previous employer. If it was their IP, you likely committed a civil wrong, and they can sue you. I can only see your point if you don't believe IP exists.
But there's a categorical difference between that situation and when an employee or dozens of employees who may be a break even or negative impact on profits have knowledge of a trade secret researched by a team of their predecessors that makes the company $100M.
I'm all about fair compensation and worker's rights, but a business shouldn't have to pay all those people $100M salaries.
However, this might be confusing different issues. My comment was specific to using NDAs/non-competes to protect trade secrets. This is different from merely using them to prevent poaching by competitors. In cases were there isn't inevitable disclosure, I think it's much less likely that a non-compete would be enforced in court.
A patent is an example that shows why that is a bad principle. The point of a patent is to share knowledge, but it also gives claims of ownership (for a period) to only a specific party. So obviously "knowledge of a product/process" isn't the discriminator. The important portion of a patent that distinguishes what is owned is literally called its "claims." My point is that whether or not you have knowledge does not lay claim to ownership, contrary to u/akira2501's question/point.
In fact, this already exists. https://en.wikipedia.org/wiki/Garden_leave
It really should be required of all noncompetes.
The more likely response then would be to move the team somewhere that does allow non-competes?
And that is much better case than NCA since it would only apply in specific narrow cases and wouldn't prevent a McDonalds employee from working in fast food industry for a year, for example.
I disagree. Big tech companies often force employees to sign very broad non-competes ("You can't go to a company that competes with us in any market") which in case of such companies covers almost everything (which tech company doesn't compete with Amazon in some way?). Granted, as far as I know big tech rarely enforces non-competes in case of regular ICs, but I would still prefer NCAs to be unenforceable and let the quant firms argue in courts regarding inevitable disclosure for some specific narrow cases where it is applicable.
> Also elsewhere I’ve mentioned how some jurisdictions provide caveats, like refusing to enforce NCAs when an employee earns less than a certain threshold (eg $75k).
I don't see why salary makes a difference here. Some random FAANG IC also shouldn't be forced to sign a NCA.
> Well-crafted laws don’t throw out the baby with the bath water
What baby? SV "baby" seems to be doing just fine in Cali with unenforceable non-competes.
I consider my position (employers can and should use other mechanisms to go after employees that _really_ stealing their IP instead of forcing NCAs on every random McDonalds employee or even junior tech IC) valid reply to position stated by OP. I stand by my words.
> And there are significant cases on the news where an employee steals trade secrets and takes them to a competitor (see Levandowski among others).
Levandowski example proves my point though since he did it in a state that doesn't enforce NCAs and Google found the way to go after him.
> It comes across like you have an axe to grind rather than making a thoughtful point.
That ad hominem was uncalled for.
To underscore it one more time, we both agree that there are other mechanisms like NDAs that protect IP. However, when used in conjunction with the inevitable disclosure doctrine, these prevent someone from being hired by a competitor. So they are doing the same thing as NCAs in the vein of the OP. If the end is the same (prevent hiring by a competitor to protect IP), your point is a pedantic distinction without a difference. If you disagree, you need to provide a rationale as to why an NDA + inevitable disclosure scenario shouldn't be allowed to prevent hiring by a competitor.
Levandowski's trial was settled before it concluded, so it doesn't really prove much in terms of legality, other than the term "trade secret" is nebulous and companies will use whatever is at their disposal to protect IP. One of the takeaways for many companies is that they need to rigorously pursue NDAs with their employees which, again, would have the same potential consequence as NCAs when inevitable disclose exists.
Your whole argument belies a misunderstanding of IP law.
"If an employee knows trade secrets, they should be paid not to move"
(except, knowledge doesn't equate to IP rights)
"Other mechanisms exist to protect IP"
(yes, except some of those mechanism also prevent being hired by competitors, so it doesn't really do much in terms of changing the outcome in the cases pertinent to this discussion)
"It's dumb to have McDonalds employees sign NCAs"
(smart legislators have already addressed this by refusing to enforce NCAs for lower-salaried employees who aren't at risk of exposing trade secrets)
Rinse and repeat, ad nauseum because you either aren't getting the distinction or don't want to understand it so you can 'stand by your words'.
You are being obtuse. It obviously proves that NCA is not required to go after former employee that copied bunch of internal company docs with IP to his flash drive and brought it to direct competitor.
> would have the same potential consequence as NCAs when inevitable disclose exists.
Doesn't exist in Cali, same as NCAs.
> Your whole argument belies a misunderstanding of IP law.
I don't appreciate your ad hominems and overall patronizing tone. This is not reddit.
> except, knowledge doesn't equate to IP rights
Where did I said it does?
> yes, except some of those mechanism also prevent being hired by competitors, so it doesn't really do much in terms of changing the outcome in the cases pertinent to this discussion
Sure it does. NCAs are usually blanket poorly-defined "can't work for any potential competitor" bans. Would be hard to prove in court that Bob-the-senior-front-end that worked on Gmail interface enshittifaction in Google for 3 years could suddenly disclose some trade secrets to Amazon even if signed an NDA. For NCA they won't need to prove anything since the two companies are definitely directly competing.
> smart legislators have already addressed this by refusing to enforce NCAs for lower-salaried employees who aren't at risk of exposing trade secrets
What does it have to do with the salary? If McDonalds employee is promoted to shift manager or something and gets paid slightly past threshold they suddenly shouldn't be able to go work for Burger King? Doesn't make any sense to me.
>It obviously proves that NCA is not required
Already stated: "Non-competes and NDAs are literally the mechanisms that companies try to protect their trade secrets."
To wit, look at what lawyers say are some takeaways from this case:
"Require employees to sign nondisclosure agreements (NDAs)."[1]
Now why would a lawyer say that? Because contracts are easier to uphold in court. But that's already been stated:
"The reason is that these contracts help protect the IP by explicitly stating their case."
And guess what happens when you combine an NDA with inevitable disclosure doctrine? A prohibition from working with a competitor. But that's already been covered here too:
"The short answer is "inevitable disclosure doctrine" that prevents you from working for a competitor if it's inevitable that you will disclose trade secrets. It's a sticky wicket for engineers."
>Doesn't exist in Cali, same as NCAs.
I'm sorry, I know HN tends to be in a bubble, but at no point did I claim California as the sole scope of my comments. Actually, I did the opposite by citing other states, like Illinois regarding their $75k threshold. Regardless, there are still provisions that provide similar relief in CA, like the UTSA.
>This is not reddit.
Ironically, it's your comment that goes against HN guidelines:
"Please don't post comments saying that HN is turning into Reddit. It's a semi-noob illusion, as old as the hills."[2]
>Where did I said it does?
Literally, your original comment I was replying to makes the claim that knowledge equates to deserving more pay:
>"If knowledge of some particular employees worth so much to the quant firms, then they should pay them not to leave accordingly."
We have mechanisms for determining who gets paid from that knowledge. It's an IP license.
>NCAs are usually blanket poorly-defined
I guess if your threshold is poorly defined contracts, then no contract law is relevant. But its a strawman to point to badly formed NCA as a rationale to ban them completely. I'm talking about good contracts, with a meaningful purpose to protect trade secrets. See any of the previous posts to this effect. If your claim is that bad NCAs should be banned, I'm with you. This, however, is not about that.
>What does it have to do with the salary?
As already discussed, contract law is completely about convention and can be changed:
"IP rights are legal rights of convention."
It's relevant because the convention used by IL is that an NCA for an employee below that threshold is "void and unenforceable." In other words, it's not a legal contract.
The fact that you railed against all that despite already being shown while it's wrong and resorting to statements like "it doesn't make sense to me" tells me this is more about you proselytizing than having a reasoned discussion.
[1] https://www.jdsupra.com/legalnews/protecting-trade-secrets-l...