FTC Non-Compete Ban: A Right to Unfairly Compete?

Non-compete agreements (NCAs) play a unique and important role in protecting a company’s intellectual property. They prevent trade secrets and other valuable business information from falling into the hands of a competitor, providing a level of certainty to all parties—the old employer, the employee, and the new employer—that avoids unnecessary suspicion and litigation. Courts in every jurisdiction vigilantly guard against abuse of NCAs, enforcing them only if they meet strict standards of reasonableness.

The Federal Trade Commission (FTC) is seeking to upend this entire system. The agency recently proposed a rule that would ban all NCAs for all employees nationwide and require employers to affirmatively rescind existing NCAs (the Non-Compete Rule).1

The Non-Compete Rule is a radical departure from the FTC’s historic antitrust enforcement practice. It is doubtful whether the agency has competition-rulemaking authority at all, and a proposal as expansive as the Non-Compete Rule is likely to provoke judicial skepticism. The Non-Compete Rule also attempts to supplant longstanding common law and statutory criteria for evaluating NCAs, which is unlikely to be well received by courts.

The Role of Non-Competes in IP Protection

Some forms of intellectual property are comparatively easy to define and protect. A patent contains detailed technical specifications—and even pictures—of the protected invention. While inventions can be mind-numbingly complex (look at any pharmaceutical patent), the issued patent is like a fence conspicuously marking the property line beyond which only those with permission may venture. Likewise, a registered trademark can draw clear boundaries around a unique artistic design or clever branding.

Trade secrets, on the other hand, include a wide variety of business information that has commercial value derived from the fact that it remains secret. Trade secrets include concrete information like the formula for a secret recipe, but a trade secret might also be a combination of countless factors that combine to form something both proprietary and valuable.

The law has long recognized a legitimate interest even for this more nebulous type of intellectual property. The common law developed causes of action for theft of trade secrets and most jurisdictions have codified those protections in some variant of the Uniform Trade Secrets Act.

These protections, along with contractual nondisclosure obligations, are often inadequate in situations where an employee gains an understanding of a company’s most sensitive internal workings, whether that’s technical processes or more intangible “know-how” about how the business operates. It is often impossible for employees in this position to move to a direct competitor without using, even involuntarily, the proprietary information developed at great expense by their former employers. At its most extreme, the risk of this scenario is recognized in the “inevitable disclosure” doctrine.2

This is the gap NCAs have historically filled.3 These contractual provisions protect an employer’s “legitimate interest in restraining the employee from appropriating valuable trade information… to which he has had access in the course of his employment.” At the same time, the employee benefits from being able to move to anoth- er position without risk of betraying the employer’s confidence, even inadvertently. NCAs thus provide certainty for both parties.

Fair and Unfair Competition

Because NCAs explicitly restrain competition, they are subject to higher scrutiny than virtually any other type of contract provision. This scrutiny stems from the bedrock principle enshrined in American law that agreements “unreasonably in restraint of trade” are unenforceable.4

Courts and legislatures at the federal and state levels have developed a robust framework for assessing whether an NCA is “reasonable,” weighing the employer’s legitimate interests against the restraint on the employee’s freedom and the potential harm to competition. While there is some variance across jurisdictions, the basic considerations are the same:

• An NCA must be ancillary to an otherwise valid agreement—no freestanding promises not to compete.

• The duration and geographic scope must not be greater than necessary to protect the business’s legitimate interests.

• The NCA must not impose undue burden on the employee or harm to the public.5

Some states have codified this common-law rubric by statute.6 Other states have gone further by eliminating or severely limiting the use of NCAs. California, North Dakota, and Oklahoma prohibit non-competes in employment contracts altogether.7 Maine, Maryland, New Hampshire, Rhode Island, Illinois, and Washington ban NCAs for low wage workers.8 Massachusetts requires a 10-day written notice, provides the employee a right to counsel, caps the duration of any non-compete at one year, and requires the employer to pay the worker during the noncompete period.9 Nevada and Oregon recently passed similar legislation.10

Regardless of the jurisdiction, the goal is the same: “to allow only reasonable restraints that protect against unfair competition”—including the misuse of intellectual property.11

The FTC’s Competition Mandate

Promoting fair competition is not solely the province of the states. Federal statutes prohibit a broad range of anti-competitive activity, from agreements “in restraint of trade” and monopolies to price discrimination and anticompetitive mergers. Enforcement of the federal antitrust program is committed to the U.S. Department of Justice and the FTC, which “collectively share responsibility for the enforcement of these statutes.”12

Section 5 of the Federal Trade Commission Act (FTCA) prohibits “unfair methods of competition” and “empowers and directs” the FTC to “prevent” any such prohibited practice.13 There is little dispute that these provisions grant the FTC “‘standalone’ authority to address acts or practices that are anticompetitive but may not fall within the scope of the Sherman or Clayton Acts.”14 The FTC has, however, historically confined its standalone antitrust enforcement to policing “incipient” violations of the antitrust laws, such as “invitations” to collude.15 This longstanding approach—affirmed most recently in the 2015 Statement—has aligned the FTC with both the Department of Justice and the federal judiciary.

The current FTC has repudiated this status quo. Three Commissioners—a majority—voted to withdraw the 2015 Statement and issued a statement asserting that the agency’s historic practice of hewing close to the antitrust statutes “abrogates the Commission’s congressionally mandated duty to use its expertise to combat unfair methods of competition even if they do not violate a separate antitrust statute.”16 Last November, the Commission released new guidance that vastly expands the agency’s definition of “unfair methods of competition” and all but eliminates consideration of efficiencies or other business justifications.

FTC Competition Rulemaking

In addition to its broader view of what falls within the FTC’s purview, the current administration has taken an aggressive view of the powers available to the agency to carry out its enforcement duties. Section 5 contains extensive provisions setting out the FTC’s investigatory and adjudicative functions. In part because of this statutory emphasis, the Commission has always operated largely through administrative hearings and challenging business practices in court— and not by formal rulemaking. That, too, is changing.

Tracing the impetus for this change leads back to current FTC Chair Lina Khan, whom President Biden appointed to the Commission shortly after taking office. In 2020, Khan—already known for her student law review article Amazon’s Antitrust Paradox17—published an article in the Chicago Law Review called The Case for “Unfair Methods of Competition” Rulemaking, arguing that the FTC possesses much broader rulemaking authority than it has traditionally exercised.

Shortly after appointing Khan, the president issued an executive order that “encouraged” the Commission to “exercise the FTC’s statutory rulemaking authority under the [FTCA] to curtail the unfair use of non-compete clauses.”18 The FTC almost immediately thereafter withdrew the 2015 Statement, asserting the agency’s power to engage in “competition rulemaking”—including “to prohibit conduct that does not violate other antitrust laws.”19 Observers recognized this statement as a sharp departure from historic § 5 enforcement practice, and cautioned that moving so abruptly could well backfire on Khan’s plans for the FTC.20

Competition Rulemaking: A Question of Power

The Non-Compete Rule was the FTC’s first major flex of the Commission’s renewed interest in competition rulemaking in line with its new vigorous enforcement approach. The problem for the agency is that it likely does not have the power to promulgate this rule.

First, it is doubtful that Congress conferred antitrust rulemaking authority on the FTC. The FTCA provision charging the FTC with preventing unfair methods of competition is contained in the first subsection of § 5. Nowhere in the remaining 13 subsections is the FTC given rulemaking power. In fact, the rest of § 5 sets out a detailed adjudicatory process that applies when “the Commission shall have reason to believe” someone is violating § 5(a).

If § 5 itself does not authorize the FTC to issue prospective antitrust rules with the force of law, neither does it provide that it is the exclusive means of enforcement available to the FTC. There is another candidate for the source of rulemaking power. Section 6 of the act sets out “Other Powers” of the FTC, most of which are functions incidental to investigations. But the second clause of the seventh subsection provides that the “Commission shall also have power… to make rules and regulations for the purpose of carrying out the provisions” of the statute.

In its 1973 National Petroleum Refiners decision, the D.C. Circuit held that these few words buried in § 6(g) were sufficient to grant the FTC sweeping rulemaking authority to enforce the FTCA’s “prevention” mandate. This is the thin reed on which the FTC rests its claim to authority to comprehensively regulate vast swathes of economic activity historically left to the states. In its Notice of Proposed Rulemaking (NPRM), the Commission simply refers to § 5 and § 6(g) and cites National Petroleum.

There are several reasons to doubt the continued vitality of National Petroleum, not least because the panel’s analysis is largely “anachronistic.”21 The D.C. Circuit relied heavily on legislative intent in a spirit of deference to administrative expedience, both of which are all but banished in today’s jurisprudence. It is difficult to imagine any modern court describing—approvingly—an agency’s power in such broad terms:

The FTC’s charter to prevent unfair methods of competition is tantamount to a power to scrutinize and to control, subject of course to judicial review, the variety of contracting devices and other means of business policy that may contradict the letter or the spirit of the antitrust laws.22

The National Petroleum court rejected the argument that § 5’s express grant of adjudicatory power implies the exclusion of other forms of enforcement, describing the expresio unius “maxim” as “increasingly considered unreliable.”23 Whatever the trend at the time, this canon of construction is ascendant today. In a recent decision, a unanimous U.S. Supreme Court invoked “the rule that ‘when Congress includes particular language in one section of a statute but omits it in another section of the same Act,’ we generally take the choice to be deliberate.”24 Indeed, just last term, the Court vacated the FTC’s attempt to use one section of the FTCA to obtain “equitable monetary relief” because, among other things, the statute elsewhere sets out the procedure for monetary recovery.25

The Non-Compete Rule is particularly problematic in its current form. Federal courts now apply much higher scrutiny “to the manner in which Congress is likely to delegate a policy decision of such economic and political magnitude to an administrative agency.”26 And the Court has repeatedly held that it “expects Congress to speak clearly when authorizing an agency to exercise powers of vast economic and political significance.”27 The Non-Compete Rule is at least as capacious as the regulations courts have struck down under this standard. The chairwoman of the House of Representatives Committee on Education and the Workforce wrote to the FTC citing these “major questions” concerns, accusing the Commission of “flagrantly overreaching beyond its congressionally delegated authority.”28

That Congress itself has been serially ambiguous about the FTC’s antitrust rulemaking authority makes the Non-Compete Rule even less likely to survive judicial challenge. When “agencies assert highly consequential power beyond what Congress could reasonably be understood to have granted,” the regulator “must point to ‘clear congressional authorization’ for the power it claims.”29 But Congress affirmatively refused to address the existence or extent of the FTC’s antitrust rulemaking authority when, two years after National Petroleum, it passed the Magnuson-Moss Act.30 That statute authorizes the FTC to promulgate rules “with respect to unfair or deceptive acts or practices”—the other prong of § 5—but is fastidiously agnostic about “ any authority of the Commission to prescribe rules… with respect to unfair methods of competition.”

The breathtaking “economic and political significance” of the Non-Compete Rule, and its departure from the FTC’s customary approach, will almost certainly be too much weight to place on a single clause buried in a list of investigatory powers ancillary to a detailed adjudicatory scheme that Congress plainly intended as the agency’s means of enforcement.

Are Non-Compete Agreements “Unfair”?

Even if the FTC has competition-rulemaking powers, it can only exercise that authority consistent with the FTCA. While the FTCA prohibits “unfair methods of competition,” it does not delegate to the FTC the power to enumerate those methods or otherwise further define the statutory language. Whether in a direct challenge to the Non-Compete Rule itself, or as part of a specific enforcement action, the courts will have to determine whether NCAs are in fact “unfair methods of competition.”

The difficulty for the FTC is that the answer to this interpretive question is a decisive “sometimes.”

In this respect, the Non-Compete Rule may be futile. As set out in the proposed rule, the FTC itself already enforces § 5 with respect to “unfair” NCAs. In those cases, the FTC must establish that the employer’s use of NCAs is an “unfair method of competition.” It seems unlikely that a court would conclude that an NCA is manifestly reasonable under the extensive common-law analysis designed precisely to assess reasonableness but is nevertheless an “unfair method of competition.” The reasonableness inquiry is the fairness inquiry.

The Commission’s criticism that “the existing legal frameworks governing non-compete clauses” were “formed decades ago” says both too much and not enough. The common law of covenants not to compete is centuries, not decades, in the making: the “seminal case on restrictive covenants”31 was decided in 1711, and discusses many of the same concerns courts today analyze when evaluating NCAs.32 And because it is “among the most ancient rules of the common law,” it did not “form” at any particular point.33 It evolves with each new case, subject to statutory revision, reflecting the customs and mores of the people to whom it applies.

The Non-Compete Rule seeks to abolish this entire ancient, living body of law—and its robust rubric for evaluating the fairness of NCAs—and replace it with the will of what one former FTC Commissioner calls “a bare majority of FTC commissioners managing whatever private economic affairs they want.”34 Whether this is wise or appropriate is a matter of debate; whether it will change anything in the courtroom is doubtful; that it will elicit vociferous challenge and invite acute judicial scrutiny is assured.

A Hatchet Instead of a Scalpel

The FTC majority spends a great deal of space in the proposed rule discussing the apparent overuse of non-competes for large swathes of employees with access to little or no proprietary information. A senior FTC staff member was quoted in the press release announcing the rule: “The proposed rule would ensure that employers can’t exploit their outsized bargaining power to limit workers’ opportunities and stifle competition.”35 The proposed rule highlights longstanding “concerns that workers [are] vulnerable to exploitation under non-compete clauses,” which “threaten workers’ ability to practice their trades and earn a living.”36

The FTC’s solicitousness towards labor may be commendable, but it provides little justification for the Non-Compete Rule’s na- tionwide, exceptionless ban. The proposed rule itself acknowledges that many of the justifications for the rule do not apply to senior executives and solicits comment on other types of employees that might warrant different treatment. One of those comments by the Medical Society of New Jersey “strongly” opposes the proposed rule as applied to doctors:

In many circumstances, restrictive covenants between individual physicians and group practices or hospitals are a business necessity. For example, restrictive covenants are a reasonable protection of an employer’s investment in a newly hired physician, where the physician may have received an incentive payment to join a group, or where, from a business perspective, the physician is being carried by the group during the early years of the physician’s practice.37

An alternative might start by tracking the Freedom to Compete Act cosponsored by senators Marco Rubio, R-FL, and Maggie Hassan, D-NH.38 That bill would have widely banned NCAs, but did not apply to executive, professional, and administrative professionals already exempt from other labor regulations. Like similar legislation on the subject in the past decade, the Freedom to Compete Act did not make it out of committee.39

But even that is still too blunt an instrument. There are countless non-exempt employees that currently receive highly sensitive business information. The nature and forms of intellectual property are as diverse as American business itself, which makes the delicate balance between the employee’s freedom to compete and the business’s proprietary information a poor candidate for uniform national regulation.

Certain Uncertainty

The FTC majority justifies its preference for a categorical ban on the grounds that it provides more certainty than alternatives like a rebuttable presumption of unreasonableness. But this ignores the significant uncertainty that will result from the sudden abolition of this traditional protection of often nebulous intellectual property interests.

Indeed, one of the main attractions of NCAs is that they provide certainty for both the employer and employee. It is already illegal for employees to use their employer’s trade secrets for a competitor. But “it is often impossible to spell out in advance in specific terms the confidential information for which protection will be desired,” making it difficult for the parties to know where precisely to draw the line.40 And an employee may be in such a sensitive position that, in the words of one court, the employee “cannot be loyal both to his promise to his former employer and to his new obligations to the [new] company”41 because the “new employment will inevitably lead him to rely on the [old employer’s] trade secrets.”42

In these and similar situations, “the most effective protective device is an enforceable postemployment covenant not to compete.”43 Subject to the usual scrutiny of the restraint’s reasonableness, “satisfactory protection of a trade secret may require a prohibition of work for a competitor along lines involving use of the secret for a reasonable period.”44 Rather than fretting over whether proprietary information is being misused when the employee moves on, the employee simply agrees not to work for a competitor for a limited amount of time in a limited geography. Any “leakage” outside of that time and place is largely consigned to the category of acceptable loss. Without the availability of NCAs, this mutually beneficial arrangement will give way to suspicion. When departing for a similar position elsewhere, employees will wonder whether his or her contributions to the new employer’s business might be tainted by the information and know-how acquired at the old job. The previous employer will likewise be extremely wary of the employee’s discretion, and more likely to ascribe any market success on the new employer’s part to intellectual property theft. More litigation is likely to result between the former employer, new employer, and the employee, raising costs for all involved—litigation that will not have the benefit of the common law’s long history “balancing competing public policies of employee mobility and protection of trade secrets.”45

The unintended economic consequences of the Non-Compete Rule are also a source of significant uncertainty. Will employers reduce compensation to reflect the increased vulnerability of their competitive position? The economic literature suggests that non-competes increase earnings for corporate executives and physicians, and that these gains are absent in states that ban such agreements. What other sectors of the economy will see decreased wages?

Will employers be less willing to share essential business information with new workers? Some firms already use “training repayment agreements” to ensure their investments in human capital are not being paid to competitors. These programs may themselves be considered a “non-compete clause” under the proposed rule’s “functional test” if the repayment “is not reasonably related to the costs the employer incurred for training the worker.”46

If anything is certain, it is that litigation over suspicions of misappropriation, and what “functions” as an NCA, will provide gainful employment for lawyers for a long time.

Break Glass?

Regardless of the fate of the Non-Compete Rule, employers should take this opportunity to evaluate their approach to confidential information and “get their trade secrets house in order.”47 This is good business hygiene and will help position the company for whatever may come from the FTC.

• Identify your trade secrets. In order to determine the best way to protect your trade secrets, you have to know what those trade secrets are. Ask yourself what information you have that you would not want a competitor to have. That is a good starting point for your list. If there is any doubt, protect valuable information as if it were a trade secret.

• Decide who needs to know. Employees should only have access to your trade secrets if they have a business reason to see the information. Use facility access controls and information security solutions, such as password-protection and encryption, to make sure that your information is accessed only on a need-to-know basis. If the Non-Compete Rule goes into effect, employers will have to be even more cautious before sharing sensitive information with their own employees.

• Review employee contracts (and get rid of unnecessary NCAs). The Non-Compete Rule identifies what appears to be a legitimate problem with overuse of NCAs. Ensure that your employment agreements for contracted employees have robust confidentiality and nondisclosure provisions but consider whether every employee currently under an NCA really needs to be.

•

Keep your confidentiality policies current and make sure employees are aware of them. Company policies should detail the procedures in place to protect trade secrets. These policies should be regularly reviewed to capture any changes in business operations. Require employees to acknowledge in writing that they will abide by these policies and provide initial and ongoing training to ensure there is no question about what you expect.

• Use non-disclosure agreements. Trade secrets should only be shared outside your company if the recipient needs the information for the business you are doing together. Before you share, enter a robust non-disclosure agreement. The recipient should acknowledge they are receiving your trade secrets and that they have obligations to keep them secret. While the FTC acknowledges that “the protection of trade secrets and other limited confidential business information is widely recognized as a legitimate use of NDAs,” employers should beware of making these agreements “so broad in scope that they serve as de facto non-compete clauses” under the proposed rule’s “functional test.”48

• Prepare for employee departures. Your trade secrets are particularly vulnerable to disclosure when your employees depart for new opportunities. Ensure that your policies clearly require departing employees to immediately return any of the company’s confidential information, no matter the format. Develop protocols for additional access restrictions that you can implement immediately upon learning that an employee is departing and monitor departing employees’ activity to ensure they do not download sensitive information prior to their departure or share it with a third party via email. If you uncover any red flags, work closely with your in-house legal team and/or external counsel to investigate immediately.

Perhaps more conscientious self-regulation will encourage the FTC to narrow the Non-Compete Rule. The proposed rule itself invites comment on possible alternatives including a rebuttable presumption rather than a categorical ban, “different standards for different categories of workers,” notice or reporting requirements, or combinations of these options.

At the time of writing, there are nearly 12,000 comments on the Non-Compete Rule and the FTC has extended the comment period to just before this article will be published. By the time you read this article, then, the Non-Compete Rule may look very different—or may be on its way to enactment in the CFR.

Lee Whitesell and Jillian Beck are trial lawyers in the Houston office of Hogan Lovells, where they handle a wide range of complex commercial disputes. Lee is a strategic litigator who deploys creative solutions to complex legal problems for clients in the technology, energy, and life sciences industries. He also handles litigation in bankruptcy proceedings for both debtors and creditors. Lee serves on the board of directors for the Southern District of Texas Chapter and chairs the Chapter’s Blask Fellowship committee, which administers scholarships to law students with summer internships in federal public service. Jillian focuses her practice on trade secrets and technology litigation, with a knack for translating complex ideas into persuasive stories for judges and juries. She is also the leader of the firm’s Global Energy Studio, an industry think tank that combines legal expertise and market insights. Jillian is a member of the Law360 Texas Editorial Board and serves on the Houston Bar Association Law Week Committee.

Endnotes

1FTC, Notice of Proposed Rulemaking: Non-Compete Clause Rule, 88 FR 3482-01.

2W.L. Gore & Assocs., Inc. v. Wu, No. CIV.A. 263-N, 2006 WL 2692584, at *17 & n.109 (Del. Ch. Sept. 15, 2006) (collecting cases), aff’d, 918 A.2d 1171 (Del. 2007).

3See, e.g., Sonotone Corp. v. Baldwin, 42 S.E.2d 352, 353 (N.C. 1947); Vulcan Detinning Co. v. Am. Can Co., 67 A. 339, 343 (N.J. Eq. 1907).

4See, e.g., Restatement (Second) of Contracts § 186(1); 15 U.S.C. § 1 (Sherman Act).

5See Restatement, supra n.2; Cont’l Group, Inc. v. Kinsley, 422 F. Supp. 838, 843 (D. Conn. 1976) (“The covenant must be reasonable both in scope and duration, and even then is enforced only when necessary to protect against use or disclosure of trade secrets or other confidential information, or solicitation of customers, or when the employee’s services are deemed unique or extraordinary.”).

6E.g. Mich. Comp. L. § 445.774a; Tex. Bus. & Com. Code § 15.50. 7Cal. Bus. & Prof. Code § 16600; North Dakota Cent. Code § 9-0801–06; Okla Stat. § 15-219A.

8See Chris Marr, Employee Noncompete Clause Limits Adopted by Three More States, Bloomberg Law (June 29, 2021).

9See Mass. Gen. L. c. 149, § 24L. 10See Oregon S.B. 169 (2021); Nevada A.B. 47 (2021).

11Loewen Group Acquisition Corp. v. Matthews, 2000 OK CIV APP 109, ¶ 14, 12 P.3d 977, 980.

12See U.S. Gov’t Accountability Office, Antitrust: DOJ and FTC Jurisdictions Overlap, but Conflicts are Infrequent (Jan. 3, 2023).

1315 U.S.C. § 45(a)(1)–(2).

14FTC, Statement of Enforcement Principles Regarding “Unfair Methods of Competition” Under Section 5 of the FTC Act (Aug. 13, 2015), https://www.ftc.gov/system/files/documents/public_ statements/735201/150813section5enforcement.pdf (2015 Statement); see Atl. Ref. Co. v. FTC, 381 U.S. 357, 369 (1965) (“It has long been recognized that there are many unfair methods of competition that do not assume the proportions of antitrust violations.”); FTC v. Brown Shoe Co., 384 U.S. 316, 320–21 (1966) (“the Commission has broad powers to declare trade practices unfair . . . with regard to trade practices which conflict with the basic policies of the Sherman and Clayton Acts even though such practices may not actually violate these laws”); FTC v. Cement Inst., 333 U.S. 683, 694 (1948) (“although all conduct violative of the Sherman Act may likewise come within the unfair trade practice prohibitions of the Trade Commission Act, the converse is not necessarily true”).

15In the 2015 Statement, for example, the Commission affirmed its commitment applying the “rule of reason” familiar to antitrust practitioners. The rule of reason, which applies to all but the most facially anticompetitive behaviors like price fixing, weighs an activity’s potential to harm “competition or the competitive process” against its “associated . . . efficiencies and business justifications.”

16Edith Ramirez, Chair of the FTC under President Obama at the time of the 2015 Statement, is a partner at the authors’ law firm. Ms. Ramirez was not involved in writing this article. Any views expressed in this article are solely those of the authors.

17Lina M. Kahn, Amazon’s Antitrust Paradox, 133 Yale L. J. 564 (2017).

18EO 14036, Promoting Competition in the American Economy, 86 FR

36987 at § 5(h) (July 9, 2021).

19FTC, Statement of the Commission On the Withdrawal of the Statement of Enforcement Principles Regarding “Unfair Methods of Competition” Under Section 5 of the FTC Act (July 9, 2021).

20See Gregory J. Werden & Luke Froeb, Can the FTC Turn Back the Clock?, ABA Antitrust Magazine Online (Oct. 29, 2021).

21See Maureen K. Ohlhausen & Ben Rossen, Dead End Road: National Petroleum Refiners Association and FTC ‘Unfair Methods of Competition’ Rulemaking, Truth on the Market Blog (July 13, 2022).

22National Petroleum Refiners Ass’n v. FTC, 482 F.2d 672, 684–65 (D.C. Cir. 1973).

23Id.

24Bartenwerfer v. Buckley, 143 S. Ct. 665, 673 (2023) (quoting Badgerow v. Walters, 142 S. Ct. 1310, 1318 (2022)).

25AMG Capital Mgmt., LLC v. FTC, 141 S. Ct. 1341 (2021).

26FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 133 (2000).

27See, e.g., Nat’l Fed’n of Indep. Bus. v. OSHA, 142 S. Ct. 661, 665 (2022) (quoting Ala. Ass’n of Realtors v. HHS, 141 S. Ct. 2485, 2489 (2021)).

28Letter of Rep. Virginia Foxx to Lina M. Khan (March 27, 2023).

29W. Virginia v. EPA, 142 S. Ct. 2587, 2614 (2022) (quoting Util. Air Regulatory Group v. EPA, 573 U.S. 302, 324, (2014)).

30Magnuson-Moss Warranty—Federal Trade Commission

Improvement Act, codified at 15 U.S.C. § 2301 et seq.

31Catherine L. Fisk, Working Knowledge: Trade Secrets, Restrictive Covenants in Employment, and the Rise of Corporate Intellectual Property, 1800-1920, 52 Hastings L. J. 441, 454 (2001).

32See Mitchel v. Reynolds, 24 E.R. 347 (Q.B. 1711) (discussing requirement that restraint of trade must be supported by consideration and limited in scope to mitigate “mischief which may arise” and “the great abuses these voluntary restraints are liable to”); Dyer’s Case, Y.B. 2 Hen. 5, fol. 5, Michaelmas, pl. 26 (Eng. 1414).

33Alger v. Thacher, 36 Mass. 51, 52–54 (1837).

34Noah Joshua Phillips, Against Antitrust Regulation, American Enterprise Institute (Oct. 13, 2022) at 6.

35FTC, FTC Proposes Rule to Ban Noncompete Clauses, Which Hurt Workers and Harm Competition, https://www.ftc.gov/news-events/ news/press-releases/2023/01/ftc-proposes-rule-ban-noncompeteclauses-which-hurt-workers-harm-competition.

36FTC, supra n.1 at 48 (citing Mitchel).

37Comment of Medical Society of New Jersey, Non-Compete Clause Rulemaking, P201200 (March 28, 2023).

38S.2375.

39Workforce Mobility Act, S.483; H.R.1367; MOVE Act, S.1504, H.R.2873, H.R.2454.

40Harlan M. Blake, Employee Agreements Not to Compete, 73 Harv. L. Rev. 625, 669 (1960).

41Eastman Kodak Co. v. Powers Film Prods., 189 A.D. 556, 561–62 (N.Y. App. Div. 1919).

42PepsiCo, Inc. v. Redmond, 54 F.3d 1262, 1269 (7th Cir. 1995).

43Blake, supra n.40 at 670.

44Allis-Chalmers Mfg. Co. v. Cont’l Aviation & Eng’g Corp., 255 F. Supp. 645, 654 (E.D. Mich. 1966).

45Whyte v. Schlage Lock Co., 125 Cal. Rptr. 2d 277, 292 (Cal. App. 2002) (rejecting inevitable disclosure doctrine); see also LeJeune v. Coin Acceptors, Inc., 849 A.2d 451, 471 (Md. 2004) (same: “Maryland has a policy in favor of employee mobility similar to that of California.”).

46Non-Compete Clause Rule, 88 FR 3482-01

47Society for Human Resources Management, How Should Employers Respond to Proposal to Ban Noncompete Agreements?, https://www.shrm.org/ResourcesAndTools/hr-topics/talentacquisition/pages/how-should-employers-respond-ftc-proposalban-noncompete-agreements.aspx (accessed Feb. 28, 2023).

48FTC supra n.1 at 11, 99, 106–111.

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