Considerable drama has played out in recent weeks related to the Federal Trade Commission’s (FTC) proposed ban on non-competes.  The agency announced its proposed ban on April 23, 2024, prompting several articles, comments, and the prompt filing of two lawsuits challenging the proposal.  It has also been noted that non-competes are currently banned in Minnesota, California, North Dakota, and Oklahoma, with several other states considering non-compete bans in some form.  While it is difficult to predict exactly what will happen with the federal ban proposed by the FTC, it is clear that these types of restrictions (i.e., non-competes in general) are becoming less popular and perceived as being considerably undesirable. 

My colleagues, Phyllis Karasov and Tyler Hartney recently outlined the status of the FTC's non-compete ban, and related court actions that have occurred.  While the FTC’s proposal is being challenged and not likely to take effect for some time, all of the recent discussion and press related to non-competes highlights the fact that intellectual property protections will continue to provide meaningful business advantages for many types of organizations.  As is well recognized by many businesspeople, the use of trademarks and service marks to protect a corporate identity, the use of patents to protect inventions and ideas, and the careful management of trade secrets can ensure that companies’ intangible assets are protected and retain value.

The FTC has estimated that a ban on non-competes will result in 17,000-29,000 more patent filings each year, a 2.7% increase in startups, and higher earnings for typical workers.  This suggest that the FTC clearly appreciates that a thoughtful strategy of utilizing patents and other intellectual property tools to protect valuable corporate assets remains a valid, effective and an important tool for businesses.  In addition to patent filing, this strategy will likely include the enhanced management of trade secrets.  In addition to the better known copyright, patent and trademark filings, trade secrets can take on many forms and have the potential to create even further business advantages.  In the new frontier, where non-competes are banned nationwide, the closer management of these corporate intangible assets (processes, formulas, designs, innovative business approaches, valuable contacts, etc.) will likely be cataloged and managed more closely. 

Again, the nationwide ban of non-competes faces challenges, and time will tell what the FTC action eventually looks like.  Regardless, this serves as a good reminder to think about and make strategic decisions regarding the intellectual assets that your company has.