International Restrictive Covenants Confidential Information Issues for Multinational

International Restrictive Covenants & Confidential Information Issues for Multinational Employers & Senior Executives July 15, 2020 ‘Zoominar’ series

TRADE SECRET PROTECTION IN THE “NEW NORMAL” Is Your Information Secure from WFH and RTW Mishaps and Misappropriation? 2020 ‘Zoominar’ series

TRADE SECRET PROTECTION IN THE “NEW NORMAL” Mechanics of Today’s Program • • • Only the panel is on video today Attendees are muted to keep the audio line clear Questions are welcomed – please use chat function to send questions to moderator Chris Stief This program will be recorded The recording, notes of discussion and a Power. Point outline will be circulated to attendees following the program 2020 ‘Zoominar’ series

Today’s Speakers Moderator Christopher Stief – Fisher Phillips Panelists Merrill April – CM Murray LLP Michael Avila – Fisher Phillips Jonathan Cohen, QC – Littleton Chambers 2020 ‘Zoominar’ series

Return to Work Checklist TRADE SECRETS, NON-COMPETITION, AND DUTY OF LOYALTY ISSUES q Ensure that employees who have been let go have returned all confidential information q Determine whether employees who have been let go are working for competitors q Have a protocol in place for remote workers to return all confidential information to company systems, devices, and accounts and then ensure that they have not retained materials on their personal devices and accounts q Be proactive about educating new employees to purge themselves of materials from former employers q Determine whether furloughed employees should sign new restrictive covenants when they return as a condition of restarting work. Very unlikely to be an option in England because unilateral variation impossible and imposition of new terms likely to result in constructive dismissal claim q Assess if employee would get “credit for time served” against the duration of covenant for time out on furlough In England – no 2020 ‘Zoominar’ series

Employees Who Have Been Let Go q Ensure that employees who are (or have been) let go have returned all confidential information Ø “Hard Measures” > Written certification of full return and purge > Systems analysis – does it show pattern of downloading or printing? > Reminder letter from Legal or HR Ø “Soft Measures” > HR or Manager interview employees, if still possible > Include data collection/retrieval questions in any exit interviews 2020 ‘Zoominar’ series

“ Employees Who Have Been Let Go q Ensure that employees who are (or have been) let go have returned all confidential information Typical US State Trade Secrets Act and similar US Defend Trade Secrets Act Language “Information, including a formula, drawing, pattern, compilation including a customer list, program, device, method, technique or process that … [i]s the subject of efforts that are reasonable under the circumstances to maintain its secrecy. ” England & Wales 1. Equity – Faccenda Chicken category 3. The “secret process”. 2. Contract – party autonomy, subject to reasonableness. 3. The EU Trade Secrets Directive – Trade Secrets (Enforcement e. t. c) Regulations 2018. Regulation. The “Trade Secret” (as defined). 4. Databases – Copyright and Rights in Databases Regulations 1997. Ø ‘Circumstances’ have changed Ø But ‘efforts’ remain crucial 2020 ‘Zoominar’ series

Employees Who Have Been Let Go q Determine whether employees who are (or have been) let go are working for competitors Ø Create procedures to systematically check for new employment locations of company ‘alumni’ Ø If contract contains compulsory disclosure provisions in respect of offers of new employment, enforce Ø Determine who ‘owns’ this project? Business unit? HR? Legal? Ø Assess enforceability of covenant following involuntary termination > Absent constructive dismissal, no issues with enforcement in England > Impact of termination varies by jurisdiction under pre-COVID law > Does COVID context make a difference? 2020 ‘Zoominar’ series

Employees Coming Back to Workplace q Have a protocol in place for remote workers to return all confidential information to company systems, devices, and accounts and then ensure that employees have not retained materials on their personal devices and accounts Ø Have all returning employees sign a Certification form > No company data remaining on any personal device > No company data in personal email accounts or cloud storage accounts > No company documents or info remaining at home Ø IT do (random? ) system checks for concerning patterns of printing, downloading or accessing information 2020 ‘Zoominar’ series

Furloughed Employees Coming Back to Workplace q Determine whether furloughed employees should sign new restrictive covenants when they return as a condition of resuming active work Ø Point does not arise in England (unless by consent). Employees have remained employed throughout furlough period and furlough gives no legal “excuse” to implement new terms and conditions Ø USA. Like starting a new position in company? > E. g. , “Material Change Doctrine” – Patriot Energy v. Kiley (Massachusetts Super. Ct. ) “A non-solicitation agreement or covenant not to compete may be deemed void if there are material changes in the employment relationship between an employee and the employer. ” 2020 ‘Zoominar’ series

Furloughed Employees Coming Back to Workplace q Determine whether furloughed employees should sign new restrictive covenants when they return as a condition of resuming active engagement Ø Or more akin to asking an existing employee to sign a new covenant (‘midstream covenant’ issues)? > Would additional consideration be required in jurisdictions where mere continued employment is not sufficient? In England, yes. Any variation must be supported by consideration > Is recall from furlough such consideration? > Reaffirmation of old covenant? Does this help or could it hurt? 2020 ‘Zoominar’ series

Furloughed Employees Leaving the Company q Assess if covenant time period was running down during furlough Ø No clear law on this in most US states Ø Language in most covenants runs from time from termination of employment Ø But will courts allow furlough to be a de facto lengthy garden leave period? > Does it matter if furlough is at 80% pay (as in England), or perhaps 0% in US (with only ongoing benefits)? > Courts may give ‘credit for time served’ against covenants or against garden leave. Some support in England for time spent on garden leave to reduce the overall period of an injunction that the court might be willing to order ( BGC v Tullet Prebon). > Important to quickly assess status and threat of previously furloughed employee who leaves 2020 ‘Zoominar’ series

Hiring New People Who Have Been Working from Home for a Competitor q Be proactive about educating new employees to purge themselves of materials from former employers Ø Heightened risk of intentional or unintentional possession of confidential business information > Require competitive recruits to sign a Certification form Ø Unknowing misuse is a possible defence in England. See the recent decision of Media Entertainment NV v Karyagdyyev Ø Ascertain whether any other restrictive covenants exist > Analyze enforceability and any potential work-arounds Ø Assess potential for disloyal conduct while working from home > Temptation to pre-solicit -- ‘No one is watching’ at home 2020 ‘Zoominar’ series

Litigation – The English Law Perspective q Injunctive relief – still possible on three clear days of notice, even in the Covid Courts. Trials much harder to list (injunction hearing a week ago, QB’s first offer of a threeday trial, with expedition, mid-September). q The usual suite of interim remedies. Delivery-up, preservation of source material, imaging orders, “mea culpa” affidavit orders. Get it right at this stage and a trial may never be required. q Final relief. The distinction between equitable remedies (looking to gain of the defaulting confidee) versus breach of contract remedies (loss of the confider). “Wrotham Park” style damages remain perhaps the most valuable remedy, but are now limited in their application to cases where damage is appropriately measured by a hypothetical fee that would have been charged to use the information. Using them as a means to create a notional loss where there is none is now impossible. 2020 ‘Zoominar’ series

Litigation – The US Law Perspective q Immediate injunctive relief – T. R. O. or Preliminary Injunction – possible in a good number of courts around the U. S. § But availability and speed likely to vary court to court, and even judge to judge q. Expedited Discovery § some courts ordering virtual depositions in aid of preliminary injunctive proceedings q. In-Person Preliminary Injunctive Hearings – probably rare right now § Aware of one held in Florida earlier in pandemic – perhaps would not happen now q. Trials and Arbitrations – “live” hearings will be hard to come by § Many practitioners expect long lines for attention of judges with federal judges prioritizing criminal cases when finally able to come back to in-person hearings 2020 ‘Zoominar’ series

Questions? Want to Talk More? Contact Us Merrill April CM Murray LLP +44 (0) 20 7933 9139 merrill. april@cmmurray. com Michael Avila Fisher Phillips 610. 230. 2179 mavila@fisherphillips. com 2020 ‘Zoominar’ series Jonathan Cohen, QC Littleton Chambers Silk: 2016 | Call: 1999 jcohen@littletonchambers. c o. uk Christopher Stief Fisher Phillips 610. 230. 2130 cstief@fisherphillips. com

UP NEXT The Impact of Global Disruption on Restrictive Covenants, and Protection of Confidential Information and other Business Interests around the World Tuesday 22 September 4. 00 pm – 5. 00 pm BST / 11. 00 am – 12. 00 pm EDT / 5. 00 pm – 6. 00 pm GMT Atypical Worker Restraints and Beyond: Protecting Confidential Information and other Business Interests in Atypical Worker, Independent Contractor, Shareholder and Franchise Relationships Wednesday 2 December 4. 00 pm – 5. 00 pm BST / 11. 00 am – 12. 00 pm EDT / 5. 00 pm – 6. 00 pm GMT 2020 ‘Zoominar’ series

MARK YOUR CALENDAR Coming up in September 2021 In-Person Once Again -- or at least we all hope so. . Second International Restrictive Covenant and Confidential Information Conference Drinks Wednesday, 22 Sept. 2021 Thursday, 23 Sept. 2021 Welcome Drinks, 6. 30 - 9. 00 pm Conference - 8. 45 am - 5. 30 pm, with Closing Venue: One Whitehall Place, 1 Whitehall Court, Westminster, London SW 1 A 2 EJ 2020 ‘Zoominar’ series