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US Chamber of Commerce to sue FTC over ban on noncompetes

๐ŸŒˆ Abstract

The article discusses the U.S. Chamber of Commerce's plan to sue the Federal Trade Commission (FTC) for banning non-compete clauses in most employment contracts across America. The FTC has determined that non-compete agreements are an "unfair method of competition" and a violation of the FTC Act. However, the rule will still allow non-compete clauses for senior executives earning over $151,164 annually. The article also discusses past debates around non-compete agreements, including allegations of anti-competitive practices by tech companies like Apple.

๐Ÿ™‹ Q&A

[01] The FTC's Ban on Non-Compete Clauses

1. What are the key points of the FTC's final rule banning non-compete clauses?

  • The FTC has officially banned non-compete clauses in employment contracts across America, with some exceptions.
  • The ban aims to help create 8,500 extra new businesses and 17,000-29,000 more patents each year.
  • The rule still allows non-compete clauses for "senior executives" earning over $151,164 annually in "policy-making positions".
  • The FTC believes this subset of workers is less likely to be subject to the "acute, ongoing harms" suffered by other workers under non-compete agreements.

2. What are the main arguments made by the U.S. Chamber of Commerce against the FTC's rule?

  • The Chamber of Commerce has labeled the FTC's action as an "unlawful power grab", arguing that the matter should be confined to state law.
  • The Chamber's CEO claims that "three unelected commissioners have unilaterally decided they have the authority to declare what's a legitimate business decision and what's not by moving to ban noncompete agreements in all sectors of the economy."

3. What are some past examples of alleged anti-competitive practices related to non-compete agreements?

  • In 2013, Apple CEO Steve Jobs was alleged to have threatened the CEO of Palm with a patent lawsuit if he didn't stop hiring Apple employees.
  • In a recent case, the startup Rivos accused Apple of using the Defend Trade Secrets Act to "improperly obstruct employee mobility" by forcing employees to sign contracts with non-compete provisions that violate California law.

[02] Debates Around Non-Compete Agreements

1. How have non-compete agreements been viewed in different jurisdictions?

  • Non-compete agreements are typically deemed illegal under the California Business and Professions Code.
  • However, there have been allegations of more complex anti-competitive practices beyond just contractual non-compete clauses.

2. What was the case involving Evan Brown and Alcatel regarding intellectual property rights?

  • Evan Brown lost a case against Alcatel in 2002, with a judge ruling that the company owned the rights to a software idea that existed entirely in Brown's thoughts.
  • The court ordered Brown to disclose his "Solution", but Alcatel's counsel admitted it was "woefully incomplete and inadequate", making it ineligible for patent protection.
  • Brown testified that it would take an "extraordinary skill" to reduce the Solution to a working computer program, and a programmer of ordinary skill would have "virtually no chance" of success without extensive experimentation.

3. How did the FTC vote on the rule to abolish non-compete agreements?

  • The FTC vote to abolish non-compete agreements was passed 3:2, with Democrats supporting the ban and Republicans opposing.
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