Business Law Journal

Following the Legislature’s 2024 amendments to Section 16600, a new spotlight has been shown down on the so-called Trade Secret Exception and the rift that has emerged over the past few years between California courts about its continued application.  Ultimately, the California Supreme Court will likely be called upon in the near future to address whether—and to what extent—an employer may include restrictive covenants in an employment agreement as necessary to protect the employer’s trade secrets.  Until it does, litigants may credibly argue that the legislature’s recent amendments to Section 16600 abrogated the exception, diminished the exception, or had no effect on it at all.  

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In VFLA Eventco, LLC v. William Morris Endeavor Entertainment, LLC, the California Court of Appeal recently affirmed the importance of drafting a contract with a clear understanding of every word and clause, and the effect each has on the contract as a whole.