Non-Competes and Protections for Confidential Information and Trade Secrets: Reconsidering the Public Interest

Abstract:

Restrictive covenants in employment agreements have become a major tool of employment and intellectual property regulation over the last three decades. While the Canadian law of restrictive covenants has undergone minimal change during this time, reforms to the law of confidential information and trade secrets and sustained scholarly critique on the adverse policy impacts of restrictive covenants invite reconsideration of the law in Canada; more specifically, in light of these developments, concerns about the public interest in non-compete clauses and agreements warrant renewed attention. The legal interests that non-compete clauses and agreements serve to protect—almost always, the maintenance of confidential information and trade secrets—already receive ample protection in the civil and criminal law. These existing laws deliver a more tailored and more appropriate scope of protection than that offered by non-competes themselves, and they generate fewer adverse effects for the public than non-competes, too. In light of these existing laws, combined with the changing nature of work and new scholarship on the adverse impacts of non-competes, this article supports proposals to attenuate the enforceability of restrictive covenants by prohibiting non-competes in Canada.