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The Non-Compete Ban: Impact on Patenting and Challenging Implementation

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by Dennis Crouch

Non-compete agreements fly under the radar for most American lawyers.  One reason is that such restrictions have long been banned within legal practice. As an example, the American Bar Association (ABA) Model Rule 5.6(a) prohibits lawyers from entering into agreements that restrict their right to practice law after terminating an employment, partnership, or other professional relationship. The rule's stated aim is to protect clients' freedom to choose their legal representation, but it also ensures that lawyers can practice their profession without restriction.

The increasing prevalence of non-compete agreements in other industries has drawn increasing scrutiny from policymakers and regulators, leading to the FTC's recent rule banning most non-compete agreements across the United States.  The new rule was announced on April 23, 2024 following a 3-2 vote by the FTC Commissioners (along party lines, with Democrats in the majority). It is set to take effect 120 days later (August 21, 2024). As I discuss below, two lawsuits have already been filed seeking to derail implementation.

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USPTO Oversight Hearing by Senate Judiciary Committee

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New USPTO Director Andrei Iancu testified in Congress on April 18 for the first time in his new official capacity -- this time before the Senate Judiciary Committee.  The Director must certainly be a visionary -- as the chief guide of U.S. intellectual property policy.  At the same time, the Director is head of a multi-billion-dollar agency with 12,000+ employees.

Although not speaking for the Senate as a whole, Senator Coons kicked-off the hearing with a statement that AIA Trials: "The current review system is systematically biased against patent owners."  From Senator Coon's perspective, the AIA was designed to give the USPTO Director authority to "fine-tune" the AIA trial proceedings without further congressional actions -- and that Director Iancu should take this opportunity to correct the imbalance.

One key statement from Director Iancu is that he is ready to work with Congress on legislative solutions to the "uncertainty" created by Supreme Court 101 jurisprudence.

The following is the Director's Opening Statement: 

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