The FTC ban on non-competes aims to open up the U.S. market for human capital — empowering workers and promoting innovation and competition. But the ruling may also unleash an earthquake for intellectual property (IP) protection.
The ruling set the legal world abuzz on how companies will need to adjust IP protection strategies in a world without non-competes. Legal experts predict a flood of patent filings, lobbying to strengthen trade secret protections, and increased utilization of non-solicitation and non-disclosure agreements.
But the anxieties over the ruling speak to a bigger problem: Most companies don’t have the strong data resiliency fundamentals in place to protect and control the valuable digital assets that live on employees’ laptops with or without non-competes.
Non-compete ban removes a common protection on “soft IP”
The story of the U.S. economy has always been about intellectual capital. Unique laws have protected innovations and motivated people and businesses to invest time and money in generating new ideas. Today, it’s not just about patents and trade secrets like the Coca Cola recipe or KFC’s secret blend of herbs and spices. The entire knowledge economy of services businesses runs on “soft IP” — the smart ideas, strategies, and problem-solving tactics which represent employees’ everyday work.
Soft IP exists as documents, presentations, and other digital assets. The problem is, the majority of soft IP lives (sometimes exclusively) on employees’ laptops. In other words, the company’s jewels aren’t protected at all — the responsibility is fully in the hands of its employees.
Business continuity should be the main concern
Of course, no company wants its IP to fall into the hands of a competitor. But the more immediate — and much more likely — problem is losing access to that IP.
Common scenarios see a company losing access in one of two ways: A departing employee moves a bunch of their best work product from a company laptop to a personal device or storage location — often with the non-malicious self-interest of using that work product in their next role. Or IT scrubs data off the departing employee’s device, unwittingly erasing the only copies of important work products.
The best-case scenario involves the time and cost to recreate those lost files, with the potential disruption to business and customer services in the meantime. But, this is a major risk that non-competes never addressed. And it’s a risk whether the departing employee sneaks off to a competitor, heads to another industry, or leaves the workforce entirely.
Data resiliency is the foundation of IP protection
Viewing IP risk through this lens, the most important thing companies should be doing in the wake of the non-compete ban has nothing to do with their legal teams. Rather, they should be focusing on strengthening their data resiliency posture — so they can be sure that no matter where a departing employee goes, the business never fully loses their IP.
Moreover, the most foundational element of IP protection is often the most overlooked: reliable, automated endpoint data backup. Organizations need to ensure they are effectively capturing and backing up valuable IP at the source.
Getting endpoint backup right
Virtually every business has some form of data backup today. But it’s alarming how outdated or gap-ridden many backup policies remain. And there’s a troubling trend of organizations misusing cloud collaboration tools in place of purpose-built endpoint backup solutions (and discovering the shortcomings of this shortcut only too late).
Here are the fundamental capabilities that every organization needs in order to protect and maintain access to business-critical IP:
- Automated and continuous: Backup can’t depend on human action. People are busy with their work. They don’t want to (and largely forget to) stop to save files to a central server or do a manual backup. Backups need to happen automatically and continuously, without asking anything of employees or burdening IT and security teams.
- Every file and every version: The value of the work product is dynamic. One day, a document is a fledgling draft — the next, it’s the basis of a go-to-market strategy. Endpoint backup needs to capture every file. And it should capture every version — so any changes or deletions (unintentional or otherwise) can be reversed.
- Easy recovery: Speed matters in recovering files. Recovery time directly impacts potential business disruptions and their costs. The endpoint backup process should make it easy to find and recover the exact files needed — or to efficiently restore an entire device.
- Strong security: Last but certainly not least, endpoint backup must align with the highest security standards and requirements. These files can represent valuable, confidential, and sensitive information. It needs to be secure in transit and at rest.
Don’t demonize your employees — just back up your endpoint data
The FTC ruling banning non-competes will undoubtedly trigger more labor fluidity. But the more immediate risk is far less sinister than fears of departing employees maliciously stealing trade secrets.
With similar bans already in place in some states and set to go into effect nationwide in as few as 120 days, the primary focus now should be on business continuity. Businesses should reevaluate and reinvest in putting essential data resiliency tools in place — starting with a foundation of purpose-built endpoint backup. By doing so, they can ensure continuous access to business-critical files and data, no matter where departing employees go.
