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FTC announces rule banning noncompetes

ftc.gov

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Re: FTC announces rule banning noncompetes

#131

Post by crote »

akira2501 wrote: post #100
LeifCarrotson wrote: post #59

Full text of the ruling here: https://www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule... It's not surprising after thinking about it for a minute, but it did startle me to read that the FTC measures innovation by the number of patents issued. > In addition, the final rule is expected to help drive innovation, leading to an estimated average increase of 17,000 to 29,000 more patents each year for the next 10 year…

> I've always thought of that as representing a stifling of innovation. The short lifetime of patents and the requirement that you publish detailed information about the invention significantly mitigates this. If they were measuring innovation by the number of copyrights filed, then I might agree with you.

In theory? Yes. In practice? No.

For a lot of industries 20 years is an awfully long time to the point of complete irrelevance - and that "detailed information" is often vague enough to be unusable. Combine that with an overly-broad range of patent-able things and an overworked USPTO granting clearly invalid patents, and in practice (at least in the tech/software world) it's doing more harm than good.

Patents are no longer about protecting R&D investments. They have become more about patenting the vaguest concepts possible, in the hope of making a profit when someone else does an actual invention which somehow stumbles into your patents' wording.

Re: FTC announces rule banning noncompetes

#133

Post by [deleted] »

AlotOfReading wrote: post #48
cjen wrote: post #24

This seems incredibly important. I know non-compete rules personally held me back at a previous tech job. I'm interested to see how this hits finance firms – I know people who were forced to take a year off between jobs (although they were compensated the whole time). Always thought that would be a pretty sweet deal.

It's worth noting that the so-called "garden leave" you're describing usually doesn't come with things like bonuses. That may even be a majority of your compensation depending on the role.

[deleted]

Re: FTC announces rule banning noncompetes

#135

Post by 0xbadcafebee »

lokar wrote: post #97
kevstev wrote: post #43

Earlier quoted context omitted.

I was subject to one as well, but it was just on my base, not total comp, which was not the majority of my compensation. And while my base was fine, it was more or less explicitly stated that this was meant to make it painful for employees to leave and had almost zero to do with any special information the employee had.

They have other tricks. My comp was about 80% bonus, most of which went into deferred comp for a few years. If I was to go to a competitor without permission (independent of the non compete) I would forfeit the deferred comp.

Reject the handcuffs. Once enough people do, they will stop making it deferred. They know that if you're willing to reject the money, you're willing to leave (the handcuffs aren't keeping you there), and that scares them.

Re: FTC announces rule banning noncompetes

#136

Post by Gibbon1 »

benced wrote: post #112
ballenf wrote: post #92

Earlier quoted context omitted.

I'd guess it will have the opposite effect as companies have one less big reason to avoid CA.

The reason no non-competes has helped CA is increasing startup formation. California has shown over the last 30-50 years that startup formation > attracting legacy businesses for growth. Unless that changes, California becoming less differentiated for startup formation but getting more legacy businesses is a bad trade for California.

One of the biggest issues I have with economists theory of comparative advantage is it ignores the self sustaining ecosystem aspects of economics.

Some places if you need someone to do specialized thing X you can just walk down the street. Most places you'll need to find someone willing to move and and take a big hit on his career options. So that deep bench of skilled labor and business resources is a big deal.

Re: FTC announces rule banning noncompetes

#137

Post by wongarsu »

akira2501 wrote: post #100
LeifCarrotson wrote: post #59

Full text of the ruling here: https://www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule... It's not surprising after thinking about it for a minute, but it did startle me to read that the FTC measures innovation by the number of patents issued. > In addition, the final rule is expected to help drive innovation, leading to an estimated average increase of 17,000 to 29,000 more patents each year for the next 10 year…

> I've always thought of that as representing a stifling of innovation. The short lifetime of patents and the requirement that you publish detailed information about the invention significantly mitigates this. If they were measuring innovation by the number of copyrights filed, then I might agree with you.

"short lifetime" is relative. Had Apple been granted a patent on the idea of a smartphone the same year they released the iPhone, that patent would only expire in three years.

There are some industries where due to slow-moving markets the 20 year patent period is still sensible, but for most sectors we would be better off with a 5 or 10 year patent period to account for the increased speed of innovation.

Re: FTC announces rule banning noncompetes

#138

Post by gpderetta »

aidenn0 wrote: post #88
cjen wrote: post #24

This seems incredibly important. I know non-compete rules personally held me back at a previous tech job. I'm interested to see how this hits finance firms – I know people who were forced to take a year off between jobs (although they were compensated the whole time). Always thought that would be a pretty sweet deal.

I personally believe that lack of non-competes was one ingredient for Silicon Valley becoming what it is.

It was! https://en.wikipedia.org/wiki/Traitorous_eight

Re: FTC announces rule banning noncompetes

#139

Post by cogman10 »

zer00eyz wrote: post #99
macintux wrote: post #36

Earlier quoted context omitted.

I suspect this won’t survive a challenge in front of the current Supreme Court, unfortunately.

I am not entirely sure. Without anti compete stealing your competitors staff becomes a valid business strategy. Buy up the competitions best people and cripple them. This favors those with the most capital not the least.

I believe it will die more because of the originalist/textualism of the supreme court rather than considerations to which big businesses benefit (or are harmed by) this the most.

The question will ultimately arise "by what authority can the FTC make such a sweeping judgement" and it would not surprise me to hear the SC rule that this is an overstep of the authority they were given by the laws creating and maintaining the FTC.

Previously, the FTC could have argued that the chevron doctrine gives them this right. However, that is almost certainly about to be completely abolished this term.

The right of contract is almost certainly going to be more important to most members of the supreme court than any other considerations. That's my 2 cents.

Re: FTC announces rule banning noncompetes

#140

Post by ixwt »

0cf8612b2e1e wrote: post #117
MattSteelblade wrote: post #25

Earlier quoted context omitted.

Going off of the press release, it doesn't go into effect until 120 days after publication and doesn't apply to current senior executives which are defined as "workers earning more than $151,164 annually and who are in policy-making positions." I would also imagine that it will immediately be challenged in court.

How does a challenge work? Is the law valid until a ruling decides or is it put on pause?

A stay on the ruling could happen, but that would be up to the courts. Not a lawyer, but considering that there could be damages from the removal of non competes and someone leaving to get another job, there could be a stay on the order rather than letting it go into effect. While it works its way up the court system.
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