In its efforts to set the best possible conditions for innovation, Massachusetts can learn a few things from California. The startup community here increasingly emulates the fluid, collaborative style of Silicon Valley, where a high tolerance for risk and a tendency toward “coopetition” — that is, the recognition that even rival firms can work together on shared business interests — have helped create mammoths like Apple, Google, and Facebook. Now, Massachusetts, which historically has been successful as a breeding ground for world-leading companies, needs to borrow another page from its West Coast frenemy: California courts generally don’t enforce so-called noncompete agreements, which keep employees from leaving existing tech giants to do their own thing. Governor Patrick is wisely urging the Legislature to follow California’s lead.
Massachusetts companies that use noncompete clauses — under which employees sign away their right to go to work for a competing firm, or start their own company in the same field, for a specified time period — view these strictures as a way to protect their trade secrets. It’s easy to see why established technology firms, such as local tech titan EMC, might support the status quo.
Yet noncompete agreements can also have negative effects for workers — by tying them to jobs they dislike, preventing them from launching new ventures, nudging them to seek new positions outside of their area of expertise, or even preventing them from finding new work after they’ve been laid off. Because they discourage workers from striking out on their own, noncompetes can also become an albatross for innovation. That’s why many in the local venture-capital and startup communities are backing Patrick’s plan.
There are ways to protect intellectual property while getting rid of noncompetes. Patrick wants Massachusetts to adopt the Uniform Trade Secrets Act, which allows employees to take new jobs or start new businesses while prohibiting them from taking their current employer’s intellectual property. Massachusetts remains one of only a handful of states that have yet to adopt the Uniform Trade Secrets Act.
Tech firms understandably want to protect their intellectual property, but that shouldn’t also give them license to stifle competition. What are our homegrown tech leaders afraid of that Silicon Valley’s largest companies aren’t? Patrick’s bill would provide the right safeguards while creating even more fertile ground for innovation.
Correction: An earlier version of this editorial incorrectly included New Jersey and Texas among the states that have not adopted the Uniform Trade Secrets Act.