Physician Noncompetes: Texas Restrictions Apply to Dentists, Physicians’ Assistants, and Nurses
On June 20, 2025, Texas Governor Greg Abbott signed into law Senate Bill 1318 (SB 1318), which will further restrict noncompete agreements for health care professionals in Texas, starting September 1, 2025. Most notably, SB 1318 limits the duration and scope of a noncompete to one year post-employment and five miles from the provider’s primary practice site. It also takes restrictions that previously applied only to physicians and makes them applicable to dentists, physician assistants, and nurses.
Backdrop: Existing Texas Law
Section 15.50(b) of the Texas Business and Commerce Code governs noncompete agreements for physicians licensed by the Texas Medical Board. It provides that noncompete agreements for physicians are only enforceable when the agreement:
Does not deny the physician access to the list of patients whom the physician had seen or treated within one year of the end of the employment relationship;
Provides access to customary patient medical records for a reasonable fee;
Provides a buy-out provision for a reasonable price or as agreed by the parties; and
Allows the physician to continue treating specific patients or those with acute illnesses after employment has been terminated.
In practice, many physicians in Texas have been permitted to buy out their noncompete agreements for one year’s compensation.
SB 1318 Amendments
SB 1318, which is not retroactive, amends Section 15.50(b). In addition to expanding the scope of the restrictions in Section 15.50(b) to include dentists, physicians’ assistants, and nurses, SB 1318 includes the following key provisions:
A noncompete’s temporal scope cannot exceed one year post-employment;
A noncompete’s geographic scope cannot exceed five miles from the provider’s primary practice site;
A noncompete’s required buyout provision must be “in an amount that is not greater than the physician’s total annual salary and wages at the time of termination of the contract or employment,” which codifies what has been common practice relating to such buy-outs; and
With respect to physicians, a noncompete is void if the physician is involuntarily discharged without good cause. “Good cause” is defined as “a reasonable basis for discharge of a physician from contract or employment that is directly related to the physician’s conduct, including the physician’s conduct on the job or otherwise, job performance, and contract or employment record.”
Under SB 1318, “nurse” encompasses any person licensed under Chapter 301, Occupations Code, to engaged in vocational nursing. Chapter 301 imposes licensure requirements on registered nurses, licensed vocational nurses, vocational nurses, licensed practical nurses, practical nurses, professional nurses, graduate nurses, and “any other designation tending to imply that [a] person [is] entitled to practice nursing.”
Conclusion
In light of these new restrictions, employers expecting to enter noncompete agreements with physicians, nurses, dentists, or physician assistants in Texas should work with counsel to make sure their agreements meet these new standards. Because SB 1318 is not retroactive, employers likely do not need to amend existing agreements to bring them into compliance with the new law. However, they should bear in mind that any arrangements entered into after September 1, 2025, will be limited to the strict one-year/five-mile requirements. State law regarding noncompetition agreements is frequently changing, so employers are encouraged to take a close look at their agreements to determine whether there is a reason to update them. We will continue to monitor and report on developments in this highly dynamic area of law.
This article was prepared with the assistance of 2025 Dallas summer associate JJ Gramlich.
Florida on Verge of Enacting Employer-Friendly Non-Compete Law
Florida lawmakers recently passed the Florida Contracts Honoring Opportunity, Investment, Confidentiality and Economic Growth (CHOICE) Act (the “Act”), which would create a presumption that covered non-compete and garden leave agreements are enforceable. If it is approved by Governor Ron DeSantis, or allowed to become law without his signature, the Act will take effect on July 1, 2025.
The Act bucks the trend of states (e.g., Virginia and Wyoming) passing laws limiting the enforceability of restrictive covenants. According to the Act’s “Legislative findings,” the Legislature was motivated to pass the measure due to its findings that:
“strong legal protections in contracts between employers and contracted personnel which encourage optimal levels of information sharing and training and development” are a proper and legitimate state interest;
“alternative means of protecting confidential information and client relationships, such as nondisclosure agreements, fixed-duration term contracts, and nonsolicitation clauses in employment contracts, are inadequate to protect against the significant global risks faced by companies in this state”; and
“predictability in the enforcement of [non-compete] contracts … encourages investment in this state.”
Currently in Florida, to enforce a non-compete, an employer must show that it is: (i) contained in a written agreement signed by the employee, (ii) justified by a “legitimate business interest,” and (iii) reasonably necessary to protect the legitimate business interest. § 542.335, Fla. Stat. The Act does not replace current state law; instead, it creates additional categories of enforceable agreements, as summarized below. Restrictive covenants not covered by the Act remain subject to Florida’s existing non-compete laws.
Employees and Agreements Covered Under the Act
Covered Employees
The Act applies to any “covered employee,” defined as “an employee or individual contractor who earns, or is reasonably expected to earn, a salary greater than twice the annual mean wage of”:
“the county [in Florida] in which the … employer has its principal place of business”; or
if the employer’s principal place of business is not in Florida, “the county [in Florida] in which the employee resides.”
This salary threshold currently can range anywhere from $80,000 to nearly $150,000.
Covered Agreements
The Act creates and governs two types of non-compete agreements. Notably, these agreements require either that the employer has a “principal place of business [in Florida],” or the covered employee “maintain[] a primary place of work in” Florida, which means they must “spend[] more work time” in Florida than “any other single workplace,” and the “agreement is expressly governed by the laws of” Florida.
“Covered Non-Compete Agreement”: A written agreement with a covered employee in which, for a period “not to exceed 4 years and within the geographic area defined in the agreement,” “the covered employee agrees not to assume a role with or for another business, entity, or individual” in which:
“the covered employee would provide services similar to the services provided to the covered employer during the 3 years preceding the noncompete period”; or
“it is reasonably likely the covered employee would use the confidential information or customer relationships of the covered employer.”
“Covered Garden Leave Agreement”: A written agreement with a covered employee, in which:
The covered employee agrees to provide “up to, but no more than, 4 years of advance, express notice before terminating the employment or contractor relationship”;
“The covered employee agrees not to resign before the end of such notice period”; and
“The covered employer agrees to retain the covered employee for the duration of such notice period and to continue paying the covered employee the same salary and providing the same benefits that the covered employee received from the covered employer in the last month before the commencement of the notice period.”
During the notice period for Covered Garden Leave Agreements, the “covered employer is not obligated to provide discretionary incentive compensation or benefits or have the covered employee continue performing any work.”
Requirements for Covered Non-Compete and Garden Leave Agreements
For both Covered Non-Compete and Garden Leave Agreements to be enforceable, the Act requires that employees:
are advised, “in writing, of the right to seek counsel before execution of the” agreement;
are provided the proposed agreement “at least 7 days before an offer of employment expires” (for prospective employees) or “at least 7 days before the date that an offer to enter into” the agreement expires (for current employees); and
acknowledge, in writing, their receipt of confidential information or customer relationships.
In addition to the above, for Covered Non-Compete Agreements, the Act requires the agreement provide that “the non-compete period is reduced day-for-day by any nonworking portion of the notice period, pursuant to a covered garden leave agreement between the covered employee and the covered employer, if applicable.”
In addition to the above, for Covered Garden Leave Agreements, the Act requires they include the following provisions:
“After the first 90 days of the notice period, the covered employee does not have to provide services to the covered employer”;
“The covered employee may engage in nonwork activities at any time, including during normal business hours, during the remainder of the notice period”;
“The covered employee may, with the permission of the covered employer, work for another employer … during the remainder of the notice period”; and
the “notice period may be reduced during the notice period if the covered employer provides at least 30 days’ advance notice in writing to the covered employee.”
Enforcement and Remedies
Notably, the Act requires courts, “[u]pon application by a covered employer seeking enforcement of a” covered agreement, “to preliminarily enjoin a covered employee from providing services to any business, entity, or individual other than the covered employer during the noncompete period.”
To dissolve a preliminary injunction, the covered employee must “establish by clear and convincing evidence, based on nonconfidential information,” that:
“The covered employee will not perform,” during the noncompete or notice period, “any work similar to the services provided to the covered employer during the 3-year period preceding the commencement of” the noncompete or notice period, “or use confidential information or customer relationships of the covered employer”; or
the employer “has failed to pay or provide the consideration provided for in the non-compete agreement,” or the “salary and benefits provided for in the covered garden leave agreement during the notice period,” and has had “a reasonable opportunity to cure the failure”; or
in case of the Non-Compete Agreement only, the “business, entity, or individual seeking to employ or engage the covered employee is not engaged in, and is not planning or preparing to engage in during the noncompete period, business activity similar to that engaged in by the covered employer in the geographic area specified in the noncompete agreement.”
The Act also contains similar provisions mandating courts to preliminarily enjoin the putative employers of employees covered by a Non-Compete or Garden Leave Agreement, and setting forth the requirements for dissolutions of such injunctions.
In addition, the Act requires that “[a]ny information filed with the court which the covered employer deems to be confidential … be filed under seal to protect confidentiality and avoid substantial injury.” This requirement appears to apply to the entire proceeding, including applications for entry of preliminary injunctions and their dissolutions. Further, courts “must presume that an employee or individual contractor has access to confidential information or customer relationships if the employee or individual contractors acknowledges the access or receipt of such access in writing.”
The Act also provides that if a “covered employee engages in gross misconduct” (which is not defined) “against the covered employer, the covered employer may reduce the salary or benefits of the covered employee or take other appropriate action during the notice period, which … may not be considered a breach of” the agreement.
The Act provides that in “any action to enforce” covered non-compete and garden leave agreements, “the prevailing party is entitled to reasonable attorney fees and costs,” and covered employers are “entitled to recover all available monetary damages for all available claims.”
Key Takeaways
If it becomes law, the Act will provide Florida employers and employers with employees in Florida a powerful way to secure post-employment restrictions. Ahead of the Act’s expected July 1 effective date, Florida employers or employers with employees primarily working in Florida should review their existing non-compete and garden leave agreements (or lack thereof) to assess whether they want to take advantage of the options provided by the Act.
California Creates Extended Producer Responsibility Program for Textiles
California Senate Bill (SB) 707, also known as the Responsible Textile Recovery Act of 2024 (Act), establishes an extended producer responsibly (EPR) program for apparel and textiles, the first such program directed at apparel and textiles in the United States. The consequences of the EPR program will be significant for apparel and textile producers, and it is plausible other states may pass similar pieces of legislation in future years.
Similar to California’s other recent EPR endeavors (primarily SB 54’s EPR program for single-use packaging), the Act establishes an EPR program for textile producers under the Department of Resources Recycling and Recovery (CalRecycle)’s oversight in which the cost and burden of recycling covered textile materials shifts from consumers and municipalities to the producers themselves. Qualifying producers must join a stewardship organization that coordinates producer compliance with the Act. CalRecycle has until July 1, 2028, to adopt implementing regulations.
Producer Requirements
The Act requires subject producers to form and join a producer responsibility organization (PRO) that will develop and implement a stewardship plan for producers to comply with the law’s requirements for “collection, transportation, repair, sorting, recycling, and the safe and proper management of covered products in the state.”
The focus of the PRO’s requirements is to create a “free and convenient” drop-off and collection system to collect and recycle postconsumer covered apparel and textile products. The PRO will work with local county governments to develop specified collection sites in each county, with the number of collection sites in a county dependent on population density. Along with the collection sites, the PRO must develop a plan for how collected covered products will be sorted, transported, processed, laundered, reused, and recycled following collection at collection sites. This plan will include procedures for how covered products will be transported from collection sites to sorters, repair businesses, or recycling facilities, how collection sites will divert covered products to secondhand markets for reuse, and how the PRO will track the flow of covered products through this system. The PRO is additionally tasked with developing a statewide education and outreach initiative to communicate the collection program specifics to the public and encourage participation.
It remains unclear how this will work in practice. The Act does not fully contemplate certain logistical items necessary to effectuate the proposed collection system, such as whether the PRO will be able to utilize pre-existing recycling infrastructure and how the PRO will coordinate with individual counties to handle processing the covered products post-collection. Further, how CalRecycle intends to enforce compliance with the drop-off and collection system is uncertain given the excessive number of collection sites that must be established to meet the PRO’s obligations under the Act.
CalRecycle has until March 1, 2026, to approve a PRO, and producers will have until July 1, 2026, to join the PRO. Within 12 months of CalRecycle’s regulations taking effect, the PRO must submit a stewardship plan to the agency, which has 120 days to review and approve the plan. The PRO must implement the approved stewardship plan within 12 months of CalRecycle’s approval. Beginning July 1, 2030, producers will be subject to compliance under the stewardship plan.
Online Marketplace Reporting
Outside of the other producer requirements, online marketplaces are annually required under the Act to notify CalRecycle and the PRO of any third-party sellers on their platforms that sell more than $1 million in covered products in the preceding year.
An “online marketplace” is defined in accordance with the California Civil Code to include “consumer-directed, electronically accessed platform[s]” that include “features that allow for, facilitate, or enable third-party sellers” and that third-party sellers use “to engage in the sale, purchase, payment, storage, shipping, or delivery of a consumer product in this state,” and that the platforms have “a contractual relationship with consumers governing their use of the platform to purchase consumer products.”
The Act also uses the California Civil Code’s definition of “third-party sellers,” which defines these parties as persons or entities that sell consumer goods in the state on an online marketplace and are independent of the online marketplace.
Penalties for Noncompliance
Ultimately, on and after the date CalRecycle approves the PRO’s stewardship plan, retailers, importers, distributors, or online marketplaces cannot sell, import, or distribute the covered product in the state if the associated producer or brand is not in compliance with the stewardship plan. The Act authorizes CalRecycle to impose administrative penalties up to $50,000 per day for intentional or knowing violations. CalRecycle may also revoke a PRO plan’s approval or require additional reporting relating to compliance to meet the Act’s requirements.
Further, within 12 months of CalRecycle promulgating its implementing regulations, it will post on its website a list of producers and associated reported brands of covered products that comply with the law. Retailers, importers, distributors, and online marketplace sellers should monitor the agency’s website to determine if a producer, brand, or covered product it sells are in compliance.
FDA Scrutinizes Clinical Trials Exporting U.S. Genetic Material
On June 18, 2025, the U.S. Food and Drug Administration (“FDA”) announced an immediate review of new clinical trials that export American citizens’ biological materials to countries of concern, such as China, for genetic engineering and subsequent infusion into U.S patients. According to the announcement, this action is in response to fears that some clinical trials transferred biological material abroad, sometimes without the knowledge or consent of participants, risking misuse of Americans’ sensitive genetic data by foreign governments.
While the Department of Justice Final Rule implementing Executive Order 14117, Preventing Access to Americans’ Bulk Sensitive Personal Data and United States Government-Related Data by Countries of Concern (28 C.F.R. Part 202), published on January 8, 2025, and effective April 8, 2025 imposes certain export controls on sensitive data transfers to countries of concern, there is a broad exemption allowing companies to send trial participants’ biological samples for processing overseas as part of FDA-regulated clinical trials.
The FDA is now reviewing all relevant trials that relied on this exemption and is requiring companies to “demonstrate full transparency, ethical consent, and domestic handling of sensitive biological materials.” New trials unable to meet these standards will not be permitted to proceed.
The FDA is coordinating with the National Institutes of Health (“NIH”) to ensure that federally funded research is not compromised by these export practices. This initiative is part of a broader federal effort to prevent the potential exploitation of Americans’ sensitive biological data by foreign adversaries and ensure that research funding supports only “secure, transparent, and U.S.-compliant institutions.” The announcement indicates that additional enforcement and policy measures could be forthcoming.
The FDA’s immediate pause on clinical trials involving the export of Americans’ cells addresses pressing ethical and security concerns but also introduces potential challenges for the biotech industry. U.S. Companies involved in exporting biological materials for clinical trials should consider assessing current practices and overall long-term global strategies to safeguard sensitive patient data for research and product development.
China’s National People’s Congress Passes Amended Anti-Unfair Competition Law
On June 27, 2025, China’s National People’s Congress (NPC) passed the newly amended Anti-Unfair Competition Law (中华人民共和国反不正当竞争法). The amended Anti-Unfair Competition Law (AUCL) will be effective October 15, 2025. While China is not a common law country, Article 7 of the AUCL nonetheless provides common law-like protection for unregistered marks that have a “certain influence.” Article 7 is updated to prohibit the use of others’ trademarks as business names or search keywords. However, this revision does not address much needed guidance on unfair competition in the field of artificial intelligence such as distillation, training data sourcing, etc. Article 40 adds an extraterritoriality provision that might inadvertently implicate foreign entities.
A translation follows:
Chapter I General Provisions Article 1 This Law is formulated in order to promote the healthy development of the socialist market economy, encourage and protect fair competition, prevent and stop unfair competition, and protect the legitimate rights and interests of operators and consumers. Article 2 In their production and operation activities, operators shall follow the principles of voluntariness, equality, fairness and integrity, abide by laws and business ethics, and participate in market competition fairly. Unfair competition as stated in this Law refers to any act by an operator in its production and business activities that violates the provisions of this Law, disrupts the market competition order, and damages the legitimate rights and interests of other operators or consumers. The term “operator” as used in this Law refers to a natural person, legal person or unincorporated organization that engages in the production, operation of commodities or provision of services (hereinafter referred to as commodities including services). Article 3 Anti-unfair competition work shall adhere to the leadership of the Communist Party of China. The state will improve and perfect the anti-unfair competition rules and systems, strengthen anti-unfair competition law enforcement and judicial work, maintain market competition order, and improve a unified, open, competitive and orderly market system. The state shall establish and improve a fair competition review system, strengthen fair competition review work in accordance with the law, and ensure that all types of operators have equal access to production factors and fair participation in market competition in accordance with the law. Article 4 People’s governments at all levels shall take measures to prevent and stop unfair competition and create a good environment and conditions for fair competition. The State Council will establish and improve a coordination mechanism for anti-unfair competition work to coordinate the handling of major issues concerning the maintenance of market competition order. Article 5 The departments that perform market supervision and management duties of the people’s governments at or above the county level shall supervise and inspect unfair competition activities; if laws and administrative regulations provide that other departments shall supervise and inspect, such provisions shall apply. Article 6 The state encourages, supports and protects all organizations and individuals to conduct social supervision over unfair competition. State organs and their staff shall not support or shield acts of unfair competition. Industry organizations should strengthen industry self-discipline, guide and regulate operators in the industry to compete in accordance with the law, and maintain market competition order. Chapter II Unfair Competition Article 7: Business operators shall not engage in the following confusing conduct that misleads people into believing that their products are those of others or that they have a specific connection with others: (1) Unauthorized use of the same or similar marks as the product names, packaging, decorations, etc. of others that have a certain influence; (2) Unauthorized use of other people’s influential names (including abbreviations, business names, etc.) or names (including pen names, stage names, online names, translated names, etc.); (3) Unauthorized use of the main part of another person’s influential domain name, website name, web page, new media account name, application name or icon, etc.; (iv) Other confusing conduct that is sufficient to mislead people into believing that the goods are those of another party or that they have a specific connection with another party. Unauthorized use of another’s registered trademark or unregistered well-known trademark as the business name of a company, or setting another’s product name, company name (including abbreviations, business name, etc.), registered trademark, unregistered well-known trademark, etc. as search keywords, thereby misleading others into believing that they are other’s products or that they have a specific connection with others, shall be deemed as confusing behavior as provided for in the preceding paragraph. Operators shall not help others to engage in confusing behavior. Article 8 Business operators shall not bribe the following entities or individuals by giving money or other means to obtain trading opportunities or competitive advantages: (1) Staff of the transaction counterparty; (2) An entity or individual entrusted by the counterparty to a transaction to handle relevant matters; (3) Any entity or individual that uses its authority or influence to influence transactions. The units and individuals specified in the preceding paragraph shall not accept bribes. In trading activities, business operators may pay discounts to trading counterparties or commissions to middlemen in an explicit manner. Business operators who pay discounts to trading counterparties or commissions to middlemen shall record such amounts truthfully in their accounts. Business operators who receive discounts or commissions shall also record such amounts truthfully in their accounts. If a staff member of an operator engages in bribery, it shall be deemed as the conduct of the operator; however, this shall not apply if the operator has evidence to prove that the conduct of the staff member is unrelated to obtaining transaction opportunities or competitive advantages for the operator. Article 9 Operators shall not make false or misleading commercial advertisements regarding the performance, functions, quality, sales status, user evaluations, honors, etc. of their products, or deceive or mislead consumers and other operators. Operators shall not help other operators to carry out false or misleading commercial advertising by organizing false transactions, false evaluations, etc. Article 10 Business operators shall not engage in the following acts that infringe upon trade secrets: (1) Obtaining the trade secrets of the right holder by theft, bribery, fraud, coercion, electronic intrusion or other improper means; (2) disclosing, using or allowing others to use the business secrets of the right holder obtained by the means mentioned in the preceding paragraph; (3) Violating the confidentiality obligation or the right holder’s request to keep the commercial secrets confidential by disclosing, using or allowing others to use the commercial secrets in their possession; (iv) Instigating, inducing or assisting others to violate confidentiality obligations or the rights holder’s requirements for maintaining confidentiality of trade secrets, and obtaining, disclosing, using or allowing others to use the rights holder’s trade secrets. Any natural person, legal person or unincorporated organization other than an operator that carries out the illegal acts listed in the preceding paragraph shall be deemed to have infringed upon trade secrets. If a third party knowingly or should have known that an employee, former employee or other entity or individual of the trade secret right holder has committed an illegal act listed in the first paragraph of this Article, and still obtains, discloses, uses or allows others to use the trade secret, it shall be deemed as an infringement of the trade secret. The term “trade secrets” as used in this Law refers to commercial information such as technical information, business information, etc. that is not known to the public, has commercial value, and for which the right holder has taken corresponding confidentiality measures. Article 11 Operators shall not engage in the following circumstances when conducting sales with prizes: (1) The types of prizes, prize redemption conditions, prize amounts or prizes and other prize sales information are unclear, affecting prize redemption; (2) After a prize-based sales activity has begun, changing the prize type, prize redemption conditions, prize amount, or prizes and other prize-based sales information without justifiable reasons; (3) Conducting sales with prizes by falsely claiming there are prizes or intentionally allowing an undecided person to win a prize; (iv) Sales with prizes offered by lottery, with the highest prize exceeding RMB 50,000. Article 12 Operators shall not fabricate, disseminate, or instruct others to fabricate or disseminate false or misleading information that damages the business reputation or product reputation of other operators. Article 13 Operators who use the Internet to engage in production and business activities must comply with the provisions of this Law. Operators shall not use data, algorithms, technology, platform rules, etc. to influence user choices or other means to carry out the following acts that hinder or disrupt the normal operation of network products or services lawfully provided by other operators: (1) Inserting links or forcibly redirecting to another operator’s website in any network product or service that the operator lawfully provides without the operator’s consent; (2) Misleading, deceiving, or forcing users to modify, close, or uninstall network products or services lawfully provided by other operators; (3) maliciously implementing incompatibility with network products or services lawfully provided by other operators; (4) Other acts that hinder or disrupt the normal operation of network products or services lawfully provided by other operators. Operators shall not obtain or use data lawfully held by other operators by improper means such as fraud, coercion, circumvention or destruction of technical management measures, thereby damaging the legitimate rights and interests of other operators and disrupting the market competition order. Operators shall not abuse platform rules, directly or instruct others to conduct false transactions, false evaluations or malicious returns against other operators, damage the legitimate rights and interests of other operators, and disrupt market competition order. Article 14 Platform operators shall not force or covertly force operators on the platform to sell goods at prices below cost in accordance with their pricing rules, thereby disrupting the market competition order. Article 15 Large enterprises and other operators shall not abuse their dominant position in terms of capital, technology, transaction channels, industry influence, etc., to require small and medium-sized enterprises to accept transaction terms such as obviously unreasonable payment terms, methods, conditions and liability for breach of contract, and to delay the payment of goods, projects, services, etc. to small and medium-sized enterprises. Chapter III Investigation of Suspected Unfair Competition Article 16 When investigating suspected unfair competition, the supervisory and inspection authorities may take the following measures: (1) Entering and inspecting business premises suspected of unfair competition; (2) Questioning the business operator, interested parties and other relevant entities or individuals under investigation, requiring them to explain relevant circumstances or provide other information related to the conduct under investigation; (3) Inquiry into and copy of agreements, account books, receipts, documents, records, business correspondence and other materials related to suspected unfair competition; (iv) Seizing or detaining property related to suspected unfair competition; (V) Checking the bank accounts of operators suspected of engaging in unfair competition. When taking measures prescribed in the preceding paragraph, a written report shall be submitted to the principal person in charge of the supervision and inspection department and approved. When taking measures prescribed in the fourth and fifth items of the preceding paragraph, a written report shall be submitted to the principal person in charge of the supervision and inspection department of the people’s government at or above the level of a city divided into districts and approved. When investigating suspected unfair competition activities, supervisory and inspection departments shall comply with the provisions of the Administrative Enforcement Law of the People’s Republic of China and other relevant laws and administrative regulations, and shall disclose the results of the investigation to the public in a timely manner in accordance with the law. Article 17 When the supervisory and inspection department investigates suspected unfair competition activities, the investigated business operators, interested parties and other relevant entities and individuals shall truthfully provide relevant information or circumstances. Article 18 Where an operator is suspected of violating the provisions of this Law, the supervisory and inspection department may interview the relevant person in charge and require him to explain the circumstances and propose improvement measures. Article 19: Supervisory and inspection departments and their staff have a legal obligation to keep confidential the commercial secrets, personal privacy, and personal information they learn of during the investigation. Article 20 Any unit or individual has the right to report suspected unfair competition to the supervisory and inspection department, which shall handle the report promptly in accordance with the law upon receipt. The supervision and inspection department shall make public the telephone number, mailbox or email address for accepting reports and keep the confidentiality of the reporter. For reports made under real names and providing relevant facts and evidence, the supervision and inspection department shall promptly inform the reporter of the handling results. Article 21 Platform operators shall specify fair competition rules within the platform in platform service agreements and transaction rules, establish mechanisms for reporting and complaining about unfair competition and resolving disputes, and guide and regulate fair competition among operators on the platform in accordance with the law; if it is discovered that an operator on the platform has engaged in unfair competition, necessary disposal measures shall be taken in a timely manner in accordance with the law, relevant records shall be preserved, and reports shall be made to the supervisory and inspection department of the people’s government at or above the county level where the platform operator resides in accordance with regulations. Chapter IV Legal Liability Article 22 If an operator violates the provisions of this Law and causes damage to others, he shall bear civil liability in accordance with the law. If the legitimate rights and interests of an operator are damaged by unfair competition, he or she may bring a lawsuit to the people’s court. The amount of compensation for an operator who has been harmed by unfair competition shall be determined according to the actual losses suffered by the operator due to the infringement or the profits obtained by the infringer due to the infringement. If an operator intentionally infringes on trade secrets and the circumstances are serious, the amount of compensation may be determined at a level not less than one times but not more than five times the amount determined in the above manner. The amount of compensation shall also include the reasonable expenses paid by the operator to stop the infringement. If an operator violates the provisions of Article 7 or Article 10 of this Law and it is difficult to determine the actual losses suffered by the right holder due to the infringement or the profits obtained by the infringer due to the infringement, the People’s Court shall award compensation of no more than RMB 5 million to the right holder based on the circumstances of the infringement. Article 23 If an operator violates Article 7 of this Law and conducts confusing behavior or helps others conduct confusing behavior, the supervisory and inspection department shall order the operator to stop the illegal behavior and confiscate the illegal products. If the illegal turnover is more than RMB 50,000, a fine of up to five times the illegal turnover may be imposed; if there is no illegal turnover or the illegal turnover is less than RMB 50,000, a fine of up to RMB 250,000 may be imposed; if the circumstances are serious, the business license may be revoked. Anyone who sells illegal goods as provided for in Article 7 of this Law shall be punished in accordance with the provisions of the preceding paragraph; if the seller is unaware that the goods he sells are illegal goods but can prove that he obtained the goods legally and identify the provider, the supervisory and inspection department shall order him to stop sales and shall not impose administrative penalties. If the name registered by an operator violates the provisions of Article 7 of this Law, the operator shall promptly apply for name change registration; before the name is changed, the registration authority shall replace its name with a unified social credit code. Article 24 If any relevant unit bribes another person or accepts bribes in violation of Article 8 of this Law, the supervisory and inspection department shall confiscate the illegal gains and impose a fine of not less than RMB 100,000 yuan but not more than RMB 1 million yuan; if the circumstances are serious, a fine of not less than RMB 1 million yuan but not more than RMB 5 million yuan shall be imposed, and the business license may also be revoked. The legal representative, principal person in charge and directly responsible personnel of an operator shall bear personal responsibility for the implementation of bribery, and if the relevant individuals accept bribes, the supervisory and inspection departments shall confiscate the illegal gains and impose a fine of no more than one million yuan. Article 25 Where an operator violates the provisions of Article 9 of this Law by making false or misleading commercial advertisements for its products, or assists other operators in making false or misleading commercial advertisements by organizing false transactions, false evaluations, etc., the supervisory and inspection department shall order it to stop the illegal behavior and impose a fine of not more than RMB 1 million; where the circumstances are serious, a fine of not less than RMB 1 million but not more than RMB 2 million shall be imposed, and the business license may be revoked. If an operator violates the provisions of Article 9 of this Law and publishes false advertisements, he shall be punished in accordance with the provisions of the Advertising Law of the People’s Republic of China. Article 26 Where an operator or other natural person, legal person or unincorporated organization violates the provisions of Article 10 of this Law and infringes upon commercial secrets, the supervisory and inspection department shall order it to stop the illegal behavior, confiscate the illegal gains, and impose a fine of not less than RMB 100,000 yuan but not more than RMB 1 million yuan; where the circumstances are serious, a fine of not less than RMB 1 million yuan but not more than RMB 5 million yuan shall be imposed. Article 27 Where an operator conducts sales with prizes in violation of Article 11 of this Law, the supervisory and inspection department shall order the operator to cease the illegal conduct and impose a fine of not less than RMB 50,000 yuan but not more than RMB 500,000 yuan. Article 28 Where an operator violates the provisions of Article 12 of this Law and damages the commercial reputation or product reputation of other operators, the supervisory and inspection department shall order it to stop the illegal behavior and eliminate the impact, and impose a fine of not less than RMB 100,000 yuan but not more than RMB 1 million yuan; where the circumstances are serious, a fine of not less than RMB 1 million yuan but not more than RMB 5 million yuan shall be imposed. Article 29 Where an operator violates the provisions of the second, third, or fourth paragraphs of Article 13 of this Law by using the Internet to engage in unfair competition, the supervisory and inspection department shall order it to cease the illegal conduct and impose a fine of not less than RMB 100,000 yuan but not more than RMB 1 million yuan; where the circumstances are serious, a fine of not less than RMB 1 million yuan but not more than RMB 5 million yuan shall be imposed. Article 30 Where a platform operator violates the provisions of Article 14 of this Law by forcing or covertly forcing operators on the platform to sell goods at prices below cost, the supervisory and inspection department shall order it to stop the illegal behavior and impose a fine of not less than RMB 50,000 yuan but not more than RMB 500,000 yuan; where the circumstances are serious, a fine of not less than RMB 500,000 yuan but not more than RMB 2 million shall be imposed. Article 31 Where an operator abuses its dominant position in violation of Article 15 of this Law, the supervisory and inspection department of the people’s government at or above the provincial level shall order it to make corrections within a time limit; where corrections are not made within the time limit, a fine of up to RMB 1 million shall be imposed; where the circumstances are serious, a fine of not less than RMB 1 million but not more than RMB 5 million shall be imposed. Article 32 Where an operator engages in unfair competition in violation of the provisions of this Law and takes the initiative to eliminate or mitigate the harmful consequences of the illegal behavior and other statutory circumstances, the administrative penalty shall be mitigated or reduced in accordance with the law; where the illegal behavior is minor and corrected in a timely manner and does not cause harmful consequences, no administrative penalty shall be imposed. Article 33 Where an operator violates the provisions of this Law and engages in unfair competition and is subject to administrative punishment, the supervisory and inspection department shall record it in the credit record and make it public in accordance with the relevant laws and administrative regulations. Article 34 If an operator violates the provisions of this Law, he shall bear civil, administrative and criminal liability. If his property is insufficient to pay, it shall be used first to bear the civil liability. Article 35 Anyone who obstructs a supervisory and inspection department from performing its duties in accordance with this Law or refuses or obstructs an investigation shall be ordered by the supervisory and inspection department to make corrections and may be fined up to RMB 10,000 yuan for an individual or up to RMB 100,000 yuan for an organization. Article 36 If a party is dissatisfied with the decision made by the supervisory and inspection department, he or she may apply for administrative reconsideration or initiate administrative litigation in accordance with the law. Article 37 Where staff members of supervisory and inspection departments abuse their power, neglect their duties, engage in malpractice for personal gain, or disclose commercial secrets, personal privacy, or personal information learned during the investigation process, they shall be punished in accordance with the law. Article 38 Anyone who violates the provisions of this Law and constitutes an act of violation of public security management shall be given a public security management penalty in accordance with the law; if it constitutes a crime, criminal liability shall be pursued in accordance with the law. Article 39: In civil trial proceedings for infringement of trade secrets, where the trade secret rights holder provides preliminary evidence to prove that he or she has taken confidentiality measures for the claimed trade secret and reasonably demonstrates that the trade secret has been infringed, the suspected infringer shall prove that the trade secret claimed by the rights holder does not fall within the scope of trade secrets prescribed in this Law. If the trade secret right holder provides preliminary evidence to reasonably show that the trade secret has been infringed, and provides one of the following evidence, the suspected infringer shall prove that it has not infringed the trade secret: (1) There is evidence that the suspected infringer has channels or opportunities to obtain the trade secret, and the information used by the infringer is substantially the same as the trade secret; (2) There is evidence that the trade secret has been disclosed or used by the suspected infringer or is at risk of being disclosed or used; (3) There is other evidence showing that the trade secret has been infringed by the suspected infringer. Chapter V Supplementary Provisions Article 40 Where unfair competition as provided for in this Law is carried out outside the territory of the People’s Republic of China, disrupts the domestic market competition order, or damages the legitimate rights and interests of domestic operators or consumers, it shall be dealt with in accordance with the provisions of this Law and relevant laws. Article 41 This Law shall come into force on October 15, 2025.
Nonsolicitation Agreement Forfeiture Clause Falls Outside Massachusetts Noncompetition Act
In a June 2025 opinion, the Massachusetts Supreme Judicial Court (SJC) clarified that the Massachusetts Noncompetition Agreement Act’s scope does not extend to a forfeiture clause tied to the breach of a nonsolicitation agreement.
Case Overview: Miele v. Foundation Medicine, Inc.
An employee was bound by an agreement not to solicit employees of Foundation Medicine. The employee later affirmed her nonsolicitation obligations in a separation agreement, which provided that the employee’s severance benefits would be forfeited in the event she breached her contractual obligations.
Foundation Medicine subsequently ceased paying severance benefits based on its claim that the employee had violated her nonsolicitation agreement. The employee filed suit and alleged that the forfeiture provision ran afoul of the Massachusetts Noncompetition Act, which places strict limitations on the use of noncompetition agreements, which, in turn, are defined to include “forfeiture for competition agreements.”
The trial court agreed with the employee’s position that the Massachusetts Noncompetition Act prohibited the forfeiture clause and ruled in favor of the employee on a motion for judgment on the pleadings.
SJC Opinion
In Miele, the SJC overturned the lower court’s decision based on a reading of plain statutory language. The Court ruled that under the Noncompetition Act, “(1) noncompetition agreements do not include nonsolicitation agreements, and (2) forfeiture for competition agreements are a subset of noncompetition agreements.” Therefore, according to the SJC, “[i]t follows, by necessary implication, that forfeiture for competition agreements also exclude nonsolicitation agreements. To conclude otherwise would contradict the statute’s express exclusion of non solicitation agreements from the broader category of noncompetition agreements.”
The SJC drew a distinction between the nature of the underlying agreement and the remedy for a violation, noting that pairing a nonsolicitation agreement with a forfeiture clause does not convert it to a noncompetition agreement. “A non solicitation covenant remains just that – regardless of whether the remedy for breach involves forfeiture of benefits. Because the act expressly excludes non solicitation covenants, and the forfeiture at issue is triggered solely by breach of such a covenant, the act does not apply.”
Key Consideration for Massachusetts Employers
The Miele decision clarifies that employers in Massachusetts may utilize nonsolicitation agreements without worrying that a forfeiture remedy may bring the agreement within the Massachusetts Noncompetition Act’s purview.
Perfume, Proof, and Parallel Imports: How Coty’s Traceability System Won a Trade Mark War
Background
On 16 April 2025, the District Court of The Hague in the Netherlands handed down a decision relating to the complex issue of trade mark exhaustion in the context of parallel trade disputes.
The claimant, Coty Beauty Germany (Coty), is a global cosmetics company and exclusive licensee of several well-known trade marks, including Hugo Boss. Coty operates a selective distribution network for the products in the European Economic Area (EEA). The defendant, Easycosmetic Benelux (Easycosmetic), is an unauthorised wholesaler of perfumes and cosmetics that operates outside of Coty’s selective distribution network.
The dispute concerned a 200ml bottle of “Bottled Night” Hugo Boss perfume, which was being sold by Easycosmetic in the Netherlands. Coty claimed that this specific bottle had originally been shipped to South Africa and therefore had not been placed on the EEA market by Coty or with its consent.
Legal Framework
The case hinged on Article 15(1) of the EU Trade Mark Regulation (2017/1001), which states that a trade mark owner cannot oppose further commercialisation of goods once they have been lawfully placed on the EEA market by or with the trade mark owner’s consent. This principle is referred to as trade mark exhaustion.
However, the District Court of The Hague clarified the position on the burden of proof in trade mark exhaustion cases, which is nuanced. The trade mark holder, here Coty, must initially substantiate the claim of infringement. However, the burden of proving that the trade mark is exhausted—in this case, that the goods were lawfully placed on the EEA market—lies with the defendant, Easycosmetic.
However, the District Court of The Hague clarified the position on the burden of proof in trade mark exhaustion cases, which is nuanced. The trade mark holder, here Coty, must initially substantiate the claim of infringement. However, the burden of proving that the trade mark is exhausted—in this case, that the goods were lawfully placed on the EEA market—lies with the defendant, Easycosmetic.
The claimant operates a selective distribution system;
The goods do not clearly identify the intended market;
The trade mark owner refuses to share information about the disputed product’s intended destination; and
The defendant’s suppliers are not forthcoming about their own sources of supply.
In Coty v Easycosmetic, it was not necessary for the court to rule on whether the burden of proof had shifted, because Easycosmetic ceased to dispute that the perfume bottles were marketed for outside the EEA.
Still, this did not mean that Coty’s product traceability evidence went to waste.
The Role of Traceability in Coty’s Victory
A pivotal element in Coty’s success was its ability to trace the product’s origin and distribution path. Coty presented evidence from its internal product tracking system, which showed that the specific bottle in question had been manufactured for and shipped to a non-EEA market, specifically South Africa.
The traceability system allowed Coty to:
Identify the batch number and match it to a specific shipment;
Demonstrate the intended market for the product; and
Prove the lack of consent for EEAmarketing of the perfume bottle.
Traceability: A Legal Sword and Shield
The Coty v Easycosmetic ruling is a powerful reminder that traceability is not just a logistics tool, it is a legal asset. For companies looking to protect their brands, especially those operating a selective distribution system, investing in an effective product tracking system is essential for protecting brand reputation and trade marks in the EEA.
A traceability system is necessary to comply with certain government regulations, for example cosmetic distributors are already obliged under the EU Cosmetic Regulations (EC) No 1223/2009, which was retained by UK law as the UK’s Cosmetic Regulations, to maintain a traceability system.
A robust traceability system can serve as decisive evidence in legal disputes to thwart unauthorised parallel imports from outside the EEA. As this case proves, there are certain circumstances in which the court will instruct the trade mark owner to provide evidence of non-EEA origin. Therefore, a well-maintained product traceability system ensures that brand owners are able to provide convincing evidence in court.
A solid traceability system acts as a deterrent to unauthorised resellers who want to exploit a non-EEA bargain, and this case serves as a reminder to unauthorised resellers that they may find themselves defenceless and out of pocket in infringement lawsuits.
If products are traceable, the brand owner may be able to operate and enforce its selective distribution system with greater ease, as it allows it to identify sources of supply of unauthorised resellers and ensure such product leaks are appropriately dealt with (for instance, also against EEA partners that breach their selective distribution terms with the brand by selling outside the network).
Traceability can support efficient and compliant product recalls.
Product traceability can assist with verifying commercial warranty/repair claims from consumers, for instance where a commercial warranty from the brand is only available for products purchased from approved sources (permitted in most member states).
Finally, a suitably designed traceability system can also in principle be deployed to meet a brand’s digital product password obligations under legislation such as the EU’s Ecodesign for Sustainable Products Regulation.
Ultimately, a traceability system is a powerful legal and commercial resource for brands. Our team would be happy to assist your brand with establishing and maintaining a compliant and effective traceability system.
Royal v. Metcalf Suggests Confusion About Massachusetts Chapter 93A Requirements
In Royal v. Metcalf, the Massachusetts Superior Court entered summary judgment under Chapter 93A for the plaintiff (an alleged debtor) against the defendant (the owner of a company engaged in the business of collecting debts). According to the undisputed facts, the owner, without possessing chain-of-title evidence to prove ownership of the debt, filed a small claims action against the plaintiff and included prejudgment interest in the amounts claimed as unpaid principal. That, according to the court, violated M.G.L. c. 93, § 49, which prohibits unfair and deceptive debt collection practices and, in turn, constituted a per se violation of Chapter 93A, Section 2. That finding makes sense because, according to G.L. c. 93, § 49, a violation of Section 49 “shall constitute an unfair or deceptive act or practice under the provisions of chapter ninety-three A.” Beyond the per se violation, the court also concluded that filing suit to collect on a consumer debt without having—or being able to readily obtain—evidence that the plaintiff owns or has any right to collect on a debt, as the owner did here, is unfair and deceptive, because the small claims filing contained false information.
As to a Section 9 injury, the court stated as follows:
Relief is also available under § 9 where the claimed injury is ‘the invasion of a legally protected interest.’ Id. at 800, quoting Leardi v. Brown, 394 Mass. 151, 159 (1985) (landlord violated c. 93A by having tenants sign residential leases with provision falsely implying they were waiving right to habitable housing). Furthermore, § 9 ‘provides for recovery of actual damages or twenty-five dollars, whichever is greater.’ Leardi, supra, at 160, quoting G.L. c. 93A, § 9(3). ‘Accordingly, under circumstances where there has been an invasion of a legally protected interest, but no harm for which actual damages can be awarded, … the statute provides for the recovery of minimum damages in the amount of $25.’ Id. Royal has established that he has suffered an invasion of a legally protected interest. Plus, most anyone compelled to answer a small claim action will have suffered some amount of emotional distress. Both of these kinds of injury are compensable under G.L. c. 93A, § 9.
The court’s injury analysis, in part, is flawed. A Section 9 injury must be separate and distinct from the underlying Section 2 violation, as the Supreme Judicial Court (SJC) held in Tyler v. Michael’s Stores, Inc. In Tyler, the SJC explained as follows:
Nevertheless, our recent decisions generally establish the following. The invasion of a consumer’s legal right (a right, for example, established by statute or regulation), without more, may be a violation of G. L. c. 93A, § 2, and even a per se violation of § 2, but the fact that there is such a violation does not necessarily mean the consumer has suffered an injury or a loss entitling her to at least nominal damages and attorney’s fees; instead, the violation of the legal right that has created the unfair or deceptive act or practice must cause the consumer some kind of separate, identifiable harm arising from the violation itself. See Rhodes v. AIG Dom. Claims, Inc., 461 Mass. 486, 496 n.16 (2012) (Rhodes); Casavant v. Norwegian Cruise Line Ltd., 460 Mass. 500, 504-505 (2011) (Casavant); Iannacchino v. Ford Motor Co., 451 Mass. 623, 632-633 (2008) (Iannacchino); Hershenow v. Enterprise Rent-A-Car Co. of Boston, 445 Mass. 790, 801-802 (2006) (Hershenow). To the extent that the quoted passage from Leardi can be read to signify that ‘invasion’ of a consumer plaintiff’s established legal right in a manner that qualifies as an unfair or deceptive act under G. L. c. 93A, § 2, automatically entitles the plaintiff to at least nominal damages (and attorney’s fees), we do not follow the Leardi decision. Rather, as the Rhodes, Casavant, Iannacchino, and Hershenow decisions indicate, a plaintiff bringing an action for damages under c. 93A, § 9, must allege and ultimately prove that she has, as a result, suffered a distinct injury or harm that arises from the claimed unfair or deceptive act itself.
Therefore, since Tyler, it is no longer the law in Massachusetts that the “invasion of a legally protected interest” standing alone constitutes a Section 9 injury. Rather, at most, it can violate Section 2 only. The court in Royal commingled and truncated the violation with the injury. Even so, the court apparently did find that the plaintiff suffered from emotional distress as a result of having to defend against a baseless small claims court filing. Emotional distress may serve as a separate and distinct injury under Section 9 to comply with Tyler. Therefore, if violation of Section 49 is the invasion of the legally protected interest (therefore violating Section 2), and plaintiff suffered measurable emotional distress as a result of having to defend the small claims filing (therefore establishing causation and a separate and distinct injury), then the court properly entered summary judgment—provided the facts concerning causation and emotional distress were not genuinely disputed.
Citing a Massachusetts District Court Appellate Division decision, the court also concluded that a violation of Section 49 remedied the need for the plaintiff to show the act otherwise occurred in “trade or commerce.” That conclusion, however, would seem to be at odds with the express language of Section 2, which requires “trade or commerce” as a separate condition to unfairness or deceptiveness. Indeed, Section 49 only states that failure to comply with Section 49 shall constitute an unfair or deceptive act or practice. It says nothing about “trade or commerce.” It would seem incongruous with the intent of Chapter 93A to extend its protections to actions and conduct not occurring in “trade or commerce” as Section 2 expressly requires. The court’s reliance on the Appellate Division decision is puzzling, given that meeting the trade or commerce requirement would appear to have been easily met according to the facts of the case. Furthermore, owners of businesses engaged in trade or commerce may be exposed to Chapter 93A liability if they engaged themselves in the unfair acts or practices.
The case illustrates the continued confusion among the bench and bar with Chapter 93A’s requirements.
Texas SB 1318: Changes to Healthcare Non-Competes Effective September 1, 2025
Healthcare employers in Texas face new requirements for non-competition agreements following the passage of Senate Bill 1318. The Texas Legislature passed this legislation on May 28, 2025, and on June 20, 2025, Governor Abbott signed the bill into law.
The legislation modifies existing requirements for physician non-competes under Section 15.50 of the Texas Business & Commerce Code and creates a new Section 15.501, which extends certain non-compete restrictions to dentists, nurses, and physician assistants for the first time.
Key Takeaways
Effective Date: September 1, 2025 – applies to non-competes entered into or renewed on or after September 1, 2025.
New Coverage: Dentists, nurses, and physician assistants are now subject to certain non-compete restrictions.
Buyout Cap: All non-compete buy-outs are capped at annual salary and wages.
Geographic Limit: Maximum five-mile radius restriction.
Duration Limit: Maximum one-year non-compete period.
“Good Cause” Voidance: Physician non-competes are “void and unenforceable” if the physician is involuntarily discharged without good cause.
When Does SB 1318 Take Effect?
The law takes effect September 1, 2025, and applies only to non-compete agreements “entered into or renewed” on or after that date. Non-compete agreements entered into or renewed before September 1 are governed by the law in effect on the date the covenant was entered into or renewed. The statute does not define what constitutes a “renewal.”
What Does SB 1318 Change for Physicians?
SB 1318 makes several significant modifications to existing Texas law in Section 15.50 of the Texas Business & Commerce Code regarding physician non-compete agreements:
New Buyout Cap and Geographic Limits: The law now requires all physician non-competes to include a buyout provision capped at the physician’s total annual salary and wages at the time of termination. Previously, the law allowed buyouts at a “reasonable price” or at an amount determined through arbitration. The geographic scope is also now strictly limited to no more than a five-mile radius from the location where the physician primarily practiced before termination.
New Duration Cap: The duration of physician non-competes is now capped at one year from the date of contract or employment termination. The previous law did not specify a maximum duration.
New Automatic Voidance Provision: SB 1318 establishes a provision that renders non-compete agreements “void and unenforceable” if a physician is involuntarily discharged from contract or employment “without good cause.” This is an entirely new requirement. The statute defines “good cause” as “a reasonable basis for discharge of a physician from contract or employment that is directly related to the physician’s conduct, including the physician’s conduct on the job or otherwise, job performance, and contract or employment record.”
New Writing Requirement: The “terms and conditions” of a physician non-compete must now be “clearly and conspicuously stated in writing.” The previous law contained no such writing requirement.
Administrative-Role Exception: SB 1318 adds a new provision in Section 15.50(b-1) stating that “managing or directing medical services in an administrative capacity for a medical practice or other health care provider” does not qualify as the “practice of medicine” for purposes of triggering the physician non-compete requirements in Section 15.50(b) of the Texas Business & Commerce Code. These administrative activities still remain subject to the broader non-compete requirements that apply to all employees under Section 15.50(a).
The existing exception in Section 15.50(c) exempting a physician’s “business ownership interest” in hospitals or ambulatory surgical centers from the non-compete requirements in Section 15.50(b) is unchanged.
Unchanged Requirements: SB 1318 maintains the existing requirements for patient access provisions, including access to patient lists and medical records, and continues to prohibit restrictions on providing continuing care during acute illnesses.
Who Is Covered Under the New § 15.501?
Senate Bill 1318 creates Section 15.501 to Texas Business & Commerce Code, which extends certain non-compete restrictions to non-physician “health care practitioners” for the first time in Texas. Health care practitioners include:
Dentists licensed by the State Board of Dental Examiners
Professional and vocational nurses licensed under Chapter 301 of the Texas Occupations Code
Physician assistants licensed under Chapter 204 of the Texas Occupations Code
SB 1318 Non-Compete Requirements for Other Practitioners: Non-competes for these healthcare practitioners are now subject to some of the same core restrictions placed on physician non-competes, including:
Buyout options capped at their annual salary and wages at termination
One-year maximum duration limit
Five-mile geographic restriction
Terms that must be clearly and conspicuously stated in writing
Previously, Texas law contained no specific restrictions on non-compete agreements for dentists, nurses, or physician assistants.
Preemption of Other Law (§ 15.52)
Expanded Preemption: SB 1318 amends Section 15.52 to make the criteria in both Sections 15.50 and 15.501 exclusive, displacing any common-law or equitable bases for enforcing healthcare non-competes. The procedures and remedies in Section 15.51 also remain exclusive.
Cross-Reference Updates: Various sections of the law have been updated to reference both the existing Section 15.50 and the new Section 15.501, ensuring the new healthcare practitioner restrictions are integrated into Texas’s overall non-compete framework.
Conclusion
Senate Bill 1318, effective September 1, 2025, amends § 15.50 and adds § 15.501 to impose buy-out caps, geographic and duration limits, voidance rules, and writing requirements on non-competes for physicians and selected healthcare practitioners.
New Jersey Bill Would Introduce Sweeping Noncompete and No-Poach Restrictions: Strategic Implications for Employers
As anticipated, New Jersey has joined the growing list of state legislative efforts aimed at prohibiting or restricting the use of noncompetes and no-poach agreements.
On May 22, 2025, the New Jersey Legislature introduced S4385/A5708 (the “Bill”), a comprehensive proposal that, if enacted, would significantly limit the enforceability of noncompetes and ban no-poach agreements in New Jersey. The Bill is currently pending in the Senate Labor Committee, but its potential impact on business operations, talent strategy, and contractual practices is already drawing close attention from legal and executive leadership.
The Bill broadly prohibits an “employer,” defined to include business entities, nonprofit organizations, and public sector employers, from seeking, requiring, or enforcing a noncompete or no-poach agreements with a “worker.” The term “worker” includes non-senior employees and executives, independent contractors, volunteers, externs and interns, apprentices, and sole proprietors, without regard to compensation status or classification under state or federal law.
Noncompetes: Unenforceable Except as To Senior Executives In a Policy-Making Position
If passed, the Bill would render most existing “non-compete clauses” with a worker who is not a “senior executive” as unenforceable, and after the effective date, it would prohibit an employer from seeking or requiring a worker who is not a senior executive to execute a noncompete. Thus, if enacted into law, the Bill would apply both retroactively and prospectively, thereby prohibiting the enforcement of all noncompetes with limited exceptions. Additionally, employers would be required to notify their workers within 30 business days of the law’s effective date that their noncompete is no longer valid or enforceable. The notification would need to be provided in a “clear and conspicuous” manner and delivered electronically or in-person.
The Bill defines a “non-compete clause” as “any agreement arising out of an existing or anticipated employment relationship between an employer and a worker, including an agreement regarding severance pay, to establish a term or condition of employment that prohibits the worker from, penalizes a worker for, or functions to prevent or hinder in any way, the worker from seeking or accepting work with a different employer after the employment relationship ends, or operating a business after the employment relationship ends.” Thus, the Bill presumably does not prohibit employers from enforcing, or entering into, other restrictive covenants, such as customer non-solicitation agreements, employee non-solicitation agreements, or confidentiality/non-disclosure agreements.
The Bill would provide a limited exception for existing non-compete clauses with “senior executives,” defined as an individual in a “policy-making position” who earned at least $151,164 in the previous year. The compensation threshold includes salary, commissions, and bonuses, but excludes board, lodging, or other fringe benefits. “Policy-making position” is defined as “a business entity’s president, chief executive officer or the equivalent, any other officer of a business entity who has policy-making authority, or any other individual who has policy-making authority for the business entity similar to an officer with policy-making authority. An officer of a subsidiary or affiliate of a business entity that is part of a common enterprise who has policy-making authority for the common enterprise may be deemed to have a policy-making position for purposes of this paragraph.”
If passed, the Bill would prohibit non-compete clauses for all workers, including senior executives, entered into after the effective date.
If a noncompete with a senior executive exists prior to the Bill’s effective date, any such noncompete would need to satisfy several stringent conditions to be enforceable, including but not limited to:
The employer shall disclose the terms of the non-compete clause in writing to the worker not more than 30 business days after the effective date, as well as “all revisions made in the provisions of the non-compete clause necessary for compliance with the requirements of this section.” If the non-compete clause is revised, the revised non-compete clause must be signed by the employer and the worker, and the disclosure shall expressly state that the worker has the right to consult counsel prior to signing.
The clause is narrowly tailored to protect legitimate and related business interests, including the employer’s trade secrets or other confidential information.
The restricted period must not exceed 12 months post-termination.
The restriction must be reasonable in geographic reach and limited to geographic areas where the executive had a material presence during the two years preceding termination, and the geographic reach shall not prohibit the worker from seeking employment in other states.
The clause is limited to services provided by the worker during the previous two years of employment.
The non-compete must not penalize a worker for challenging the validity or enforceability of the noncompete.
The noncompete cannot contain a choice-of-law clause that has the effect of avoiding the requirements of the Bill.
The worker must not be required to waive any substantive, procedural, or remedial rights provided under the act, any other act or regulation, or the common law.
The noncompete must not restrict a worker from providing a service to a customer or client of the employer, if the worker does not initiate or solicit the customer or client.
The noncompete shall not be unduly burdensome on the worker, injurious to the public, or inconsistent with public policy.
The noncompete states that it shall be void if the employer does not provide written notice to the worker of the employer’s intent to enforce the non-compete clause within 10 days after the termination of an employment relationship between the employer and the worker, but the notice is not required if the worker has been terminated for “misconduct.” The Bill defines “misconduct” as conduct that “is improper, intentional, connected with the individual’s work, within the individual’s control, not a good faith error of judgment or discretion, and is either a deliberate refusal, without good cause, to comply with the lawful and reasonable employer rules made known to the worker, or a deliberate disregard of standards of behavior the employer has a reasonable right to expect, including reasonable safety standards and reasonable standards for a workplace free of drug and substance abuse.”
The noncompete provides that during any period after the employment relationship ends in which the worker is prevented from engaging in work or taking employment because of restrictions imposed by the non-compete clause, the employer, unless the worker is terminated for misconduct or there is a breach by the worker, shall pay the worker an amount equal to 100 percent of the pay to which the worker would be entitled for the work during that period; and make any benefit contributions needed to maintain the fringe benefits to which the worker would be entitled during that period.
Any noncompete that fails to meet these standards would be deemed void. Furthermore, any noncompete made with a senior executive after the Bill’s effective date will be deemed unenforceable.
As with similar legislative efforts in other states, the Bill provides an exception for noncompetes in connection with the bona fide sale of a business, ownership interest, or substantially all operating assets. It also allows for the enforcement of a noncompete where a cause of action arose before the Bill’s effective date.
No-Poach Agreements: A Violation of Public Policy
In addition to restricting noncompetes, the Bill explicitly declares no-poach agreements to be contrary to public policy and that “any no-poach agreement shall be void.” The Bill defines a “no-poach agreement as “any agreement between employers or between an employer acting as a contractor and any legal person acting as a contractee that restricts or hinders the ability of an employer to hire, or contract for the services of, a worker, or hinders a worker from obtaining employment.”
The Bill provides a private right of action for workers subject to or affected by a noncompete or a no-poach agreement. If passed, the Bill would enable workers to sue for injunctive relief, liquidated damages of up to $10,000, lost compensation, and attorneys’ fees. In addition, employers would be required to post a copy of the statute or an approved summary in a prominent workplace location. Repeated violation of these obligations may result in fines of up to $10,000.
Takeaways
While the Bill’s fate remains uncertain, its introduction reflects the continuing legislative trend aimed at restricting the use of noncompetes. Although on its face, the New Jersey Bill appears to allow for some exceptions to the use of noncompetes, in practicality, the Bill would not protect against unfair competition if passed as presently drafted. As one example, if a candy company employed a top executive in New Jersey with access to its secret formula to an everlasting gobstopper, and that executive sought employment with a rival candy company but that position was in New York, then presumably the noncompete would be unenforceable under the Bill because a senior executive could seek employment in another state. As written, the Bill’s exceptions are in name only and if the Bill is enacted would place New Jersey in largely the same position as only four other states that ban noncompetes (California, Minnesota, North Dakota, and Oklahoma).
New Jersey businesses and those employers with employees located in New Jersey should stay tuned for updates here on New Jersey because, if the Bill is passed, employers would be required to both identify their senior executives and amend their noncompetes with their senior executives. New Jersey employers would also need to prepare and send notices regarding any existing noncompetes with workers who are not senior executives.
Employers should remain attentive to developments and consider proactive legal review of their noncompetes and other restrictive covenants, particularly those employers with operations in multiple states.
Ariana Tagavi contributed to this article
Jurisdictional Boundaries of the Federal Circuit in ITC-Related Matters Are Limited
In Realtek Semiconductor Corporation v. ITC (23-1187), the Federal Circuit concluded that it lacked jurisdiction to decide whether the International Trade Commission (ITC) correctly denied Realtek’s motion for sanctions against Future Link Systems, LLC because the ITC decision did not involve a final determination affecting the entry of articles. As a result, the panel did not address the merits of Realtek’s appeal.
Background
In 2019, Future Link entered into a license agreement with MediaTek, Inc., which stipulated a lump sum payment if Future Link filed a lawsuit against Realtek. After filing a complaint with the ITC accusing Realtek of patent infringement, Future Link subsequently settled with a third party and told Realtek that the settlement resolved the underlying investigation. Realtek filed a motion for sanctions alleging that the agreement between Future Link and MediaTek was improper.
Despite expressing concern about the agreement between Future Link and MediaTek, the administrative law judge (ALJ) denied the sanctions motion on the basis that the agreement did not influence Future Link’s decision to file the complaint. Future Link then withdrew its complaint, and the investigation was successfully terminated. As such, there was no final determination on the merits by the Commission.
Once the ITC adopted the ALJ’s order, Realtek appealed the denial of the sanctions motion to the Federal Circuit.
Jurisdictional Analysis
The Federal Circuit’s jurisdiction to hear appeals from the ITC is governed by 28 U.S.C. § 1295(a)(6), which allows for the review of final determinations under 19 U.S.C. § 1337.
On appeal, Realtek was not able to persuade the panel that the ITC’s denial of the sanctions motion was a final determination within Section 1295(a)(6). Rather, the panel explained that Realtek’s position misconstrued Federal Circuit case law and that a final decision on the merits, such that it would trigger jurisdiction under 28 U.S.C. § 1295(a)(6), must be a decision that is tied to the entry of articles. In doing so, the panel harkened back to an almost 40-year old decision in which the appellant asked the Federal Circuit to review a decision by the Commission regarding the declassification of certain materials. More specifically, in Viscofan, S.A. v. U.S. International Trade Commission, the Federal Circuit found that it did not have jurisdiction to review an ITC decision on declassification because (1) 28 U.S.C. § 1295(a)(6) only gave the Federal Circuit exclusive jurisdiction to review final determinations “relating to unfair practices in import trade” and (2) Congress specifically defined final determinations to include those set forth in the first sentence of Section 1337(c):
The Commission shall determine, with respect to each investigation conducted by it under this section, whether or not there is a violation of this section, except that the Commission may, by issuing a consent order or on the basis of an agreement between the private parties to the investigation, including an agreement to present the matter for arbitration, terminate any such investigation, in whole or in part, without making such a determination.
In other words, ITC decisions that do not affect the validity of an exclusion order are not within the Federal Circuit’s jurisdiction. Since Realtek’s appeal sought sanctions unrelated to the entry of articles, the appeal did not meet this requirement and was dismissed.
Takeaways
While the Federal Circuit did not reach the merits of Realtek’s appeal on the sanctions issue, this decision highlights the importance of understanding the specific jurisdictional boundaries of the Federal Circuit in ITC-related matters, particularly concerning sanctions and other issues that are not ancillary to a final determination. As an aside, the panel did lend some insight into what “ancillary issues” would still be deemed to fall within Federal Circuit jurisdiction under 28 U.S.C. § 1295(a)(6). In this aspect, a decision not to institute an investigation or dismissal for lack of subject matter jurisdiction would be an ancillary issue appropriate for appellate review under Section 1295(a)(6) because they have the effect of conclusively denying the complainant’s request to exclude particular items from entry.
However, the panel recognizes that, based on the statute, it remains an open question which court can review this type of matter. The only guidance from the panel on this question is that “in other settings, courts have held that, in the absence of an indication of where judicial review will take place, ‘the normal default rule is that persons seeking review of agency action go first to district court rather than to a court of appeals.’”
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Where the Rubber Meets Regulation – FTC Clarifies Data Security Requirements for Auto Dealers Under Safeguards Rule
On June 16, 2025, the Federal Trade Commission (FTC) issued FAQs that directly affect many automobile dealers, clarifying how its Safeguards Rule (the Rule), part of the FTC’s implementation of the Gramm-Leach-Bliley Act (GLBA), applies to the automotive sector. The Rule requires non-banking financial institutions to implement measures to protect customer information—and the FTC is making it clear that many car dealerships fall within that definition.
While “financial institution” might traditionally bring to mind banks or lenders, the Rule defines the term much more broadly. It includes businesses significantly engaged in financial activities or closely related services. That means mortgage brokers, finance companies, financial advisors, credit counselors—and yes, car dealers who either finance or lease vehicles to consumers.
According to the FAQs, if a car dealership helps customers secure auto loans or directly provides financing, it qualifies as a financial institution under the Rule. The same goes for dealerships that lease vehicles for over 90 days, since leasing is also considered a financial activity.
The FAQs also clarify what counts as “customer information” protected by the Rule. Customer information includes a dealer’s documents like approved financing or leasing applications, spreadsheets containing customer names and financial data, and other information that could be linked to a customer’s financial profile. However, general sales reports that don’t relate to a consumer’s financing or leasing aren’t covered.
The Rule requires covered financial institutions to maintain an information security program that outlines all of the ways dealers collect and store customer information, how this information is shared with other companies, and how dealers delete such information when it is no longer needed. Though there is no one-size-fits-all approach regarding what constitutes a sufficient information security program, the FAQs advise that these programs should contain administrative, technical, and physical safeguards appropriate for a dealer’s size, complexity, type of activities, and sensitivity of the customer information involved.
The FAQs list ten key requirements for an information security program, which include a written risk assessment of reasonably foreseeable risks, oversight of service providers, a written incident response plan, and notifying the FTC of certain security breaches.
The FAQs further address various other issues and scenarios specific to automobile dealers. But the key takeaway? If your dealership is involved in financing or long-term leasing, the FTC Safeguards Rule applies—and if you are a car dealer, now is the time to evaluate whether your current data security practices meet the FTC’s expectations. With the agency signaling that it’s watching this sector, it’s best not to steer off course.