Trailer Clauses in a World Without Noncompetes

John Klym*

In April 2024, the Federal Trade Commission (FTC) issued its highly anticipated final rule banning most noncompete agreements.¹ Though a federal district court quickly ruled that the FTC lacked the authority to issue the rule,² and the Commission has abandoned the rule under the Trump Administration,³ the proposed rule highlights the widespread criticism of noncompete agreements. In fact, of the 26,000 comments received on the proposed rule, 25,000 supported the ban.⁴ Moreover, four states have already banned noncompetes,⁵ and scholars⁶ and legislators⁷ are increasingly critical.

Even if the future of noncompetes seems bleak, businesses will still want to protect the same interests secured by noncompete agreements. For example, these agreements protect against the risk of competitors poaching employees in whom a business invested considerable resources training and retaining.⁸ Moreover, noncompetes are a strong safeguard against the disclosure of confidential information, such as a recipe or customer list, that may not rise to the level of a trade secret or other intellectual property form.⁹

In justifying its ban, the FTC identified several ways that businesses could achieve those goals in a world without noncompetes.¹⁰ The FTC pointed to existing trade secrecy laws, patent law, nondisclosure agreements, and employee invention assignments as possible alternatives for protecting confidential information, intellectual property, and other sensitive activities.¹¹ And the FTC suggested fixed duration contracts and offering better benefits as options for discouraging employees from moving to a competitor.¹²

This Note explores a possible response to a ban in a situation where noncompetes are often salient: inventive employees. For those workers, who often have the most access to valuable information and training, businesses may look to using employee invention assignments with trailer clauses. In a trailer clause, an employee agrees to assign inventions to the employer if (1) the inventions are created during a specified period following their employment, and (2) the inventions relate to the employer’s field of work.¹³

Continue reading in the print edition . . .

*J.D., Notre Dame Law School, 2026; B.A. in Political Science and Economics, University of Notre Dame, 2023. Thank you to my colleagues on the Notre Dame Law Review for their careful edits and to Dennis Wieboldt, Rory Owens, my father Christopher Klym, and my classmates and professors at Notre Dame Law School for their suggestions and encouragement. All errors are my own.

1 See Press Release, Fed. Trade Comm’n, FTC Announces Rule Banning Noncompetes (Apr. 23, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/04/ftcannounces-rule-banning-noncompetes [https://perma.cc/7A3M-Z4W8]; Non-Compete Clause Rule, 89 Fed. Reg. 38342 (May 7, 2024) (held invalid by Ryan, LLC v. FTC, 746 F. Supp. 3d 369, 389–90 (N.D. Tex. 2024)).

2 Ryan, 746 F. Supp. 3d at 389–90.

3 See Press Release, Fed. Trade Comm’n, Federal Trade Commission Files to Accede to Vacatur of Non-Compete Clause Rule (Sep. 5, 2025), https://www.ftc.gov/newsevents/news/press-releases/2025/09/federal-trade-commission-files-accede-vacatur-noncompete-clause-rule [https://perma.cc/UE4P-9BEU].

4 Non-Compete Clause Rule, 89 Fed. Reg. at 38344.

5 California, North Dakota, and Oklahoma have banned noncompete agreements since the nineteenth century. See Non-Compete Clause Rule, 89 Fed. Reg. at 38424 n.767. Minnesota recently passed a ban in 2023, though the ban only applies to new noncompetes. See MINN. STAT. § 181.988 (2025); MINN. STAT. § 645.21 (2025).

6 See infra Section II.C.

7 See, e.g., Banning Noncompete Agreements: Benefits for Workers, Businesses, and the Economy: Hearing Before the Subcomm. on Econ. Pol’y of the S. Comm. on Banking, Hous. & Urb. Affs., 118th Cong. 1 (2024) (statement of Sen. Elizabeth Warren, Chair, Subcomm. on Econ. Pol’y).

8 Jonathan M. Barnett & Ted Sichelman, The Case for Noncompetes, 87 U. CHI. L. REV. 953, 969–71 (2020).

9 Alan J. Meese, Don’t Abolish Employee Noncompete Agreements, 57 WAKE FOREST L. REV. 631, 688 (2022); see also Ingersoll-Rand Co. v. Ciavatta, 542 A.2d 879, 893–94 (N.J. 1988).

10 See Non-Compete Clause Rule, 89 Fed. Reg. at 38424.

11 Id.

12 Id.

13 See infra notes 98–103 and accompanying text (defining “trailer clause” and describing common trailer clauses).