How the second Trump Administration’s trade secret policies will impact US businesses is difficult to predict. However, several themes and trends will likely drive US policy toward trade secrets under the new administration:

• the Biden-era’s Federal Trade Commission (FTC) rule prohibiting workplace non-compete clauses, which is currently before the Court of Appeals for the Fifth Circuit, will likely be discarded; 
• the US Department of Justice (DOJ) may resurrect Trump’s ‘China initiative’ and prosecute more criminal trade secret matters; and 
• protecting trade secrets may become more of a national competitive priority. 

The FTC’s workplace non-compete rule

Officially, the incoming administration has taken no stance on the FTC’s ruling, which largely invalidates workplace non-compete provisions. Prohibiting workplace non-competes elevates the importance of trade secret protection because employers would no longer be able to prevent employees from working for direct competitors. 

The FTC’s rule is currently ensnared in an appellate challenge following the District Court for the Northern District of Texas’s ruling in Ryan v FTC (24-cv-986, 20 August 2024). It is quite likely that the second Trump Administration will drop the appeal; if that occurs, the court’s ruling, which prevented enforcement of the FTC’s rule on a nationwide basis, would remain in place. 

Further, the president announced the elevation of current FTC commissioner Andrew Ferguson as the next FTC chair. Ferguson will replace Biden-appointee Lina Khan – the architect of the FTC’s rule, which was one of the Biden Administration’s flagship initiatives. Under the Trump Administration, the FTC may seek to amend or repeal the non-compete rule if the appeal is not abandoned. 

In states where non-compete terms are enforceable, those provisions will likely remain enforceable. In states where workplace non-competes are invalid, employers will have to continue to rely upon a combination of confidentiality terms and statutory trade secret protections to address an employee’s post-termination conduct. Because the FTC’s proposed rule is unlikely to take effect, there should be little change in the current status quo. 

Trump’s policy towards China and trade secrets

During his first term, Trump’s so-called ‘China initiative’ encouraged the DOJ to pursue trade secret theft cases.  The department’s 16 November 2020 report trumpeted its successful efforts to curtail trade secret theft by prioritising criminal investigations and prosecutions of economic espionage and other forms of trade secret theft. Although the DOJ officially ended the initiative in 2022, it maintained prosecuting trade secret cases against Chinese nationals as a high priority under the Biden Administration. 

The China initiative will likely be resurrected and complement Trump’s economic policy toward China, including imposing tariffs.  It is reasonable to expect that the DOJ will also prosecute highly visible claims for trade secret misappropriation against Chinese companies and individuals. 

Influence of tech billionaires could be good for trade secret protection

Elon Musk’s influence as a major donor to Trump’s 2024 presidential bid may help to move federal protection of trade secrets up the agenda. Musk is also familiar with trade secret litigation – in November 2024 Tesla reached a conditional settlement its four-year long litigation against Rivian over alleged trade secret misappropriation, while a German-Canadian resident of China was very recently sentenced to 24 months for stealing electric vehicle trade secrets from Tesla. 

Assuming it can navigate the conflicts of interest, direct contact with tech giants that are embroiled in trade secret disputes may help the incoming administration develop a more practical appreciation for trade secret protection. 

The road ahead

It is difficult to predict how the incoming administration’s policies may impact trade secret protection. Trump’s second term may have some impact on the FTC’s rule prohibiting workplace non-competes, though it is largely dead because of the Ryan decision. The administration’s stance toward China will drive additional DOJ investigations and prosecutions of those that allegedly misappropriate trade secrets. Finally, the influence of tech billionaires could help the second Trump Administration make more well-reasoned decisions around protecting trade secrets as a means of improving the competitive future of the United States.