goodthinking! blog

Alert! Protect your software against reverse engineering

Protecting proprietary software is critically important for many technology startups. Proprietary software can potentially be protected as a trade secret or by copyright or patent law – there are pros and cons to each approach. For example, some companies prefer going the trade secret route because, unlike with copyrights and patents, it requires no filings or disclosures; generally, all that is required is for the company to take reasonable measures to keep the trade secret confidential.

A company may lose its competitive advantage if a competitor “reverse engineers” its proprietary software. Reverse engineering software is the process of analyzing, disassembling, or experimenting with the software to discover its structure, design, or source code. Successful reverse engineering may enable a competitor to create a substantially similar or duplicate product. It may surprise you that reverse engineering software — even when it is copyrighted or protected as a trade secret — is generally lawful under federal and state law, unless theft, fraud, bribery, espionage, or other improper means are involved.

Fortunately, there are steps a business can take to minimize the risk of reverse engineering, such as contractually prohibiting business partners, licensees, and others with access to the proprietary software from reverse engineering it – with a breach of this obligation resulting in liability for breach of contract and trade secret appropriation.

Contact goodcounsel if you have concerns that your proprietary software is not adequately protected.

Jared Montney, an intern and 4th-year student at the University of Chicago, provided substantial assistance researching, drafting, and editing this blog post.


Categorised as: Lawyering

FTC issues a nationwide ban on noncompetes

Following the trend of many states that have severely limited or prohibited employee noncompetes, the FTC announced in April a final rule prohibiting noncompete provisions in agreements with workers. The FTC rule, which will become effective on September 4, 2024 (assuming it withstands legal challenges) will, if nothing else, bring uniformity and clarity to the now-fragmented national landscape of noncompete regulation.

The rule prohibits employers from entering into, attempting to enter into, or maintaining noncompete clauses with any workers (whether employees or contractors) and requires notice to certain workers that their noncompetes are now unenforceable. With respect to noncompete clauses entered into prior to the effective date, enforceability depends on the seniority level of the employee – senior executive noncompetes, narrowly defined, are grandfathered.

Although legal challenges are pending, it is crucial for businesses to prepare for compliance by reviewing and adjusting their current employee agreements, assessing all outstanding noncompete agreements, and preparing notifications to the extent required by the rule.

If you need help understanding how this rule applies to your business or any other guidance on next steps, please do not hesitate to contact us.


Categorised as: Employment Law, Legal Issues, Regulatory alert

ChatGPT on retAIner: goodcounsel packs AI in the legal briefcase

A year or so ago, amidst the initial frenzy of excitement about artificial intelligence (or more specifically, about the “large language models” or “LLMs,” which enabled non-programmers to interact with AI using natural language), I mused on our blog about whether our clients should fire us and hire ChatGPT instead. (Short answer – not yet.)

As I wrote at that time, “I expect that AI tools will become increasingly helpful as assistants,” and over the past year, this has certainly come to pass here at goodcounsel. We have been finding ways to incorporate AI into our practice every day, both the general-purpose technologies used by the public, such as ChatGPT, and specialized legal tools built on top of these AI platforms, such as those offered by our partner ClauseBase.

Below, I’d like to describe a few of the ways that goodcounsel uses AI to enhance its law practice.

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Categorised as: Artificial intelligence and the practice of law, Law Practice Innovation, Lawyering

[Updated] Compliance Alert: the Corporate Transparency Act

See update #1 below

You may have already heard of the Corporate Transparency Act (CTA). It is a new federal law requiring most businesses to register with the Financial Crimes Enforcement Network (FinCEN). Congress designed the CTA to combat money laundering and enhance corporate accountability. This post will provide an overview of how to comply with the CTA.

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Categorised as: Corporate transparency act, Legal Issues

Pre-post money price caps

One piece of received wisdom that, with experience, I’ve come to question is that convertible notes and their stepsiblings, Simple Agreements for Future Equity (“SAFEs”), are “simple.” Yes, the documents for these types of investments are generally quite short and deal with fewer issues, so they are (as we’ve noted in the past) easier and less expensive to generate than equity documents (which is the main reason for their popularity). However, I’ve come to recognize many subtleties in how convertible instruments operate; there’s more complexity than meets the eye.

In this post, I’d like to address one such subtlety: the difference between a postmoney and a premoney valuation cap. The difference results in resoundingly divergent economics.

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Categorised as: Fundraising

Using artificial intelligence intelligently

In my previous post about AI (specifically, AI large language models or “LLMs”) and its impact on the legal profession, I concluded that the current versions of LLMs would not replace lawyers but could serve as very able assistants. As our friends at Clausebase put it in a recent webinar: AI can take over a great many human tasks on the “production” side but the lawyer is still indispensable in carrying out key “creative” work.

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Categorised as: Artificial intelligence and the practice of law, Law Practice Innovation, Lawyering

Guaranteed paid leave for Illinois employees

Illinois employers take note: Illinois recently joined two other trailblazing states (Maine and Nevada) in requiring employers to provide a minimum amount of paid leave for employees. Thanks to the new Paid Leave for All Workers Act (the “Act”), effective on January 1, 2024, employees working in Illinois (but not Cook County) will earn and accrue up to 40 hours of paid leave each 12-month period. Employees working in Chicago are already, and will remain, subject to the Chicago Paid Sick Leave Act, and those in Cook County have the Earned Sick Leave Ordinance.

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Categorised as: Employment Law, Lawyering