Protecting Your Manufacturing Business in 2026: A Practical Guide to Trade Secrets, Non‑Competes, and Non‑Solicitation Agreements

Written by Adam E. Witcov From Michael Best & Friedrich LLP on Feb 24, 2026

The call always seems to come at the worst time. A key engineer or top salesperson gives notice—and you learn they’re going directly to your biggest competitor. They know your pricing strategies, production methods, supplier relationships, and what differentiates your business in a crowded market.

The first question from leadership is almost always the same: “We have a non‑compete. Can we stop this?”

After years litigating these cases, I’ve learned this: Winning or losing rarely turns on what you do when an employee leaves. It turns on what you had in place before they ever thought about leaving.

Courts reward employers who are thoughtful, precise, and proactive. They punish employers who rely on broad, outdated, or poorly implemented restrictions. And in 2026, that distinction has never mattered more.

Where the Law Stands in 2026

The FTC’s attempted nationwide ban is gone—but scrutiny isn’t.

The FTC’s 2024 proposed rule banning most non‑competes was struck down. But in early 2026, the FTC entered a consent order with an employer restricting its non‑compete practices. The agency’s message is crystal clear: it will pursue non‑compete enforcement on a case‑by‑case basis.

Wisconsin law still controls—and Wisconsin courts are skeptical of overreach.

Under Wisconsin Stat. § 103.465, a non‑compete is enforceable only if all five elements are satisfied:

1. Necessary to protect the employer’s legitimate business interests
2. Reasonable in time
3. Reasonable in territory
4. Not harsh or oppressive
5. Not contrary to public policy

Courts in 2026 are asking sharper questions:

• Why this employee?
• Why this scope?
• Why these restrictions?
• What specific interests require protection?

The days of handing every employee a standard two‑year non‑compete are over. Judges want evidence you’ve tailored the restriction to the employee’s role and the employer’s actual risks.

Understanding What Counts as a Trade Secret in 2026

A trade secret under Wisconsin law is information that:

• derives economic value from not being known, and
• is subject to reasonable measures to keep it secret.

For manufacturers, trade secrets often include:

• Customer pricing, delivery requirements, and buying patterns
• Proprietary production steps and quality control processes
• Supplier relationships, negotiated terms, and capacity insights
• Product roadmaps and R&D priorities
• Failure-mode analysis, testing protocols, and troubleshooting data

What’s not a trade secret?

General skills, industry knowledge, and know‑how employees gain over their careers.

Most common mistake I see: Claiming something is a “trade secret” while storing it in unlocked cabinets, unprotected folders, or internal systems accessible to everyone.

You cannot enforce what you do not protect.

Building Your Protection System Before You Need It

A defensible protection program rests on three pillars:

1. Identify the true trade secrets

Conduct a trade secret audit. Ask:

• What information gives us competitive advantage?
• What would materially harm us if a competitor had it?

Surprisingly often, the crown jewels aren’t what leadership initially thinks.

2. Document what is confidential

Strong confidentiality agreements reference specific categories of confidential information—not vague catch‑alls like “all business information.”

Onboarding should include clear education:

• No downloading to personal devices
• No emailing documents externally
• No casual sharing with visitors, vendors, or friends

Exit interviews must:

• Reconfirm confidentiality obligations
• Retrieve all documents and devices
• Document what the employee had access to

3. Control access

Reasonable—not perfect—security measures are essential:

• Role‑based access limits
• Document labeling
• Restricted server folders
• Logging or alerting for unusual downloads
• Clean desk and visitor protocols in sensitive areas

Courts don’t expect a fortress. They do expect intentional, consistent protection.

Non‑Competes That Hold Up in Wisconsin

Wisconsin courts enforce non‑competes that check every box:

Reasonable Scope

Geography must match your actual market. A regional manufacturer cannot justify a nationwide ban unless the business really operates nationwide.

Reasonable Duration

12-24 months remains the sweet spot. Longer terms require strong justification.

Legitimate Business Interest

This is the cornerstone. Courts recognize:

• Customer relationships
• Access to trade secrets
• Specialized trainingNot recognized:
• Preventing competition
• Preventing employees from earning a living
• Restricting general skills or industry knowledge

Adequate Consideration

For existing employees, continued employment is not enough. You must give something new: compensation, promotion, equity, or access to significant confidential information.

Alternatives That Are Often More Effective

Many manufacturers overuse non‑competes when other tools are safer and more enforceable:

• Non‑solicitation agreements (customers or employees)
• Non‑disclosure agreements tied to specific confidential information
• Garden leave for senior executives
• Retention bonuses for key employees
• IP assignment & confidentiality bundles for engineers and designers

Often, the best program uses tiers—not one-size-fits-all.

Handling the Departure of a Key Employee

When someone resigns:

Immediate Priorities

• Stay professional—avoid emotional reactions
• Conduct a detailed exit interview
• Confirm confidentiality obligations
• Recover all devices, documents, credentials
• Document access and responsibilities

Investigate discreetly

Look for red flags:

• Unusual downloads
• External USB activity
• Accessing files outside normal workflow
• Syncing to cloud drives

Consider cease-and-desist carefully

Use them when there is evidence, not suspicion.

Litigation? Ask the business question

• What is the real risk to the business?
• How valuable is the information?
• How urgent is the threat?
• Is an injunction realistically attainable?

Litigation is a tool—not a strategy.

Special Considerations for Family‑Owned Manufacturers

Family businesses often struggle because:

• Agreements are informal or unwritten
• “Loyalty” is assumed
• Successors get broad access without controls

Treat family members like any key employee:

• Clear confidentiality agreements
• Reasonable non‑competes when appropriate
• Defined expectations
• Documented access to sensitive information

It’s not about mistrust. It’s about protecting the enterprise for future generations.

Five Practical Steps You Can Implement This Month

1. Conduct a trade secret audit

Identify what truly needs protection.

2. Update confidentiality and restrictive covenant agreementsMake them specific, reasonable, and role-appropriate.
3. Upgrade physical and digital controlsAccess controls, labeling, and monitoring.
4. Strengthen onboarding and exit processesEducate employees on confidentiality; document departures.
5. Tier your protection strategyAssign the right restriction to the right employee group.

When to Call Your Lawyer

• Hiring a key technical or sales employee
• Family members entering or exiting the business
• Updating your protection program
• Signs an employee may be taking information
• A competitor is aggressively recruiting your team

The best outcomes come from preparation, not reaction.

Having litigated trade secret, non-compete, and non-solicitation cases, I’ve learned something important: the best protection isn’t what you do when someone leaves—it’s what you put in place long before they ever consider it. I’ve seen employers lose cases they should have won because their agreements were poorly drafted or overbroad. I’ve also seen them win cases that seemed challenging because they’d taken the time to properly identify and protect what mattered most to their business. Understanding what happens when these protections fail in court has taught me how to build them properly from the start.

Manufacturers succeed when they’re intentional, disciplined, and proactive about protecting what makes their business competitive. When you build the right foundations—targeted agreements, real trade secret protection, and thoughtful processes—you dramatically increase your chances of stopping a departing employee from harming the business. And if you find yourself facing that Tuesday afternoon phone call, you’ll be ready.