Trade Secrets Are Lost Before People Leave

On September 25, Beam Therapeutics sued a former scientist, YolTech Therapeutics, and Serapha Bio in federal court in Massachusetts under the Defend Trade Secrets Act.¹ Beam alleges the scientist secretly founded YolTech while still on Beam’s payroll, then filed patent applications for YolTech five months after leaving, built on Beam’s confidential work. Serapha categorically refutes the claims.² Serapha licensed the YolTech program and launched with $230 million in venture backing.³ No court has ruled on the merits, and this article takes no position on who is right.

This article is about the mechanism Beam describes: the window of exposure that exists before someone leaves, while they are still on payroll and still have access. Most founders leave that window unguarded, and closing it is not a legal task. It is an operational one that starts with how you lead.

The alleged harm began while the employee was still employed there, in files she could access. A noncompete governs what happens after someone leaves. It does nothing about the months before. The biotechs that protect their science most effectively are not the ones with the most restrictive agreements. They are the ones where stewardship of shared work is built into how the company operates day to day.

The noncompete is a narrow tool in Massachusetts

The Massachusetts Noncompetition Agreement Act sets strict conditions. Both the employer and the employee must sign the agreement,⁴ and the employer must notify the employee in writing of the right to consult counsel before signing.⁵ Noncompetes are generally unenforceable against hourly employees and anyone terminated without cause, and the Act does not cover non-solicitation agreements.⁶

Courts apply those conditions literally. In Anaplan Parent, LP v. Brennan, the Superior Court refused to enforce noncompetes in three equity grant agreements because the parent company signed them, not the subsidiary that employed the executive.⁷ The Supreme Judicial Court heard argument on September 9 on whether a corporate parent qualifies as an “employer” under the Act.⁸ As of this writing, no decision has issued.

Early-stage biotechs live inside this exact structure. Many venture-built companies grant equity from a parent or holding entity while employing people at an operating subsidiary. A founder who assumes the equity paperwork protects the company is relying on the theory the Superior Court rejected.

Compliance and leadership are the same investment

There is a common instinct to treat IP protection as a legal department problem: audit NDAs, file patents, draft restrictive covenants, and keep it entirely separate from how the leadership team runs the business. That separation is the gap. The scientists, engineers, and operators at a 20-person biotech company are not primarily motivated by equity and salary. They came because they believe in the science. When IP stewardship is introduced as a set of constraints layered on top of that mission, it reads as distrust. When it is introduced as how we protect the work we are all building together, it becomes a professional norm that people uphold without being told.

Federal law protects information as a trade secret only when its owner has taken reasonable measures to keep it secret.⁹ Those measures, at a small company, are people processes, and people processes reflect how the company is led. The question for founders is not only whether the processes exist, but whether people understand why they exist and who they are protecting.

Protection lives in three moments

The offer. The first conversation about IP is a leadership moment, not a legal formality. Ask every hire to disclose, in writing, any outside business activities, advisory roles, and companies they have founded or plan to found. Frame it as an alignment conversation, not an interrogation. “We want to support your professional development and make sure there are no conflicts we need to manage together” is not soft; it is smart. It surfaces issues early, when they are still manageable, and it signals that the company operates with transparency as a professional norm. Require written approval for new outside activities during employment. Confirm the confidentiality and invention assignment agreement is signed by the entity that actually employs the person. Include the whistleblower immunity notice federal law requires; without it, the company cannot recover exemplary damages or attorney fees from that employee in a trade secret suit.¹⁰

The access model. Role-appropriate access is sound operational hygiene, not a sign of distrust. In well-run clinical, manufacturing, and research environments, people routinely work within defined data boundaries. That is how serious science gets done. Give each role access to the data it needs for its work, and revisit it when roles change. Beam’s complaint describes a scientist pulling dozens of records she had never opened before, in technical areas outside her own, at night and on weekends.² Most small companies never log access, let alone review it. Logging costs little. The review needs an owner. Framing this to the team as operational discipline, the same way you would frame clean lab notebooks or GxP documentation, changes the register entirely. It is not about watching people. It is about running a company that takes its science seriously.

The exit. A well-constructed exit is a courtesy, not an interrogation. Revoke system access the day employment ends. Walk through confidentiality and invention assignment obligations in the exit conversation: calmly, specifically, and without accusation. Collect a signed certification that company materials have been returned or deleted. When this process is consistent and professional, departing employees respect it. When it only appears in contentious situations, it feels punitive. The goal is a standard that applies equally to everyone, from the first scientist to the most senior leader, so no one experiences it as personal.

The executive's role

None of this holds if leadership treats IP stewardship as an HR initiative. Executives who discuss the company’s science as a shared asset, who talk openly about what the work means, how it was built, and why protecting it matters to every person at the table, create the conditions where policies land as professional norms rather than restrictions. The same outside business activity disclosure that feels invasive in a low-trust environment feels routine in a high-trust one. The difference is whether leaders modeled the expectation first.

This is also where operational discipline and the legal framework reinforce each other. Courts assess whether a company took “reasonable measures” to protect its trade secrets. Reasonable measures are not just technical controls. They are the pattern of behavior a company exhibits consistently. A company that can show it discussed IP expectations at onboarding, maintained role-appropriate access, and conducted thorough exits is in a materially stronger position than one that simply had employees sign an agreement.

What to do this quarter

For leaders of life sciences companies, six steps, each grounded in how the company operates:

1. Inventory every restrictive covenant, including those inside equity grant agreements, and confirm the employing entity signed each one.
2. Add an outside business activity disclosure to the offer packet and an annual re-certification. Train managers to treat the conversation as an alignment check, not a compliance exercise
3. Confirm every confidentiality and invention assignment agreement carries the federal whistleblower immunity notice
4. Turn on access logging for the electronic lab notebook, data rooms, and shared drives that hold unpublished data. Name someone to review it monthly. Brief the team on why the company logs access; tie it to protecting the science they are building.
5. Write a one-page exit checklist: same-day access revocation, an obligations review, and a signed return certification. Apply it consistently to everyone
6. Before licensing in an asset, ask how the program was created, not only who holds the patents.¹¹

A noncompete decides where people go after they leave. Trade secrets are lost while they are still here. How you run the company is the first line of defense.

This article is for informational purposes only and does not constitute legal advice. Consult qualified employment counsel regarding your company's specific circumstances.

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References

1. Hoodline, Cambridge Biotech Beam Sues Chinese Rival, Alleges Gene-Editing Secrets Were Stolen, September 30, 2026.
2. BioPharma Dive, Beam sues 2 biotechs, alleging theft of base editing trade secrets, September 29, 2026.
3. PharmaVoice, Beam sues 2 biotechs, alleging theft of base editing trade secrets.
4. Mintz, Employers Should Revisit Their Non-Compete Agreements after Latest Massachusetts Superior Court Ruling, November 10, 2025.
5. ArentFox Schiff, The Seven Year Itch: Recent Guidance on the Massachusetts Noncompetition Act.
6. Fisher Phillips, Massachusetts Superior Court Sets New Limits on Noncompetes.
7. Fisher Phillips, Massachusetts Superior Court Sets New Limits on Noncompetes.
8. Holland & Knight, Massachusetts Supreme Judicial Court Holds Oral Arguments in Important Noncompete Case, September 17, 2026.
9. 18 U.S.C. § 1839 (definition of trade secret).
10. 18 U.S.C. § 1833(b) (whistleblower immunity notice).
11. Lex Commentary, Beam Therapeutics Brings Trade-Secret Claims Against Gene-Editing Rivals, September 30, 2026.