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Category Archives: Non-Compete Enforceability

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Two New England States Pass Legislation Restricting Physician Non-Competes

Posted in Legislation, Non-Compete Enforceability

We’ve written a lot this summer about the Massachusetts legislature’s latest failed attempt at non-compete reform. Two other states in New England, however, are able to claim accomplishments in that regard. Specifically, Connecticut and Rhode Island each enacted statutes this summer imposing significant restrictions on the use of non-compete provisions in any agreement that establishes employment or any other form … Continue Reading

All or Nothing: Nevada Supreme Court Refuses to Adopt “Blue Pencil” Doctrine for Non-Compete Agreements

Posted in Non-Compete Enforceability

In a recent opinion, the Supreme Court of Nevada refused to adopt the “blue pencil” doctrine when it ruled that an unreasonable provision in a non-compete agreement rendered the entire agreement unenforceable. “Blue penciling” refers to a court’s willingness to strike unreasonable clauses from a non-compete agreement, leaving the rest of the agreement to be enforced; or to modify the … Continue Reading

In Like A Lion, Out Like A Lamb: Following Much Fanfare, Massachusetts Noncompete Reform Again Fails

Posted in Legislation, Non-Compete Enforceability

In what has become a highly anticipated annual game of “Will They/Won’t They,” the Massachusetts legislature again failed to pass comprehensive noncompete reform legislation this year, despite much fanfare and high hopes from certain quarters. This should come as no surprise to our loyal readers, who have seen this happen virtually every year over the past decade, but it … Continue Reading

Massachusetts Governor Supports Noncompete Reform, But Not Abolition

Posted in Legislation, Non-Compete Enforceability, Trade Secrets

According to The Boston Globe, Massachusetts Governor Charlie Baker has publicly voiced his support for some restrictions on noncompete agreements, but he does not want to abolish them entirely. Specifically, Governor Baker supports the bill passed by the Massachusetts House of Representatives (discussed previously here), but not the far more restrictive bill passed by the Massachusetts Senate (discussed … Continue Reading

One Step Forward, Two Steps Back: Massachusetts Senate Reverses Course On Non-Compete Reform

Posted in Legislation, Non-Compete Enforceability

As we last reported, just a few weeks ago, the Massachusetts House of Representatives unanimously approved a non-compete bill that revised the original draft bill and addressed some of the business community’s concerns (such as the mandatory garden leave provision, prohibition on judicial reform of overbroad agreements, etc.). However, the Senate yesterday introduced a version that would dramatically curtail … Continue Reading

Webinar Recap! Enforcing Trade Secret and Non-Compete Provisions in Franchise Agreements

Posted in Non-Compete Enforceability, Practice & Procedure, Restrictive Covenants, Trade Secrets

As a thank you to our valued readers, we are pleased to announce the webinar “Enforcing Non-Compete Provisions in Franchise Agreements” is now available as a podcast and webinar recording.

In Seyfarth’s seventh installment in its series of Trade Secrets Webinars,  Seyfarth attorneys John Skelton, James Yu and Dawn Mertineit focused on the importance of State specific non-compete laws … Continue Reading

Update: Massachusetts House of Representatives Edits and Unanimously Approves Non-Compete Bill in an Attempt to Make Progress Before End of Legislative Session

Posted in Legislation, Non-Compete Enforceability, Trade Secrets

As we previously reported, Massachusetts is making yet another go at non-compete reform, as the Joint Committee on Labor & Workforce Development introduced a compromise bill at the end of May that has many in the Commonwealth talking.  As we noted, there were several provisions that gave some commentators pause, including most notably a garden leave provision that would … Continue Reading

Court Upholds Non-Compete Giving Former Employer Discretion To Determine Whether Ex-Employee Is Working For A Competitor

Posted in Non-Compete Enforceability, Restrictive Covenants

A severance agreement executed in connection with a Stark Truss employee’s resignation included a one-year non-competition clause.  It allowed the company unfettered discretion to decide if his new employer was a competitor and, if so, to terminate his severance.  The ex-employee took another job and sued Stark Truss in an Ohio court, seeking a declaration that he was entitled to … Continue Reading

Upcoming Webinar: Enforcing Trade Secret and Non-Compete Provisions in Franchise Agreements

Posted in Non-Compete Enforceability, Practice & Procedure, Restrictive Covenants, Trade Secrets

On Tuesday, June 21, 2016 at 12:00 p.m. Central, Seyfarth attorneys, John Skelton, James Yu and Dawn Mertineit will present the seventh installment of the 2016 Trade Secrets Webinar series. This program will focus on protecting a franchisor’s trade secrets, confidential information, and goodwill through the use of covenants against competition.

The Seyfarth panel will specifically address the following topics:… Continue Reading

Bring Out the Body Bags: Seller’s Covenant, In Asset Sales Agreement, Not To Compete Within 150 Miles For 10 Years Unenforceable

Posted in Non-Compete Enforceability, Restrictive Covenants, Trade Secrets

Palmetto bought the assets of Knight Systems’ mortuary transport business. The agreement of purchase and sale included (a) Palmetto’s commitment to buy body bags, at specified discounted prices, exclusively from Knight Systems for 10 years, and (b) Knight Systems’ promise not to provide mortuary transport services within 150 miles of Palmetto’s offices for the same period.  Notwithstanding the non-compete covenant, … Continue Reading

Georgia’s Restrictive Covenants Act Turns Five Years Old: Assessing the Impact of Georgia’s Law Five Years On

Posted in Non-Compete Enforceability, Restrictive Covenants

While the federal Defend Trade Secrets Act is garnering a great deal of attention, it’s worthwhile to remember that state law remains critically important in drafting restrictive covenants.  This week, May 11, 2016, marks the fifth anniversary of Georgia’s revised trade secrets act, which fundamentally recast how courts view and enforce restrictive covenants.

Prior to enactment of the new law, … Continue Reading

No Microscope Needed to See Why This Non-Compete Is Unenforceable

Posted in Non-Compete Enforceability, Restrictive Covenants

When is a microscope not needed? When the problem one is looking at is big as an elephant, not small as an amoeba.

Nion, an electron microscope manufacturer, contracted with Gatan, a spectrometer manufacturer, to use Gatan’s spectrometers in Nion’s microscopes. The contract contained both confidentiality and non-compete clauses. When Gatan learned that Nion had sold other parties microscopes that … Continue Reading

White House Issues A Call To Arms With Respect To Non-Competes

Posted in Legislation, Non-Compete Enforceability, Restrictive Covenants

On May 5, 2016, the White House issued a report largely piggybacking on a recent U.S. Treasury Department study, on which we previously posted, with a primary focus on the purported misuse and negative impacts of non-compete agreements.  The White House report reiterated much of what the Treasury Department covered its March 31, 2016 study, and focused on … Continue Reading

Despite Evidence That Ex-Employee Violated Customer Non-Solicitation Covenant, Injunction Denied Because No “Irreparable” Harm

Posted in Non-Compete Enforceability, Practice & Procedure

Touzot was an employee of ROM, a seller of products used in making balsa wood model planes and boats.  His employment agreement included a post-termination customer non-solicitation covenant.  After he left ROM, he became a competitor.  The company sued him and his Ecuadorian supplier of balsa wood, which previously had been ROM’s supplier, alleging that they were colluding to steal … Continue Reading

U.S. Treasury Department Suggests That Non-Compete Reform is Necessary

Posted in Legislation, Non-Compete Enforceability, Practice & Procedure, Trade Secrets

The U.S. Department of Treasury recently released a study on the effect of non-compete agreements, taking a hard line with respect to their social and economic benefits and purported harms.  Specifically, while the authors of the study acknowledge that in some cases non-compete agreements can promote innovation, they ultimately conclude that the potential harm of misuse by employers outweighs those … Continue Reading

California Court Gives Two Thumbs Down and Voids Non-Compete in Actor’s Agreement

Posted in Non-Compete Enforceability, Trade Secrets

Seyfarth Synopsis: Limitation on an actor’s ability to work in certain films struck down as an unlawful restraint of trade. 

California, mecca of the film and media production industries in the U.S., is notorious for outlawing non-compete agreements. It is one of the few states that generally prohibits the unlawful restraint of one’s profession or business, with limited exceptions. … Continue Reading

Court Won’t Enjoin Physician Who Breached Non-Compete Covenant And Consented To Injunction

Posted in Non-Compete Enforceability, Restrictive Covenants

A physician signed a non-compete covenant, agreed to be enjoined if he breached, and allegedly did breach. But when his former employer asked a Providence, Rhode Island Superior Court judge to enter an injunction, he refused to prevent patients from being treated by a doctor of their own choosing. Medicine & Long Term Care Associates, LLC v. Khurshid, Civil … Continue Reading

You Can’t Put Lipstick On This Pig: Beauty Company’s Non-Compete Deemed Unenforceable

Posted in Non-Compete Enforceability, Restrictive Covenants, Trade Secrets

On March 25, 2016, a Massachusetts Superior Court judge struck down skin care salon Elizabeth Grady Face First, Inc.’s (“Elizabeth Grady” or the “Company”) attempt to make its non-compete agreement seem prettier than it actually is.  In denying Elizabeth Grady’s motion for a preliminary injunction, the court stressed that employees’ conventional job knowledge and skills, without more, will not constitute … Continue Reading

North Carolina Courts Are Forbidden To “Blue Pencil” An Unenforceable Non-Compete

Posted in Non-Compete Enforceability, Restrictive Covenants

Reversing a 2-1 decision of the North Carolina Court of Appeals, the state’s Supreme Court held unanimously that an assets purchase-and-sale contract containing an unreasonable territorial non-competition restriction is unenforceable.  Further, a court in that state must strike, and may not modify, the unreasonable provision. Beverage Systems of the Carolinas, LLC v. Associated Beverage Repair, LLC, No. 316A14 (N.C. … Continue Reading

Leave No E-mail Unturned in Trade Secret and Non-Compete Cases

Posted in Non-Compete Enforceability, Trade Secrets

A recent verdict in the Superior Court of Fulton County, Georgia is an excellent reminder of the importance of conducting thorough discovery in unfair competition cases.  Earlier this year, after a four day trial, a Georgia jury awarded telecom company Cost Management Group (“CMG”) $282,001 in damages, $300,000 in attorneys’ fees, and $200,000 in punitive damages, finding that CMG’s former … Continue Reading

Extensive Training Of Ex-Employee By Former Employer Not Enough For Injunction Against Competition

Posted in Non-Compete Enforceability, Restrictive Covenants, Trade Secrets

Although an employer spent many hours assisting an employee to obtain a real estate appraiser’s license, the Tennessee Court of Appeals held recently that the employee’s restrictive covenants were unenforceable.  Davis v. Johnstone Group, Inc., No. W2015-01884-COA-R3-CV (Mar. 9, 2016).

Summary of the case.  The ex-employee, Davis, had no prior real estate appraisal experience in 1998 when he started … Continue Reading

Upcoming Webinar: Protecting Confidential Information and Client Relationships in the Financial Services Industry

Posted in Non-Compete Enforceability, Restrictive Covenants, Trade Secrets

On Thursday, April 14 at 12:00 p.m. Central, Seyfarth attorneys, Scott Humphrey, Marcus Mintz and Kristine Argentine will present the fourth installment of the 2016 Trade Secrets Webinar series. This program will focus on trade secret and client relationship considerations in the banking and finance industry, with a particular focus on a firm’s relationship with its FINRA members.

The Seyfarth … Continue Reading

Ex-Employee Hit With Six-Figure Judgment For Violating His Non-Competition Agreement By Helping His Son Compete

Posted in Non-Compete Enforceability, Restrictive Covenants, Trade Secrets

A long-running non-compete clause dispute has reached the Louisiana Court of Appeal three times.  Last month, the court affirmed a $600,000 judgment, plus attorneys’ fees and costs, against an ex-employee who assisted his son’s start-up company compete with his father’s former employer.  Pattridge v. Starks, No. 50,351-CA (Louisiana Court of Appeal, Feb. 24, 2016) (Endurall III).

Summary of the Continue Reading

Massachusetts Legislature Takes Up Noncompete Reform . . . Again

Posted in Non-Compete Enforceability, Trade Secrets

Another year, another attempt at noncompete reform in Massachusetts.  According to the Boston Globe, Massachusetts House Speaker Robert DeLeo announced that lawmakers would unveil a bill limiting the use of noncompete agreements in the Commonwealth.  As we have previously reported, legislators have been attempting to enact noncompete reforms in Massachusetts for years (since at least 2008), to … Continue Reading