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Category Archives: Non-Compete Enforceability

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2014 Trade Secrets Webinar Series Year in Review

Posted in Computer Fraud, Cybersecurity, Data Theft, International, Non-Compete Enforceability, Social Media, Trade Secrets

Throughout 2014, Seyfarth Shaw LLP’s dedicated Trade Secrets, Computer Fraud & Non-Competes Practice Group hosted a series of CLE webinars that addressed significant issues facing clients today in this important and ever changing area of law. The series consisted of 10 webinars:… Continue Reading

2013 National Year in Review: What You Need to Know About the Recent Cases/Developments in Trade Secrets, Non-Compete,

Court Thwarts Employer’s Effort To Block Vested Profit-Sharing Plan Participant from Obtaining Employment with a Competitor

Posted in Non-Compete Enforceability, Trade Secrets

Other than to protect good will or trade secrets, a non-compete provision intended to prevent a former employee from acquiring an interest in, or becoming an officer or director of, a competitor of the ex-employer may not be enforceable.

Summary of the case:  A stand-alone agreement executed by employee-participants vested in their employer’s profit-sharing plan contained an unusual non-compete provision.  … Continue Reading

Non-Compete And Confidentiality Clauses In A Beverage Maker’s Contracts With A Bottler And A Consultant Held To Be Unenforceable

Posted in Non-Compete Enforceability

Courts will decline to enforce contractual restrictive covenants in agreements that unreasonably restrain trade or lack adequate consideration.

Summary of the Case

Innovation Ventures (IV), developer of an energy drink, entered into contracts with a bottler and with a production consultant.  Both contracts contained non-compete and confidentiality clauses.  Shortly after the bottler’s and consultant’s business relationships with IV ended, IV … Continue Reading

French Court Rules That A Confidentiality Clause Does Not Require Any Financial Compensation to Be Lawful

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

As many readers will know, non-compete clauses in employment contracts are only valid in France if, among other conditions, an employee receives a financial consideration of 40 to 60% salary depending on the sector and the role for the duration of the restriction. But do confidentiality clauses need to be subject to the same treatment?

The recently published decision of … Continue Reading

Seyfarth Attorneys to Present Paper on Trade Secrets and Lawyer Mobility at AIPLA Trade Secret Summit

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

At some point in his or her legal education, every law student discovers one of the more strikingly unique rules about the profession that he or she aspires to enter.  Unlike laws governing physicians, accountants, engineers, and virtually all other professions, rules governing the practice of law impose a nearly absolute prohibition on lawyer non-compete agreements.  At the same time, … Continue Reading

Non-Compete And Non-Solicitation Covenants Contained In Bovine Artificial Insemination Employment Agreements Held Unenforceable

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

Several ex-employees now may compete with their former employer, and may solicit its employees and customers, after a federal judge in the Eastern District of Washington held that the restrictive provisions in their employment agreements are unenforceable. 

The agreements, drafted by the former employer, contained a choice-of-law provision which the former employer tried unsuccessfully to invalidate.  The court also held … Continue Reading

Customer Non-Solicitation Covenant Runs From Date Employment With Asset Seller Terminated, Not From Later Date Employment With Asset Purchaser Ended

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

An employee executed an employment agreement which included a two-year covenant not to solicit the employer’s customers.  When the employer sold the company’s assets, the sale included that agreement.  The employee then went to work for the assets purchaser but subsequently resigned.  The Texas Appellate Court held that the two-year period began to run on the date the assets seller … Continue Reading

When “The End” Is Not “The End”: Asserting Trade Secret Claims After The Execution of a Mutual Release

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

In many cases, the execution of a mutual release is often the last step in resolving a trade secret or non-compete case.  Typically included in the release is an affirmation that all confidential information has been returned and the once former adversaries promise not to sue one another.  Once the release is executed, the fight is usually over.  Usually, but … Continue Reading

Competitor Avoids Injunction Because Competition Was Not Significantly Aided And Abetted By A Signatory To Non-Compete

Posted in Non-Compete Enforceability

In a recent Texas federal court ruling, a competitor closely aligned with, and seemingly assisted by, a signatory of a non-compete covenant narrowly avoided a preliminary injunction because the assistance was not shown to have been substantial.

Summary of the case.  In connection with the purchase and sale of a partnership’s assets, a partner of the seller signed a covenant … Continue Reading

Non-Compete and Forum Selection Clauses in Franchise Agreement Binding on Franchisee Who Signed It and on His Wife Who Didn’t

Posted in Non-Compete Enforceability, Practice & Procedure

A Florida franchisee executed a franchise agreement (FA) containing a non-compete provision and a Pennsylvania forum selection clause.  Following termination of the FA, the former franchisee’s wife opened a similar business in another part of Florida.  The franchisor filed suit in Pennsylvania against the former franchisee and his wife, and they moved to dismiss or, alternatively, to transfer the case … Continue Reading

Ten-Day Interruption In Employment Necessitates New Non-Compete

Posted in Non-Compete Enforceability, Practice & Procedure

An employee who had executed a two-year non-compete was let go.  He returned to work 10 days later but was not asked to sign a new agreement.  More than two years after his return, he was terminated and became an employee of a competitor.  A lawsuit seeking to enforce the non-compete was dismissed on the ground that it had expired.… Continue Reading

Appellate Court Orders Trial Judge To Rewrite Parties’ Non-Compete Covenant To Make It Enforceable

Posted in Non-Compete Enforceability, Practice & Procedure

An asset purchase and sale agreement included unusual non-competition provisions. They authorized a court to redo any time, scope and area restrictions held to be unenforceable. 

The North Carolina Court of Appeals held that the covenant’s territorial restriction was overbroad. Notwithstanding the state’s “strict blue pencil doctrine,” which limits a judge’s authority to revise a non-compete clause, the appellate court … Continue Reading

Massachusetts Governor Makes Last Ditch Effort to Pass Non-Compete Legislation Before His Term Ends

Posted in Legislation, Non-Compete Enforceability

As you may recall, we recently reported that Massachusetts legislators’ attempts to pass a bill altering the landscape of non-compete enforceability (including Governor Deval Patrick’s bold push to ban non-compete agreements altogether) failed yet again.  As has become a nearly perennial event in the Commonwealth, efforts to push legislation through by the close of the session were frenzied, but ultimately … Continue Reading

What You Need to Know About Non-Compete Covenants in India

Posted in International, Non-Compete Enforceability, Practice & Procedure

As a special feature of our blog –special guest postings by experts, clients, and other professionals –please enjoy this blog entry about non-compete covenants in India by technology and corporate attorneys Sajai Singh and Soumya Patnaik of J. Sagar Associates in Bengaluru, India. Sajai serves as the President of ITechLaw, a leading technology law organization.  This entry is part one … Continue Reading

Shanghai Courts Provide Additional Relief to Employers for Breach of Non-Compete Agreements

Posted in International, Non-Compete Enforceability, Trade Secrets

Non-compete agreements are widely used by employers in certain industry sectors in China to protect their trade secrets and confidential information.

In China, employers may require the employee to continue to perform the non-compete obligation and pay liquidated damages in accordance with the non-compete agreement after breach occurs.

In the past, however, the following uncertainties could impede the employer from … Continue Reading

Kansas Federal Court Denies Preliminary Injunction For Alleged Violation Of Confidentiality And Non-Compete Covenants under Canadian Law

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

The plaintiff corporation — now a Delaware LLC based in Kansas — was headquartered in Alberta, Canada at the time its employees signed agreements containing confidentiality and non-compete covenants.  The agreements designated the applicable law to be that of Alberta.  When its ex-employees allegedly violated the covenants, the plaintiff sued them and their new employer in a Kansas federal court.  … Continue Reading

Webinar Recap! International Trade Secrets and Non-Compete Law Update

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

We are pleased to announce the webinar “International Trade Secrets and Non-Compete Law Update,” is now available as a podcast and webinar recording.

The fifth webinar in the 2014 series, was presented by Wan Li, Ming Henderson, Justine Turnbull and Daniel Hart, focused on non-compete and trade secret considerations from an international perspective. Specifically, the webinar involved a discussion … Continue Reading

United Kingdom Update on Contractual Notice Periods and Restrictive Covenants

Posted in International, Non-Compete Enforceability, Restrictive Covenants

An employee cannot ‘walk out’ and refuse to work to avoid their notice period and the restrictive covenants contained in their contract of employment.

In Sunrise Brokers LLP v Rodgers [2014] EWHC 2633 the High Court held that an employer does not have to accept that a ‘walk out’ by an employee will terminate the contractual relationship. The employer has … Continue Reading

Seyfarth Attorneys Present on Latest Developments in Trade Secrets and Non-Compete Law At ABA Annual Meeting

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

Seyfarth partners Robert Milligan and Kate Perrelli will lead a CLE program for the ABA IPCentral Conference during the ABA’s Annual Meeting in Boston on August 7th.

They are scheduled to be joined by in-house counsel Pamela Davidson from U.S. Foods, Karen Tompkins from Stryker, Lisa Seilheimer from CDW, and Jerry Cohen from Burns & Levinson LLP.

The panel will … Continue Reading

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

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

On Tuesday, August 26, 2014 at 12:00 p.m. Central, Seyfarth attorneys Scott Humphrey, Jason Stiehl and Rebecca Woods will present the sixth installment in its series of 2014 Trade Secret Webinars. They 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.  Topics … Continue Reading

No Massachusetts Non-Compete or Trade Secret Legislation This Year

Posted in Legislation, Non-Compete Enforceability, Trade Secrets

Although, as we have previously reported, the Massachusetts legislature arguably got closer to enacting a non-compete statute this year than ever before ─ which, if Governor Deval Patrick had his druthers, would have banned them outright ─ there will be no new legislation this year according to our sources.   The legislative session ends today.

As we last reported, … Continue Reading

Liquidated Damages, A Permanent Injunction, and Attorneys’ Fees Awarded For Violating Non-Disclosure/Non-Compete Agreement And Preliminary Injunction

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

In a well-written recent opinion concerning violation of both a confidentiality/non-compete agreement and a preliminary injunction, a federal judge explained in detail why she was awarding liquidated damages, entering a permanent injunction, and assessing legal fees.

Summary of the Case

Two financial planners, one an individual and the other a corporation, negotiated a merger of their businesses.  Before being provided … Continue Reading

Once You’ve Made Your Restrictive Covenant Bed You Must Lie Upon It…

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

The traditional approach taken by the English Courts to restrictive covenants was confirmed in the decision of the Court of Appeal in Prophet plc v Huggett [2014] EWCA Civ 1013. The Court of Appeal overturned a High Court judge’s decision that the words “or similar thereto” should be added to the relevant clause in order for it to make … Continue Reading

There Are Many Ways to Milk a Cow and Not All Are Protected Trade Secrets

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

A consultant of a company entered into a consulting agreement with a competitor. The scope of his consultancy of the first company involved dairy-permeate processing systems and the second involved lactose-processing systems. The Court of Appeals of Minnesota found that these businesses were sufficiently distinct such that disclosure of information regarding one business would not violate the non-compete agreement prohibiting … Continue Reading