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Category Archives: Non-Compete Enforceability

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Is An Offer Of At-Will Employment Adequate Consideration For A Non-Compete? Recent Court Rulings Split Three Ways

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

Three very recent decisions reflect the irreconcilable division of judicial authority regarding the adequacy of at-will employment as the sole consideration for an otherwise valid non-compete.  Compare (a) Standard Register Co. v. Keala, No. 14-00291 (D. Haw., June 8, 2015) (adequate under Hawaii law) (“majority rule”), with (b) Hunn v. Dan Wilson Homes, Inc., Nos. 13-11297 and 14-10365 … Continue Reading

Non-Compete That Grants An Employer The Right To Seek Injunctive Relief No Guarantee That Injunction Will Issue

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

A trial court declined to enter a preliminary injunction in a non-compete covenant case despite a provision in the covenant giving the employer the “right to seek injunctive relief in addition to any other remedy available to it.” The decision was affirmed on appeal.

Summary of the case. A 20% owner of a pest control service company (referred to by … Continue Reading

Texas Don’t Hold ‘Em: Forum Selection Clause Is Unenforceable

Posted in Non-Compete Enforceability, Restrictive Covenants

By: Joshua A. Rodine and Jonathan L. Brophy

California courts generally favor forum selection clauses entered into freely by parties and where enforcement is not unreasonable. This general principle is true even if the forum selection clause is “mandatory” and requires a party to litigate its dispute exclusively in the designated forum. The party opposing enforcement of a forum selection … Continue Reading

Democratic Senators Propose Federal Legislation to Ban Use of Non-Compete Agreements with Low-Wage Employees and to Require Advance Notice to Potential Employees of Requirement to Sign Non-Compete

Posted in Legislation, Non-Compete Enforceability

U.S. Senators Al Franken (D-Minn.) and Chris Murphy (D-Conn.) proposed federal legislation last week to ban the use of non-competes for low-wage employees and require companies to provide advance notice before asking potential employees to sign non-competes. Senators Elizabeth Warren (D-Mass.) and Richard Blumenthal (D-Conn.) are cosponsors of the bill.

The stated purpose of the legislation, entitled the Mobility … Continue Reading

The Sounds of Silence: Non-Compete Reform Efforts Largely Absent in Massachusetts Legislature

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

Last summer was a busy time for legislators in Massachusetts mulling over non-compete reform. As we reported here and here, several competing bills were in play as the legislative session drew to a close, including a compromise bill that was passed in the state Senate but ultimately failed to advance in the House. You may even recall that then-Governor … Continue Reading

Legal 500 Names Seyfarth Shaw as a Finalist for Top Trade Secrets Litigation Department in the U.S.

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

The 2015 edition of The Legal 500 United States recommends Seyfarth Shaw’s Trade Secrets group as one of the best in the country.

Nationally, our Trade Secrets practice retained its position in Tier 2. For the second year in a row, our practice has been named to the shortlist for best trade secrets practice in the U.S., and we are … Continue Reading

Court, Applying Pennsylvania And California Law, Declines To Enjoin Alleged Violation Of Worldwide Non-Compete

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

A non-competition covenant prohibited employees of Adhesives Research (AR), a company based in Pennsylvania, from performing services for a competitor of AR anywhere in the world for two years after termination. Newsom, AR’s western U.S. manager of medical products, worked out of her home in California. When she quit and joined another adhesives manufacturer, AR sued and moved for entry … Continue Reading

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

Posted in Data Theft, International, Non-Compete Enforceability, Trade Secrets

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

In Seyfarth’s third installment of its 2015 Trade Secrets Webinar series, Seyfarth attorneys focused on non-compete and trade secret considerations from an international perspective. Specifically, the webinar will involved a discussion of non-compete and trade secret … Continue Reading

Forum Selection Clause in Non-Compete Agreement Unenforceable

Posted in Non-Compete Enforceability, Practice & Procedure

A contractual provision designating the exclusive venue for filing a breach of contract lawsuit was held to be trumped by a 100-year old statute requiring trial of such cases in the county of residence of at least one party. A&D Environmental Services, Inc. v. Miller, Case No. COA14-913 (N.C. App., Apr. 7, 2015).

Summary of the case. A North … Continue Reading

Ninth Circuit Jeopardizes Broad “No Re-Hire” Clauses in California

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

In Golden v. California Emergency Physicians Medical Group, a divided Ninth Circuit panel held that a “no re-hire” provision in a settlement agreement could, under certain circumstances, constitute an unlawful restraint of trade under California law.

The Facts

Dr. Golden, a physician, agreed to settle his discrimination claim against his employer, California Emergency Physicians Medical Group (“CEP”). Their oral settlement … Continue Reading

Beware of the Delaware Choice of Law in Non-Compete Agreements

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

By Justin K. Beyer and Matthew I. Hafter

Delaware has long been one of the jurisdictions most friendly to the interests of corporations and is the state of incorporation for a significant majority of corporations. While that trend does not seem likely to change, a new Delaware Chancery Court decision should give pause to choice of law decisions of Delaware … Continue Reading

Geographically Overbroad Non-Competes Held To Be Unenforceable

Posted in Non-Compete Enforceability, Practice & Procedure

In unrelated decisions, two federal courts recently refused to enforce non-compete covenants in employment agreements that lack reasonable geographic limits.

Status of the cases. In one of the two lawsuits, the employment agreement included a Tennessee choice of law provision. Louisiana courts are more protective of employees than courts in Tennessee. Since the parties had contacts with both states, naturally … Continue Reading

Seyfarth Shaw is Pleased to Announce the Publication of the Trading Secrets 2014 Year in Review!

Posted in Computer Fraud and Abuse Act, Non-Compete Enforceability, Trade Secrets

The 2014 Year in Review is a compilation of our significant blog posts from throughout last year and is categorized by specific topics such as: Trade Secrets Legislation; Trade Secrets; Computer Fraud and Abuse Act; Non-Compete & Restrictive Covenants; Legislation; International; and Social Media and Privacy. As demonstrated by specific blog entries, including our Top 10 Developments/Headlines and Trade Secrets, … Continue Reading

Appellate Court Holds That Non-Compete Agreement Assigned Pursuant to Bankruptcy Court Order is Enforceable by Assignee

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

Courts are divided on the enforceability by an assignee of a non-compete covenant relating to personal services where the covenant does not state whether it is assignable and the employee does not consent to the assignment.

Status of the case.  A non-compete agreement signed by an employee of TSG, Inc., purported to be effective for two years after his termination … Continue Reading

Top 10 Developments/Headlines in Trade Secret, Computer Fraud, and Non-Compete Law in 2014

Posted in Computer Fraud, Non-Compete Enforceability, Trade Secrets

As part of our annual tradition, we are pleased to present our discussion of the top 10 developments/headlines in trade secret, computer fraud, and non-compete law for 2014. Please join us for our complimentary webinar on January 27, 2015, at 1:00 p.m. e.s.t., where we will discuss them in greater detail. As with all of our other webinars (including the … Continue Reading

Court Refuses To Enforce Settlement Agreement Containing Non-Compete Covenant Citing Lack of Assent

Posted in Non-Compete Enforceability, Practice & Procedure

Plaintiff’s motion to enforce a settlement agreement in principle was denied because some material terms of that agreement were not included in the version the plaintiff sought to enforce.  GeoLogic Computer Sys., Inc. v. MacLean, Case No. 10-13569 (D. Mich., Dec. 10, 2014).

Status of the case.  Counsel for the parties to a software copyright infringement lawsuit purportedly reached … Continue Reading

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:

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

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