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Category Archives: Non-Compete Enforceability

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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

Seyfarth Shaw Attorney To Moderate Upcoming ABA Webinar on Trade Secret Protection Best Practices

Posted in Non-Compete Enforceability, Trade Secrets

Robert B. Milligan, partner of Seyfarth’s Litigation department and co-chair of the firm’s Trade Secrets, Computer Fraud & Non-Competes practice group, is a moderator on an upcoming webinar presented by The American Bar Association’s IP Law section. The webinar, titled “Trade Secret Protection Best Practices: Hiring Competitors’ Employees and Protecting the Company When Competitors Hire Yours”, will take place … Continue Reading

Webinar Recap! 2015 National Trade Secret, Non-Compete and Computer Fraud Law Year in Review

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

We are pleased to announce the webinar “2015 National Year in Review: What You Need to Know About the Recent Cases/Developments in Trade Secrets, Non-Compete and Computer Fraud Law” is now available as a podcast and webinar recording.

In Seyfarth’s first installment of its 2016 Trade Secrets Webinar series, attorneys Robert Milligan, Jesse Coleman and Joshua Salinas reviewed noteworthy … Continue Reading

Five Easy Tips for Improving Your Company’s Non-Compete and Confidentiality Agreements and Related Practices Now

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

As January quickly passed by and new projects increase by the day, there is still a golden opportunity to capitalize on some low-hanging fruit to immediately improve your company’s practices and add immediate value to your company.  The opportunity lies in improving your company’s restrictive covenant and confidentiality agreements and confidentiality policies.  Below are five tips that you can employ … Continue Reading

Upcoming Webinar: 2015 National Year in Review: What You Need to Know About the Recent Cases/Developments in Trade Secrets, Non-Compete and Computer Fraud Law

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

On Friday, January 29, 2016 at 12:00 p.m. Central, Seyfarth attorneys Michael Wexler, Robert Milligan and Joshua Salinas will present the first installment of the 2016 Trade Secrets Webinar series. The presenters will review noteworthy cases and other legal developments from across the nation this past year in the areas of trade secrets and data theft, non-competes and other restrictive … Continue Reading

Top 10 Developments/Headlines in Trade Secret, Computer Fraud, and Non-Compete Law in 2015

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

Continuing our tradition of presenting annually our thoughts concerning the top 10 developments/headlines this past year in trade secret, computer fraud, and non-compete law, here—in no particular order—is our listing for 2015 and a few predictions for 2016.  Please join us for our first webinar of the New Year on January 29, 2016 discussing these developments/headlines.

1) Enactment of federal Continue Reading

Restraint Payments in Australia – Compliance Issues

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

In the latest of our series of post-employment protection blog posts, we consider the compliance and regulatory issues that need to be thought through when drafting an effective post-employment restraint in Australia.

How will any restraint payment be structured?

The threshold question is what kind of payment (if any) to make in return for the agreement of an employee not … Continue Reading

Drafting and Litigating Post-Employment Restrictive Covenants in Australia – Tailoring Your Restraint to Ensure the Right Fit

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

By Michael Tamvakologos and Justine Giuliani

We will now look at the different types of post-employment restrictive covenants, and work through a checklist of questions employers should ask themselves when drafting a restraint to make sure it’s the right fit.

A good restraint is not about creating the ultimate “catch all” provision. Rather, it requires a series of good choices … Continue Reading