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The In-House Advisor Published by Shepard Davidson & Renee Inomata

Category Archives: Noncompetition & Other Restrictive Covenants

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The Value of a Non-compete Agreement to an Acquiring Company Can Be Limited

Posted in Contracts, Noncompetition & Other Restrictive Covenants, Pre-Litigation Considerations

It is standard practice in M&A transactions for the acquired business to assign all of its contractual rights to the purchaser. While that may sound good in theory, depending upon how the underlying contracts are drafted, they could have little or no value to the purchaser. Indeed, as the Massachusetts Superior Court’s decision in NetScout,… Continue Reading

Careful Drafting of Non-Competes and Other Restrictive Covenants Can Save the Day

Posted in Contracts, Noncompetition & Other Restrictive Covenants, Pre-Litigation Considerations, Separations, Layoffs & Terminations

It generally is a defense to a breach of contract claim if the defendant proves that the plaintiff was the first one to materially breach the parties’ agreement. As a recent case from the Business Litigation Session of the Massachusetts Superior Court confirms, however, a plaintiff seeking to enforce a post-employment restrictive covenant can avoid… Continue Reading

Whistleblower Immunity Required Under Defend Trade Secrets Act

Posted in Compliance, Policies & Notices, Confidentiality, Contracts, Noncompetition & Other Restrictive Covenants

The new Defend Trade Secrets Act (“DTSA”) allows owners of trade secrets to now bring a civil action in federal court to protect their trade secrets and confidential information. Further, under the DTSA, a trade secret owner may be awarded actual damages, injunctive relief, restitution, the extraordinary relief of ex parte seizure orders and, if there is willful or… Continue Reading

If You Have Confidential Information, Keep It Confidential!

Posted in Confidentiality, Noncompetition & Other Restrictive Covenants

I’ve been involved in many cases where it is alleged that someone violated his or her non-compete agreement or misappropriated the company’s confidential information or trade secrets. Often, the key issue has been not what the former employee did, but what the company did not do to protect the information it contends is proprietary. The… Continue Reading

Track More Than Case Law When Drafting a Noncompete Covenant

Posted in Contracts, Noncompetition & Other Restrictive Covenants

No doubt, ensuring that any agreement is consistent with judicial precedent is critical if you want to enforce that agreement at some point in the future. Nevertheless, merely incorporating precedential concepts or language into an agreement may not be enough to get your client to where it wants to be, and may even result in… Continue Reading

Don’t Overlook The Need to Show Irreparable Harm When Seeking Injunctive Relief to Enforce a Non-Compete

Posted in Contracts, Injunctions and Attachments, Noncompetition & Other Restrictive Covenants, Pre-Litigation Considerations

When seeking preliminary injunctive relief to enforce a non-compete, the moving party is often focused on how obvious it is that the defendant breached the parties’ agreement. As 7-Eleven recently learned, however, even when there is a valid and enforceable noncompetition provision and a clear breach of it, unless you can show that you will… Continue Reading

Until They Are Banned, Non-Competition Agreements Are Still Valuable

Posted in Noncompetition & Other Restrictive Covenants

As the debate continues in Massachusetts as to whether or not to ban noncompetition agreements, a related question remains: Is there really any value in having employees sign noncompetition provisions?  As a recent decision by U.S. District Court Judge Denise Casper in Boston Scientific Corp. v. Dongchul Lee confirms, if an employer has valuable trade… Continue Reading

Proposal to Eliminate Noncompetes Is Not Warranted

Posted in Contracts, Noncompetition & Other Restrictive Covenants

Earlier this month Gov. Deval Patrick called for the elimination of noncompete agreements and formally proposed this as part of a bill called An Act to Promote Growth and Opportunity.  The Governor’s proposal, and the rallying cry of its various supporters, are firmly based on the premise that noncompete agreements have a negative impact on… Continue Reading

How a Company Insider Can Leave, Take Company Business and Not Breach Her Fiduciary Duty

Posted in Fiduciary Duties, Noncompetition & Other Restrictive Covenants

In a previous blog post, The Fiduciary Duty of Preserving Corporate Opportunities, I wrote: In general, an officer, director, partner, LLC member or shareholder in a closely held corporation owes a fiduciary duty not to usurp for his personal benefit, a business opportunity that could and should belong to the corporation.   While I have no… Continue Reading

Your Trade Secrets May Be Vulnerable to “Legal” Theft

Posted in Compliance, Policies & Notices, Noncompetition & Other Restrictive Covenants, Privacy & Data Security

As in-house counsel, how would you like to tell your CEO: “While our customer lists, pricing information, and business processes are trade secrets, we can’t sue the independent contractor who stole them because we did not do enough to protect those trade secrets.”  Sound contrived?  Well, that is exactly the ruling one Massachusetts Superior Court… Continue Reading

Three Ways in Which Enforcement of Non-Competition Agreements is Like Dating

Posted in Injunctions and Attachments, Noncompetition & Other Restrictive Covenants, Pre-Litigation Considerations

In a prior blog post Three Issues In-House Counsel Should Raise Before Asking Employees To Sign Non-Competes, my co-publisher, Shep Davidson, provided suggestions to help in-house counsel ensure that non-competition restrictions on employees were appropriate and enforceable. As it is Valentine’s Day, we look at three ways in which enforcement of non-competition agreements is like… Continue Reading

A Right to Match Can Provide Multiple Benefits

Posted in Contracts, Noncompetition & Other Restrictive Covenants

A client recently forwarded me an article about a lawsuit that Oakley brought against Nike and golf wonder-boy Rory McIlroy.  In that suit, Oakley claims that as part of its endorsement agreement with McIlroy it had a right to match any new endorsement proposals made to McIlroy.  Nevertheless, after Nike made a proposal to McIlroy, the… Continue Reading

Are Non-Competes Hurting the Massachusetts Economy?

Posted in Contracts, Noncompetition & Other Restrictive Covenants

In the January 24-31, 2013 “Business View” section of the Boston Business Journal,  State Senator William Brownsberger and State Representative Lori Erlich claimed that one reason Massachusetts is losing jobs to Silicon Valley is that California law prohibits non-compete agreements, whereas in Massachusetts they are routinely enforced.  The authors then use this conclusion to argue that… Continue Reading

Enforcing Non-Compete Agreements Against California Employees – Part II

Posted in Contracts, Noncompetition & Other Restrictive Covenants

In Enforcing Non-Compete Agreements Against California Employees — Part I, I discussed how a Massachusetts company might be able to enforce a non-compete against a California employee by including a Massachusetts choice of law provision in an employment agreement.  In this post, I will discuss three scenarios under which an employer may be able to… Continue Reading

Enforcing Non-Compete Agreements Against California Employees — Part 1

Posted in Contracts, Jurisdiction, Venue and Choice of Law, Noncompetition & Other Restrictive Covenants

In a post this summer, I raised three issues employers may want to consider before even requesting that an employee execute a covenant not to compete.  One issue that I did not mention is whether the company’s employee lives and works in California.  Although where an employee lives may be relevant, contrary to what many… Continue Reading

Be Wary of State-Specific Requirements for Noncompetition Agreements

Posted in Contracts, Noncompetition & Other Restrictive Covenants

One size most certainly does not fit all when it comes to noncompetition agreements.  Every state has its own requirements when it comes to the enforceability of employee noncompetition agreements.  In some, such as California, noncompetition agreements are unlawful by statute.  In other states, such as Colorado, noncompetition agreements may only be enforced in certain… Continue Reading

Three Issues In-House Counsel Should Raise Before Asking Employees to Sign Non-Competes

Posted in Contracts, Noncompetition & Other Restrictive Covenants

While many employers take comfort in knowing that some or all of their employees have agreed to non-compete covenants, obtaining and enforcing such agreements does not come without costs.  As such, it is important for in-house counsel to explore with their business clients whether it really makes legal and economic sense to seek such agreements. … Continue Reading