In the context of one company purchasing another company, a non-compete agreement is far more enforceable than it would be in an employer/employee situation. That’s hornbook law. A good explanation for this was given in a Texas Supreme Court case: In the case of covenants not to compete incident to the sale of a business, the seller’s promise...
Continue ReadingEven after Sheshunoff clarified the law governing non-compete agreements, we continue to see agreements that cause us to scratch our heads and wonder whether they are enforceable. Sheshunoff made clear that, even in an at-will employment situation, a delay between the employee signing the non-compete agreement and receiving the information is not fatal to the agreement’s enforceability. However, “How strong...
Continue ReadingIn several states, an employer may–via a non-compete agreement–prevent a departing employee from taking advantage of the relationships the employee developed with the former employer’s customers. This is true whether or not the identities of the former employer’s customers are "confidential." In those states, therefore, the former employer can successfully contend, "We introduced you to our customers and you’ve...
Continue ReadingVery often, a departing employee won’t take customer lists or other confidential documents with him, but a lot of the information he has memorized will be considered by his former employer to be confidential. Customer names and contact information, for example, are routinely memorized by sales representatives. Nevertheless, the sales representative’s employer typically contends that such information is confidential....
Continue ReadingIn trade secret cases, the parties routinely produce confidential and proprietary information to each other. Typically, a protective order is entered that permits the parties to designate information as confidential (which means, inter alia, that it can only be used in the litigation) and states how the information is to be treated. Super-sensitive information can be designated as “Attorneys...
Continue ReadingI often hear from employees who are bound by non-compete agreements that “Texas is a right-to-work state,” and that, therefore, their agreements are unenforceable. Not true. The “right to work” concept has NOTHING to do with non-compete agreements. Rather, the “right to work” concept has to do with the right of employees to decide for themselves whether they will...
Continue ReadingCompany X’s employee (who is bound by a non-compete agreement) resigns and begins working for Company Y (a competitor of Company X). Company X sues its former employee for violating his non-compete. Months later, they reach a settlement, and a final judgment is entered. Company X can then sue Company Y for tortiously interfering with the non-compete agreement between...
Continue ReadingIncreasingly, America’s economic preeminence in the world is challenged by other nations, including most notably China. In some cases, "economic espionage" is alleged when American trade secrets are taken abroad. Here’s an interesting story about DuPont’s trade secrets that were taken in the U.S. and, it was believed, bound for China: http://www.delawareonline.com/apps/pbcs.dll/article?AID=/20070302/NEWS/703020363/-1/NEWS01 www.mylawteam.com
Continue ReadingTo get an injunction restraining former employees from competing, an employer needs a valid non-compete agreement or a misappropriation of trade secrets claim, right? Wrong. A breach of fiduciary duty (duty of loyalty) can also warrant injunctive relief. In a case decided several years ago, two employees worked for a company (“the Corporation”) that was involved in the institutional...
Continue ReadingAnother quick hit on the ramifications of Sheshenoff. In recent years, employers have not infrequently added to their non-compete agreements a promise to convey confidential information to the employee, even if the employee no longer worked for the employer when the information was conveyed. The purpose of this was to address the employee’s argument that, "Because I’m an at-will...
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