Non-Compete Agreements –
One Size Does Not Fit All
by Beth McDaniel &
Steve McDaniel, JD, PhD
Technology Litigators
Non-competition. The very term seems un-American. In this country, we are all about competition, free, unfettered, plain old American
competition. Right? Right. That pretty
much sums up the same attitude that the
American courts have towards non-competition agreements. It gives them gas!
Still, non-competition agreements are not
per se illegal. How do you walk the fine
line between protecting your trade secrets and other confidential information
using a non-competition agreement and
running afoul of the natural disdain with
which courts hold such agreements?
Non-competes are designed to protect
a business’ interests by limiting competition. Generally, non-competes are pursued in two situations: (1) when hiring a
new employee; and (2) when purchasing
an established business. For purposes of
this article we will just focus on the first
situation, non-competes tied to employment, as these tend to be more contentious and debated situations.
By their very nature, non-competition
agreements (or non-competes) are controversial. Any restriction on a person’s
right to work is a restraint of trade and
may be prohibited if it is excessive or unreasonable. Courts are cautious about
enforcing them and reluctant to prevent
a person from working in his field and
exercising his trade. Non-competes are
cases brought in equity. Courts are looking for a fair and equitable result.
Non-compete law is a complex and
evolving area of law, which varies sig-
nificantly from state to state. From a
drafter’s position, it’s adult-swim only.
One agreement will not be suitable for ev-
eryone. As an employer, you should view
each non-compete as unique and tailor
it to the situation at hand. If narrowly
drawn and tailored to the specific situa-
tion, non-competes can be one of several
valuable tools in protecting your confi-
dential information and trade secrets. An
understanding of the legitimate basis for
using non-competes, together with the
addition of tailor-made strategic terms
discussed below will help an employer
draft a non-compete that will
fit the particular situation, and
more likely to be upheld in a
court of law if challenged.
ing in your pond, then a non-solicitation
agreement might accomplish your objectives just as well, and be more likely to be
upheld by the courts.
Once you’ve decided the non-compete
route is what you want to take, then you
will want to make sure that the agreement
36 | Coatings World
www.coatingsworld.com
March 2013
