What’s New in Non-Compete News? Drafting Tips, Unfair Competition, China…

For your reference, a roundup of helpful commentary and analysis regarding non-compete agreements, new writing from lawyers and law firms on JD Supra:

Six Factors to Consider When Drafting Non-Compete Agreements (Dinsmore & Shohl LLP):

“Is the industry in which the employer is engaged, and in which the employee desires to continue working, highly competitive? Is there a limited opportunity to participate in this industry? How many players are there in the market, and are their respective market shares relatively large or small? … If the industry is highly competitive and has a history of employee “poaching,” the non-compete agreement is more likely to be upheld.” Read on>>

Preventing Unfair Competition in the Absence of a Noncompete Agreement (Foley & Lardner LLP):

“A key executive, top salesperson, or high-level engineer is joining a fierce competitor after being exposed to your company’s most confidential and proprietary information and trade secrets. The business leaders are very upset and demand action, but for one reason or another — company or industry culture, hiring needs, oversight, deception — there is no non-competition agreement with the departing employee.” Read on>>

Practical Pointers in Respect to Non-compete Agreements in China (McDermott Will & Emery):

“In 2008, China’s Labour Contract Law provided uniform rules regarding non-compete issues after the termination of an employment relationship. Like many other legal issues in China, however, there is a gap between the general legal principles and the actual practice. This newsletter provides a brief overview of the legal requirements regarding non-compete agreements in China, as well as some practical issues to take into consideration.” Read on>>

Court Says “No Way” To No-Hire (Allen Matkins Leck Gamble Mallory & Natsis LLP):

“California is known for its hostility to covenants not to compete… California Business & Professions Code Section 16600 keeps the hate alive by providing that every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void. The legislature does make a few exceptions for non-compete agreements in connection with the sale or dissolution of a business.” Read on>>

Is a General Assignment Clause Sufficient under Florida’s Non-Compete Statute? (Akerman Senterfitt):

“Florida’s statute governing the enforcement of non-compete covenants provides that a court may enforce such covenants in favor of an assignee or successor, provided that ‘the restrictive covenant expressly authorized enforcement by a party’s assignee or successor.’ Is a general assignment clause in an agreement that contains a non-compete covenant sufficient under the statute?” Read on>>

“Ohio Court Holds Surviving Merger Entity Cannot Enforce Noncompete Agreement Absent Assignment” in Employment Flash – September 2012 (Skadden, Arps, Slate, Meagher & Flom LLP):

‘The Ohio Supreme Court, in a 4-3 decision affirming the lower courts, held that in the corporate merger context, the surviving company may be prevented from enforcing a restrictive covenant against an employee where express language allowing for assignment of the covenant is absent.” Read on>>

Want To Ensure Your Noncompete Is Valid? Read It. All Of It (Poyner Spruill LLP):

“The natural tendency for many people when reviewing contracts is to skip to the good stuff. They want to know the important details. How much do I have to pay? What does the other party have to do? How long will this contract last? The boilerplate provisions at the end, involving things like severability, authority, and choice of law aren’t very exciting at all… A recent case from the United States District Court for the Western District of North Carolina, however, makes clear that these provisions, particularly in the context of covenants not to compete, are as important as ever.” Read on>>

Court Rejects 18-Month Restrictive Covenant on Former Owners Who Became Employees (Pullman & Comley, LLC):

“Do not simply use non-compete agreements without demonstrating the need for them. If there is a need, think about specifying the reasons why it is needed in the agreement itself. And understand that some judges will look quite skeptically on these restrictive covenants so be prepared to show how these agreements fit within the company’s overall strategy to protect trade secrets or confidential information.” Read on>>

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