This is Enrico Schaefer. Welcome to Internet Law Radio. I am an internet law attorney specializing in a variety of technology and internet law issues ranging from cybersquatting to trademarks to copyrights to non-compete and trade secret agreements. Today, we’re going to be talking a little bit about non-compete agreements. And we’re going to be talking about those agreements from the employer perspective.
When you are drafting a non-compete agreement, there are a number of things that you need to consider from the employer point of view. In Michigan and many other states, non-compete agreements are considered enforceable to the extent they are reasonable and support a legitimate business purpose. So, it’s really important when you’re drafting your non-compete to understand who’s the employee that’s going to be signing it, and how are you going to explain to a court if there should be non-compete litigation or a lawsuit to enforce a non-compete agreement. What are you going to tell the judge is your explanation for needing this non-compete agreement? And, although the bar is not particularly high for that particular element, you need to be able to explain, and it’s best if the rationale is at least suggested, if not, expressed in the non-compete agreement itself.
A non-compete agreement could not only be drafted to indicate that your employee cannot work for a competing company directly or indirectly for a period of years, but to also spell out the unique nature of that employee’s employment. So, while a lot of boilerplate or non-compete agreement forms out there are just simply completely generic, you can do better than that in your drafting. You can say, for instance, that so-and-so is a technology manager at your company and is involved in a variety of issue ranging from creating and implementing html code, database code, other technology applications, and application development for your company on proprietary process that relate to the strategic direction of your company. And then, when you go in front of the judge, if you should have to sue for violation of the non-compete, you could explain that the very things that are in the non-compete agreement support the legitimate business purpose.
So, non-compete drafting can be done on a form or boilerplate basis, but you shouldn’t do that if you’ve got some funds to spend to get a couple further steps up the ladder. You should tailor your non-compete to the specific employees involved. You need to be able to show the legitimate business purpose as just one of the elements, which will be required if you should ever have to file a motion for injunction, for a preliminary injunction or a temporary restraining order, for instance, asking that the court order that the employee cease working for a competitor.
In the next episodes, we’ll be talking more about non-compete agreements and what is required in order to make them enforceable in non-compete agreement litigation, if you should have to go to court.
For Internet Law Radio, my name is Attorney Enrico Schaefer signing off for today. We’ll see you next time.