Trade Secret Attorney, Non-Compete Agreement Attorney

How to Best Obtain a Non-Compete Agreement?

Employers often obtain non-compete agreements or non-competition agreements from their employees.  However, the employees are often in a position to successfully challenge the validity or reasonableness of the non-compete.  Employers often ask, “How do I best obtain a valid non-compete agreement?”  The best and most effective way to obtain a valid non-compete agreement by an employer from an employee is to do it with the offer of employment to the employee. 

There is legislation pending and being debated in Michigan that would require employers to obtain a non-complete agreement from the employer and include it with the offer of employment, otherwise it would be invalid.  Absent the passage of the legislation, the most effective way to obtain a valid non-compete is to still include it with an offer of employment.   This does several things.  It avoids the argument from the employee that the non-compete agreement was made without consideration because the employee will understand that it is a condition of the employment.  It will remove the stigma of unfairness as the employee will no longer be able to argue that he or she did not know what they were getting into in executing the non-compete agreement.  It will also go a long way towards an employee attempting to argue that the non-compete agreement is unreasonable in both scope and duration, which is otherwise a requirement for a valid a non-compete, because the employee executed the agreement at the same time he or she was offered employment, making the reasonableness argument much more difficult.  Finally, it will take the away the sympathy factor from a judge who is often moved by the fate of the employee who indicates that “I was faced with signing the non-compete or losing my existing employment”. 

What is the best way to obtain a non-compete agreement?   The best way to obtain a valid non-compete agreement is to offer the non-compete agreement at the same time you make an offer of employment to the employee.  

Non-Compete Agreement Considerations for Employers

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. 

Enforceability of Noncompete Agreements in California | California Weakens Enforcement of Non-compete Agreements

The California Supreme Court has ruled that employee non-compete agreements are not valid unless the agreement involves the sale of the business.  The court's opinion in Edwards v. Arthur Andersen, L.L.P. involved a certified public accountant who had signed a non-compete agreement with a former employee.  In exiting his former employment, the employee was asked to sign a termination of non-compete agreement with other release provisions in it in which the employee refused to sign.  Subsequently the employee went to work for another employer.  The court held that because the non-compete agreements are generally invalid, that the consideration for demanding release of an invalid non-compete agreement could be considered a wrongful act and illegal under California law. 

The Edwards Decision is a significant clarification in California law and likely a trend in the unwillingness of courts generally to enforce questionable non-compete agreements in a down business climate. 

Companies Must Do More To Define and Protect Their Trade Secrets

GLOBAL WATER GROUP, INC., Appellant v. Robert ATCHLEY and Aspen Water, Inc., Appellee. (The Trade Secrets Vault)

Court of Appeals of Texas, Dallas. GLOBAL WATER GROUP, INC., Appellant, v. Robert ATCHLEY and Aspen Water, Inc., Appellee. No. 05-06-00709-CV. Jan. 9, 2008.
Rehearing Overruled Feb. 14, 2008.

Background: Water purification corporation filed lawsuit against its former president and his competing water purification company, asserting claims for misappropriation of trade secrets and breach of shareholder agreement. Following a jury verdict in favor of plaintiff, defendants filed motion for judgment notwithstanding the verdict (JNOV). The 116th Judicial District Court, Dallas County, Robert Frost, J., granted motion. Plaintiff appealed.

Holdings: The Court of Appeals, O'Neill , J., held that:
(1) plaintiff's formula of compound used in "mixed media pod" during absorption step of water purification process was not a trade secret;
(2) sequence of process used by plaintiff in its water purification system was not a trade secret; and
(3) corporation's former president did not breach shareholder agreement.

Technorati Tags: trade secret, fiduciary, shareholder

Non-Compete Agreement & Trade Secret Attorneys: The Employer Perspective

Non-Compete Assessment For Employers:  If you are an employer and are looking to draft, upgrade or enforce a non-compete agreement, aslo known as a non competition agreement, our attorneys can help you define a strategy which provides the greatest return on your legal dollars.  Developing a non-compete agreement or non competition agreement is the easy part. Designing a strategy which enhances the likely enforecement of your agreement in court and protects your trade secrets should be your most important business goal. Especially in this difficult economic climate, the large number of employee layoffs and terminations make is cost prohibitive to drag every employee who violates their non-compete or discloses trade secrets into court. Wouldn't it be better to put a system in place which drastically improved employee compliance with their non-compete agreements?  Our attorneys can help your company understand you to protect its assets - on a flat fee defined deliverable basis - in the following areas: 

• Drafting or updating non-compete, trade secret and patent/invention agreements which will stand up in court.
• Developing a process and audit chain to ensure that each important employee has signed a non-compete contract and, as importantly, understands their non-compete obligaitons
• Designing and updating your trade secret and invention protection internal process.
• Enforceing your non-comepte agreements against employees by threat letter or litigation if ncessary.
• helping your company understand its options and providing attorney recommendations regarding risks and strategies.  

 As importantly, we can provide you the guidance and advice you need within a budget that works for you. Don't be penny wise and pound foolish.  Contact a non-compete attorney today by calling 866.936.7447 (toll free) or sending us an email describing situation.

Attorney Mark Clark and the Traverse Legal team have included some resources below to help your company understand the intricacies of non-competition agreements and trade secret issues:

What is a Non-Compete, Non-Solicaiton and Trade Secret Agreement? A non-compete agreement is an agreement signed by an employee or contractor where he/she agrees that they will not engage in certain employment within a certain geographic area for a certain period of time after they quit or are fired. A non-solicitation contract is an agreement signed by an employee or contractor where he/she agrees that they will not contact and/or solicit an employer's customers and/or remaining employees for a certain period of time after they quit or are fired. Trade secrets are docuemtns and information owned by the company which provide competitive advantage. 

This article will address non-compete, trade secret and non-solicitation agreements from the employers point of view.