The touchstone of a trade secret is that it provides the owner of the information with a competitive advantage in their market. Courts look at the cost of development, the difficulty in duplicating and measurable benefits to ascertain whether a bona fide trade secret exists. The first step in the…
The Federal Trade Commission is considering an administrative rule that would enact a broad ban on non-compete agreements that would prohibit contracts that restrict the employee from working for a competitor or starting a competing business. The rule would also apply to ‘de facto’ non-competes, such as non-solicitation agreements, that…
A business divorce is the process by which the owners of a business separate their business interests. The process involves negotiation and may also require litigation. These cases can be divided into four phases: the emergent phase, the examination phase, the valuation phase and the resolution phase. Most owner lawsuits…
An agreement prohibiting a former associate of a law firm from competing with his former employer within 90 miles of New York City was void and unenforceable. Solicitation of the clients of a law firm by a former associate may be actionable, even if a potential restriction on practice, in…
Key employees of a company may be bound by restrictive covenants that are included in an agreement to sell the entity, but do not reference them individually. A court should consider whether the restrictive covenant of a key employee was a significant element of the transaction and necessary to protect…
A restrictive covenant that is in force during a vesting period for securities granted as part of an employee incentive program may present an issue for enforcement, if not tied to to the protection of an employer’s legitimate interest. A court considering a preliminary injunction request blue-penciled the duration of…
Restrictive covenants that limit the ability of former employees to compete have been the subject of legislative limits in a number of states, including Maine, Maryland, Massachusetts, New Hampshire, Rode Island, Virginia and Washington. Bills that would limit the enforceability of restrictive covenants in New…
Accounting firm is compelled to repurchase the equity of departing shareholder who moved practice to competitor firm. A shareholder agreement that is integrated and intended to be the parties’ complete agreement may preclude a claim for breach of corporate by-laws. A shareholder in an accounting firm organized as a professional…
Although a former executive was bound by a restrictive covenant, the fact that his duties after joining a competitor were directed to a different market made the scope of the restrictions unreasonable. A restrictive covenant that is not narrowly tailored to protecting specific interests of the former employer at stake…
Physicians are subject to reasonable restrictions on post-employment activities that will limit their competition with a previous employer. A restrictive covenant that prohibits competition must protect a legitimate interest, impose not undue hardship on the former employee and not injury the public interest. Restrictive covenants must be narrowly tailored so…