NON-COMPETE AND NON-SOLICITATION SERVICES

Non-competition and non-solicitation clauses are frequently tucked away inside employment agreements. Employees who have not had their employment agreements legally reviewed can sometimes find nasty surprises in the form of these clauses. For example, our legal team has represented medical doctors whose physician employment agreements subjected them to onerous restrictions on post-employment activities.

Despite the fact that non-competes are not enforceable in every state under every circumstance, businesses nonetheless continue to insert these provisions into their agreements in an effort to control contracting parties long past the termination of their business arrangement. In such cases, our goal is to advise clients to they are properly protected.

Non-competition clauses sometimes serve as a deterrent to potentially competitive activity, even if unenforceable.

More broadly, we advise our clients to distinguish various interrelated legal obligations that can unduly restrict their activities both during and after the contract period:

• Confidentiality and Trade Secret Protection
• Non-competition
• Non-solicitation

These provisions can attack different kinds of competitive activities, and unless thoroughly reviewed, can be unwittingly triggered, resulting in unnecessary and costly litigation.

Proactively, we assist our clients in crafting appropriate language to help protect their interest in restraining unfair competition. For example, here are two contact provisions in an Independent Sales Representative (ISR) Agreement:

1. Non-competition. The ISR, within a five (5) year period commencing with the Effective Date, shall not, directly or indirectly engage in (or prepare to engage) in distribution or sales activities, for any business that is primarily focused on or engaged in activities relating to sales of stable water product clusters in the United States and any other country in which the Company or any of its affiliates engages in such business. The remedy at law for breach of this non-compete provision being inadequate, the ISR understands, acknowledges and agrees that the Company shall be entitled, in addition to such other remedies it may have, to temporary and permanent injunctive relief for any breach or threatened breach of this non-compete provision without proof of any actual damages that have been or may be caused to the Company by such breach. If a court determines that this covenant is unenforceable in any given state for any reason, then the court may blue-pencil or otherwise modify the scope of such covenant to make it enforceable.
2. Non-solicitation. The ISR, within a two (2) year period commencing with the termination of this Agreement, shall not directly or indirectly influence or attempt to influence or solicit present or future customers, employees, performers or independent contractors of the Company or any of its affiliates to restrict, reduce, sever or otherwise alter their relationship with the Company or such affiliates.

Many business contracts — and certainly employment agreements — should be given a thorough legal review with respect to non-competition and non-solicitation restrictions on trade.