Forgot your password?
typodupeerror
The Courts Government Businesses News

CA Vs. MA In Battle Over Non-Compete Clause 248

Posted by kdawson
from the so-free-you-can-choose-bondage dept.
Lucas123 writes "A case was filed with superior courts in California and Massachusetts involving a former EMC top executive who is trying work for HP. The case is throwing into relief Massachusetts's and California's differing approaches to non-compete clauses in employment contracts. California courts have argued that non-competes hamper a person's ability to traverse the marketplace freely for work, while Massachusetts courts say the agreements actually afford freedom to develop technology without the fear of IP theft."
This discussion has been archived. No new comments can be posted.

CA Vs. MA In Battle Over Non-Compete Clause

Comments Filter:
  • Hey (Score:5, Informative)

    by ta bu shi da yu (687699) on Tuesday May 05, 2009 @06:45PM (#27839229) Homepage

    In Australia, non-compete clauses are classed as restraint of trade, and thus illegal. Sucked in ex-EMC executive!

    • Re:Hey (Score:5, Insightful)

      by evilbessie (873633) on Tuesday May 05, 2009 @07:04PM (#27839445)
      However if a company wanted you to take 6 months paid leave before you could leave I have no problem. But once you stop paying me you stop telling me what to do, that's mostly the way employment works.
    • Re:Hey (Score:5, Informative)

      by HalfFlat (121672) on Tuesday May 05, 2009 @08:52PM (#27840441)

      In Australia, non-compete clauses are classed as restraint of trade, and thus illegal.

      This is, as far as I know, not true. Non-compete clauses are legal, but not universally regarded as valid — they are evaluated on a case-by-case basis. Here is an interview [bnetau.com.au] with Peter Townsend [townsendslaw.com.au], a lawyer specialising in business law, describing the state and enforceability of these clauses in Australia.

  • IP (Score:5, Funny)

    by Gat0r30y (957941) on Tuesday May 05, 2009 @06:51PM (#27839297) Homepage Journal
    It seems IP doesn't only belong to the company- but also at least to some degree to the person who actually developed said IP. As it is located in his/her intellect and it is sort of difficult to remove without destroying it.
    Not that this argument about IP works in the first place - this guy is an executive.
    • by tomhudson (43916)

      But there's no reason you have to use the knowledge you gained at your former employer. After all, if they're your FORMER employer, chances are good that there are at least a few thing you'd do differently, given the chance. Why would you want to repeat what you consider mistakes?

      • by PPH (736903)

        Who says I gained knowledge at my prior employer? Perhaps they gained it from me.

        As you climb higher up the corporate ladder, this tends to be the case more often than not. Individuals bring skills and knowledge into a company and they are compensated quite highly. They are also paid to keep these skills out of the hands of their competitors. And its this latter point that argues against non compete clauses. Pay me a month's wages and you have the exclusive use of my talents for a month. 6 months pay for 6

    • Not that this argument about IP works in the first place - this guy is an executive.

      That was my thought when I read the summary too. He's a "top executive" at that. So the only IP he may have are the new buzz words EMC is planning to use in their next marketing campaign.

    • Re: (Score:3, Funny)

      by BGrif (1190941)
      Can someone tell me how people can use IP freely?

      You know someone was going to do it!
    • by barzok (26681)

      Not that this argument about IP works in the first place - this guy is an executive.

      "Top executives" move around various companies in the same industry constantly. It's the good ol' boys club. When I worked at an insurance company, they brought in a new CIO from another insurance company to do a "slash & burn" job on the IS department - same thing he'd been hired by the previous company to do, and probably at least one company before that.

    • It seems IP doesn't only belong to the company- but also at least to some degree to the person who actually developed said IP.

      Most employment contracts say differently. Unless your employer is less slimy than most, they claim sole ownership of everything you create for the term of your employment. I redlined my contract to say explicitly that what I create outside working hours, and not using company resources, belongs to me and me only. My main motivation for that was being able to contribute to open-sour

  • by techno-vampire (666512) on Tuesday May 05, 2009 @06:59PM (#27839373) Homepage
    To some extent, both positions are right. To me, the problem is in how broadly do you define competitor. As an example, let's say I was doing graphics work for an MMORG. Clearly, working for a different MMORG would be working for a competitor. Working on CGI for an animated feature wouldn't be, at least to me. Would working for a different company bringing out a first person shooter, or turn based strategy game be working for a competitor? Personally, I wouldn't think so, but again, that could be argued either way.
    • by evilbessie (873633) on Tuesday May 05, 2009 @07:07PM (#27839469)
      No. Once you stop paying me you don't have any right to tell me what to do. You don't want me to join a competing company for say a year, you can damn well pay me for a year to sit on my ass. I'm fairly sure that they are not allowed in the UK anyway, so I'm fine.
      • by codegen (103601)
        If they are not allowed in the UK, then why is one of the running jokes in the Alex comic (Alex Masterly) about gardening leave? If I understand the context right it is about non-competes, although in the 6 month to 1 year range.
    • I agree that to a certain extent both positions are right, but I differ on the reasons.

      Presumably, the executive was compensated (probably very well compensated) in exchange for his agreeing to not work for a competitor. With that in mind "a contract is a contract". If he didn't want to work under those conditions he should have simply refused to sign the non-compete agreement and let the chips fall where they may. No fair signing the contract, taking the money and then crying about it later when you are

      • by AK Marc (707885) on Tuesday May 05, 2009 @08:16PM (#27840161)
        No fair signing the contract, taking the money and then crying about it later when you are expected to live up to the contract.

        In CA, they put non competes in contracts all the time, even though they are essentially illegal (and anyone writing them in CA knows that). You can force "non compete" in that someone may not take something owned by the previous company, like a product or such, and use that at the new company for a competitive advantage. An illegal contract does not need to be honored. You can't sign yourself into indentured servitude. And a contract that specifies you can't work in the field you are most qualified in is not much different. That the companies like to have them to badger former employees with illegal contracts is all find and dandy. But in some areas, you aren't given a choice. You sign, or you starve (figuratively). So, you sign and expect the illegal contract to not be enforced.

        On the other hand, companies are so willing to throw employees under the bus today that it is ridiculous to think they can interfere with you taking another job by claiming "IP" issues.

        The company isn't claiming IP. MA is. MA claims that forced unemployment is ok because the risk that someone might accidentally share info with a competitor is too high. CA says that forced unemployment is illegal regardless of contract, just like indentured servitude is.
        • And a contract that specifies you can't work in the field you are most qualified in is not much different.

          That's part of the point I was trying to make. I'd find a non-compete like that too restrictive, but one that allows you to work in a different part of your field just fine.

    • by geekoid (135745)

      Nope. A person should be able to work for whom they please and not be tied to a company while not getting paid.

      First, it's graphics work, so it will need to fit the style of the MMORPG. So it's going to be different by it's nature. Your not going to take your WoW animatin and stuff it into age of Conan.

      This is just used to make people afraid to look into the job market and feel trapped. If someon does leave it's used to extract punishment.

      Yeah, if you want someone to sit for a period then offer them some mo

      • Nope. A person should be able to work for whom they please and not be tied to a company while not getting paid.

        Just because you can't work for a competing company for six months to a year, doesn't mean you can't work. There are few professions where you can't find work that doesn't conflict with a no-compete clause if you want to badly enough. The only people who are really harmed by them are people who say, "That's all I can do," and won't look for anything else. A graphic artist can look at other typ

    • by Libertarian001 (453712) on Tuesday May 05, 2009 @07:58PM (#27840009)
      Companies have no business telling people where they can and cannot work. Don't want to risk losing your people? I guess that means you value them. Maybe try not treating them like shit and then you won't lose them.
      • by cdrguru (88047)

        The problem is, a "corporation" has no ethical base. So a competitor offers a key employee 3x their salary to come work for them. Knowing full well that the loss of this key employee will set back the release of a product their current employer is trying to get out.

        They pay the guy 3x his former salary for four months and fire him. Nope, you don't fit in with our culture.

        Competitor succeeds in torpedoing product launch so their product is the only one in the marketplace longer. Big win for them.

        Former e

      • Maybe try not treating them like shit and then you won't lose them.

        What does this have to do with what I wrote? It has nothing to do with why the employee left. Maybe he wanted to move to a different city, maybe his project ended and he wasn't needed any more, maybe, especially with the economy so bad he was downsized. For that matter, maybe he wanted to try something new.

    • by MobyDisk (75490)

      What if the MMORPGs are in different markets with minimal crossover? What if the employee left because the other MMORPG sucks and they learned nothing useful?

    • by cdrguru (88047)

      This example probably has no "compete" in it in any meaningful way.

      Let's say you were doing graphics design for an ad campaign for a new product for Apple. Like all new Apple products, it is real secret. Microsoft offers you more money, better benefits, relocation to anywhere you want to live - just bring along samples of your recent work. Very recent work. Big, high-resolution samples.

      Should they be able to do this with impunity?

      • That's an interesting question. If you haven't any samples that don't reveal any secrets, and Apple doesn't agree to letting you take them, then I'd have to say no to that.
      • Re: (Score:3, Interesting)

        by corbettw (214229)

        That's apples and oranges (no pun intended). It's one thing to bring your knowledge with you, but bringing work product along should be strictly verboten. Your current employer paid you to create those items, it would be unethical to give them to someone else.

      • by rts008 (812749)

        Should they be able to do this with impunity?

        If it directly breaks patent laws, or infringes on copyright, then I would say no*. If it does neither, then yes, and fsck the 'trade secrets' type BS.
        If it is truly a valid 'trade secret', then you can cover it with a patent, or it will fall under copyright, or trademark. The problem is trying to apply IP law to spurious shit that is claimed to be a 'trade secret' that really is not applicable in that situation.

        *Having said that, I do not mean to imply that to do so is 'wrong' by my philosophy of current I

  • The right to work. (Score:3, Insightful)

    by Bellegante (1519683) on Tuesday May 05, 2009 @07:05PM (#27839457)
    The freedom to seek gainful employment should not be infringed.

    While not a specifically enumerated right of the people, it is both expected that we work in a productive manner, and beneficial to the society in which we live.

    The only way I could possibly agree with the enforcement of such a contract would be through compensation - have them pay his salary for each of the 12 months they expect him to be employed.

    Even then, it deprives society of the good work he could be doing. Why should the government agree to such a thing?
    • Re: (Score:3, Interesting)

      by caitsith01 (606117)

      The freedom to seek gainful employment should not be infringed.

      While not a specifically enumerated right of the people, it is both expected that we work in a productive manner, and beneficial to the society in which we live.

      The only way I could possibly agree with the enforcement of such a contract would be through compensation - have them pay his salary for each of the 12 months they expect him to be employed.

      Even then, it deprives society of the good work he could be doing. Why should the government agree to such a thing?

      I think confidentiality is a better concept to employ in this scenario than blanket non-compete clauses. I.e., fine, work for whoever you want, but your previous employer should (and does, at least in Australia) have a right to require you to keep secret any confidential information you gained during the course of your employment with them.

      I am no fan of governments or companies controlling my life either. But I can see that there is a bargain to be made whereby you are paid to work on potentially sensiti

  • by timeOday (582209) on Tuesday May 05, 2009 @07:07PM (#27839473)
    It appears most of EMC is technically "located" in foreign tax havens [transnationale.org] (click Locations & Production). As such, I don't think the US Justice System should waste US taxpayer money enforcing EMC contracts. They like the low taxes in the Bahamas and Bermuda, let's see them protect EMC.
  • FTA:

    "HP is no more guilty than EMC when it comes to wooing talent from competitors. EMC has hired several HP executives, including Mark Lewis, former vice president of worldwide marketing for HP's network storage solutions group, who is now EMC's president of Content Management and Archiving, and Howard Elias, HP's former senior vice president of business management and operations, who is now president of EMC's Global Services and Resource Management Software group."

    Hahaha silly EMC. At first read I could see EMC's argument but if they aren't playing by the same rules they are trying to get enforced then I don't believe this glaring hypocrisy will go overlooked.

  • by NeutronCowboy (896098) on Tuesday May 05, 2009 @07:43PM (#27839853)

    Because that's what it really amounts to. Spend more than a few years at a company, get really good at what you do. Then, if the company pisses you off, you are faced with three options:
    1) Bend over and take it.
    2) Completely change your profession, and start from scratch. All knowledge you have acquired has been rendered useless.
    3) Be unemployed for the term of the non-compete.

    Alright, so it isn't quite slavery. You're not caned if you stop working for the master. But it's a damn risky proposition to actually stand up to any abuse.

    Is any more proof necessary that overzealous IP laws will strangle our economy? As someone else pointed out, Silicon Valley is Silicon Valley because talent is free to move between companies.

    • by russotto (537200)

      No, you're right; it's slavery. Not being caned just means the master isn't quite as brutal, not that he isn't the master.

      At any job, if you're dissatisfied with your employer or your work, you can try any number of things, but if your employer isn't interested in working with you, you've only got one real recourse, and that's to leave. Works pretty much the same way the other way; if you're insistent on not doing the job, your employer can't compel you to do it, but he can fire you.

      If your employer can,

    • by cdrguru (88047)

      How about getting a job with a company that does not compete? How about the similar job for a company in a different line of business?

      This doesn't help if your main attraction to a new employer is to bring over essentially trade secret information that they want to help them compete. This is clearly the case with a lot of Microsoft-Google job swaps. It has come up more than a few times with software companies that I have worked for. This should be actionable and in most cases, it is.

      It gets a lot grayer

      • Re: (Score:3, Insightful)

        How about getting a job with a company that does not compete? How about the similar job for a company in a different line of business?

        The more highly educated and specialized you become, the more likely it is that the situation you describe simply doesn't exist.

        I can say with a high degree of probability, my skills and experience pretty much lock me into the industry I am now, and given the diverse areas in which my company does work, anyone who would hire me could be considered a competitor.

        It's not re

    • Re: (Score:2, Interesting)

      by Chemoboy (1548401)
      I would classify it more like being an indentured servant. They are attempting to strip away the workers right through a contract which should never be possible in the first place. Perhaps, the only exception being issues of National Security or the military. Is there any way to justify this when some (maybe all) fortune 500 companies have all of their employees under IP / non-compete clauses?
  • by PDG (100516) <pdg@webcrush.com> on Tuesday May 05, 2009 @08:03PM (#27840063) Homepage
    I work for a California company, and they had me sign a non-compete. I asked them why considering that California courts will not enforce them. Response from the legal department--just in case the court changes their mind.
    • Re: (Score:3, Insightful)

      by tom's a-cold (253195)
      They do it to intimidate you, even though they know that they're not legally binding. Also, companies that operate in multiple states will try to impose terms of employment that can be enforced in whichever states are most anti-employee. If they're not enforceable somewhere else, they hope the employee won't realize that.

      They really should be abolished nationwide. It's just another way of asserting control over you even when you're receiving no compensation for the restrictions they're forcing on you.
    • Re: (Score:3, Interesting)

      I work for a California company, and they had me sign a non-compete. I asked them why considering that California courts will not enforce them. Response from the legal department--just in case the court changes their mind.

      Wouldn't the law at the time of the signing apply?

      • Re: (Score:3, Interesting)

        by Mr. Roadkill (731328)

        Wouldn't the law at the time of the signing apply?

        Um, yes, maybe...

        IANAL, and I don't particularly like the idea of non-compete agreements... but it seems pretty clear, at least to me, that it's worthwhile for the employers to get them signed if they can.

        What currently makes them unenforceable in California? Is it something enshrined in legislation, or the result of previous court decisions about legislation that tried to make them enforceable?

        If it's a matter of the legislation saying they're enforceable, and the courts having decided they're not enforce

Two is not equal to three, even for large values of two.

Working...