CA Vs. MA In Battle Over Non-Compete Clause 248
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."
Hey (Score:5, Informative)
In Australia, non-compete clauses are classed as restraint of trade, and thus illegal. Sucked in ex-EMC executive!
Re:Hey (Score:5, Insightful)
Re:Hey (Score:5, Informative)
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)
Not that this argument about IP works in the first place - this guy is an executive.
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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?
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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
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Since your former employer (unless they're SUN) doesn't own the IP to MySQL, it's not an issue. They can't claim ownership of your knowledge of MySQL since MySQL is already owned - by someone else - and the license that governs ownership of that knowledge is the license between YOU and MySQL (the gpl) unless your former boss had a separate agreement with MySQL that granted THEM ownership rights, which I seriously doubt, seeing as SUN bought them. Ditto for your other examples. What they DO own is the propr
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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.
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You know someone was going to do it!
Re:IP (Score:4, Funny)
Bart: "Is Mister Freely there?"
Moe: "Who?"
Bart: "Freely, first initials I. P."
Moe: "Hold on, I'll check. Uh, is I. P. Freely here? Hey everybody, I. P. Freely! Wait a minute... Listen to me you lousy bum. When I get a hold of you, you're dead. I swear I'm gonna slice your heart in half."
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"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.
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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
Both arguments make sense (Score:4, Interesting)
Re:Both arguments make sense (Score:5, Insightful)
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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
Re:Both arguments make sense (Score:4, Informative)
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.
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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.
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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
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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
Re:Both arguments make sense (Score:4, Insightful)
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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
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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.
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The government has limited business telling people what they can and cannot agree to in a contract.
There are many statutory rights you cannot invalidate with a contract.
Here are some examples in California:
1) Your landlord cannot put a clause in your rental/lease agreement that they can enter the property at anytime to check its condition.
2) An employer cannot place conditions on a severance in regards to suing for back wages or filing a complaint to the state.
3) Because California is a no-fault divorce state, both pre and post nuptials cannot use faults of character or behavior as conditions.
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It's not duress this way. Duress would be "Sign this or we'll harm you/your family/your dog/etc". There are always options in the other case. You may not like them, but they exist.
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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?
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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?
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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.
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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
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The right to work. (Score:3, Insightful)
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?
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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
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Suppose someone were going to pay me 2 years worth of money, up front, for 1 year of work, in exchange for not competing for a year.
That's not how it works. They pay you market rate for doing your job (possibly a bit above to make you leave). It certainly isn't twice as much or (years worked+noncompete term)/(years worked) extra.
That's really the problem.
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So, people should not have the right to agree to sell certain rights?
Did he FREELY sell those rights for an identifiable compensation? Or was he coerced into something that clearly takes away right, by not having a choice (e.g. sign this or no job)? If EMC's intent was STRICTLY to be sure trade secrets are not divulged, then why didn't they just ask him to sign an agreement for that? The reality is these clauses are abusive because they go beyond what the companies are claiming they protect. These clauses are intended to entrap people to keep pay levels lower, reducing t
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If EMC's intent was STRICTLY to be sure trade secrets are not divulged, then why didn't they just ask him to sign an agreement for that?
Because no one would ever dream of lying and breaking a contract that is near impossible to enforce? Or do you have some magic ability that would let EMC know that someone divulged trade secrets and prove in court that a particular ex-employer did so?
Let EMC sue in Barbados (Score:5, Insightful)
Re:Let EMC sue in Barbados (Score:4, Insightful)
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Both arguments make sense but..... (Score:2, Interesting)
"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.
Noncompete agreements are the DRM of human capital (Score:3)
So MA is bringing back slavery? (Score:5, Interesting)
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.
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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,
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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
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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
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So why are there non-competes in California? (Score:5, Interesting)
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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.
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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?
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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
Re:So why are there non-competes in California? (Score:5, Interesting)
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But which is more important? Or actually: which state really has jurisdiction in this case?
Probably the State in which the contract was executed or otherwise specified in the contract.
California is right (Score:5, Insightful)
Ask yourself this: which state has Silicon Valley? Which state is home to the vast majority of tech companies?
And which state is known for overreacting to animated LED characters by deciding they're bombs and evacuating the state capital over them?
By the way, this has already been answered in a previous Slashdot article. Someone has done the research: California's lack of non-compete agreements helped them become a center of technology in the US. Massachusetts' non-compete agreements helped ensure that no tech company prospered there. (The only company I can think of that was based in Massachusetts is Digital, and they died what, over a decade ago?)
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Now, none of this means that I think "non-compete"s are anything other than a flaming pile of fail (They strike me as a textbook case of how the "freedom" to make certain sorts of binding contracts can sometimes result in substant
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Plenty of companies have branch offices, but EMC is one of the only ones I can think of with headquarters in Mass, along with Raytheon.
Branch offices in Mass that I can name off the top of my head: Sun, Intel, BAE, Cisco, Broadcom, Nvidia.
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Huh? ATI was based in Markham, Ontario.
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Everyone here knows lots of tech companies that are located in Silicon Valley and elsewhere. As for Massachusetts, can you please list some? Other than perhaps EMC, I can't really think of any offhand. And no, MIT doesn't count, since it's a school.
Maybe you're the retarded one, since you like to throw terms like that around.
Re:California is right (Score:5, Informative)
Lots of companies. Although since the PC beat the mainframe there are fewer computer companies.
We have large offices for Raytheon, Parametrics, Solidworks, Comverse, Sigmatel, ..... uswusf.
All the major "California" companies have large offices here in MA too:
Sun/Oracle
Microsoft
Lotus/IBM
Hp
Symantec
Akami
In cambridge/boston its more Biotech (Amgen Novartus, pfizer )etc...
google is your friend
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I wouldn't call Raytheon a "tech company". Defense contractors aren't like normal companies in any way.
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That's true, but that stuff is usually done in very small companies that you'll never hear about. The behemoths simply aren't able to do anything innovative because of their internal structure.
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Let's not forget that DEC was a Massachusetts company. So was DG. So was Lotus. So is BBN. So are many other MIT-spawned entities.
Re:Maybe they're both right (Score:5, Insightful)
I'm almost always in favor of more open markets over regulation and control, so, IMHO, non-competes are stupid and a restraint of fair trade.
Sounds a little self-contradictory there. The non-compete was not part of "regulation and control"; it was part of a contract negotiated supposedly in good faith by both parties in an open employment market. If you think non-compete's are a restraint of fair trade, then I suppose your head asplode, because it's the regulations that forbid them and nothing else. Only government regulation is supporting fair trade here, not the open market.
Of course, those of us who aren't ideological fanatics and who realize that governments of the people are the only thing standing between us and outright slavery by corporate/military/religious/political overlords aren't a bit surprised. Governments that are too big or too small both lead to slavery, and finding a reasonable balance in between is almost impossible, which is why the phrase 'Situation Normal, All F***ed Up' was coined. :)
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"..., those of us who aren't ideological fanatics and who realize that governments of the people are the only thing standing between us and outright slavery by corporate/military/religious/political overlords aren't a bit surprised."
wow. actually believing that MAKES you a fanatic.
Non-compete are bad becasue when implemented in a state it become impossible to find work without signing one. So no, there isn't any free market or fair trade when forced to sign one.
Forced by practicality might be better.
When no
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I think you're misunderstanding my argument. Non-compete clauses are part of a contract; nothing to do with regulation, except insofar as the government enforces contracts in general. The only thing stopping non-compete clauses is specific regulation (in CA and other places). GPP said that regulation is bad and non-competes are bad. I was trying to get him to explain this contradiction.
Non-competes are not "implemented in a state"; they are frequently regulated against in particular states, though. By
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Pot
{
Kettle.black();
}
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I'm almost always in favor of more open markets over regulation and control,
Since non-compete clauses are contracts voluntarily signed, then, you're in favor of enforcing them, right?
So, IMHO, non-competes are stupid and a restraint of fair trade.
Well, sure. But are you in favor of regulation prohibiting stupidity? Are you in favor of regulations enforcing fair trade?
Which is more important to you?
Re:non competes only make sense when... (Score:4, Funny)
I hear Burger King has really strict IP rules around the secret to why "The King" is so creepy.
Re:non competes only make sense when... (Score:5, Insightful)
Easy solution. Legalize non-competes, but require the company to pay the employee while bound by the non-compete.
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Re:non competes only make sense when... (Score:5, Informative)
Florida pretty much does what you state. Generally the non compete clauses only hold water as long as the person remains employed. I do not know how a large lay off payment would effect this practice.
The general idea being that a contract must continue to benefit both parties. When the employee is no longer paid the no compete is dead.
Re:non competes only make sense when... (Score:4, Funny)
Sounds good, but it sets up the following far too easily:
1) Get hired by a company that has juicy IP
2) Sign a non-compete with "keep getting paid" clause
3) Quit
4) ???? (here the ??? means do whatever you want)
4) PROFIT!
PS: I don't support non-competes. I just always wanted an excuse to post a .... PROFIT! post on /.
Re:non competes only make sense when... (Score:5, Interesting)
Uhuh. Or, alternatively, the company could hire lawyers who aren't complete morons, and they write up a contract which includes two termination options for the employer:
a) Termination with non-compete, including continued pay for the duration, or
b) Termination without non-compete
If the company believes you possess knowledge that would be truly beneficial to their competitors, they can go with option a. For your mythical con-man, he gets option b.
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No ... get paid the lesser of the current pay at the current company or the new pay at the new company based on its offer. The offering company would be obligated to pay that rate if the current company decided to not enforce the non-compete.
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but the terms of your new job are also under NDA terms with the new company, so that won't work.
Re:non competes only make sense when... (Score:4, Interesting)
Well as a tech worker, I certainly do not want to work in a state where I can be sued for switching jobs! Driving away developers certainly isn't going to help Massachusetts foster technological development.
Your solution does seem to be the best of both worlds.
Re:non competes only make sense when... (Score:5, Insightful)
Well, given how Silicon Valley is vastly more important than Boston (which used to have parity), you can see which approach is more useful for technological advancement.
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Several of them are defense contractors, so if you aren't in the defense industry, they're not going to be household names. Many of them produce foundational tech or infrastructure--you never heard if it because it's not a consumer brand name, but your house or car or computer would be so 19th century without it.
It's not a great claim for MA, though--many of those companies have satellite offices all over the country and just keep the corporate HQ in MA. The work is done elsewhere.
Re:non competes only make sense when... (Score:5, Funny)
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That's actually already legal everywhere, I'm pretty sure; I don't think anyplace (at least, any US jurisdiction) outlaws non-compete terms in employment contracts that only apply while you are employed, which is what that amounts to.
Still a problem... (Score:3, Interesting)
Re:non competes only make sense when... (Score:5, Interesting)
Basically what they determined, is that the basis of a non-compete, is that the employee would be bringing something of value (which was obtained from the first employer) to a second employer, putting the first employer at a disadvantage...
However, since my wife was laid off, it was determined that by laying her off, the first employer essentially deemed that she was no longer of any value to the company... Therefore, since her status was classified as not having any value to first employer, her employment by second employer does not place the first company at a disadvantage, because they already deemed her services as being not valuable to them.
So basically that means, if you leave on your own accord, it may be enforceable.. But if you are fired or laid off, you cannot be held to a non-compete (In the state of Washington anyways), because by terminating your employment against your will, the company is admitting that you no longer possess anything of value to the company.
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I'm not trying to form an opinion about who was right in your wife's case, but wow, that's a really bogus interpretation of why a company would lay someone off.
Taking the employers pov...
Just because I don't have enough money to continue doing R&D, doesn't mean that my engineers don't possess valuable information that I already paid for and that is rightly my trade secret.
That being said...
Non-compete contracts are usually written in such an overly-broad manner that I consider them to be garbage. If a
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Look at it another way. The company choose to stop paying your wage... therefore the information or job you hold was not worth enough for THEM to keep paying for so it shouldn't stop you from getting another job with those skills. And again... they stopped PAYING you for your information so why can't you go elsewhere too.
Courts are usually very civil on these things in terms of keeping a person working. Even in the case with IBM and Apple, Apple was able to give the guy a token job "on the couch" for 9 mon
Re:non competes only make sense when... (Score:5, Insightful)
Just because I don't have enough money to continue doing R&D, doesn't mean that my engineers don't possess valuable information that I already paid for and that is rightly my trade secret.
Sucks to be you. You either keep them on the payroll or deal with losing them.
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A part of me wonders if someone did sign it, and if a company states that signing it is a requirement for continued employment, if that's considered signing an agreement under duress?
That depends on the appropriate labor laws. If they're "at-will employment", then no. Employees can quit or be terminated at any time, for pretty much any reason.
Re:non competes only make sense when... (Score:4, Funny)
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Here's a car analogy: your company buys a car and is happy with it, but a bit later times are tough and it can't afford to own the car anymore, so it puts it on the market. Somebody else buys it, and when they want to drive it, the company lawyer claims they can't drive it, because it's the company's car...
It
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The guy in this case made enough money to not have to work...
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You get a job that uses your skills in a way that doesn't compete with your previous employer. For example, when I left a job as a Unix kernel programmer, I took a job writing writing firmware for SCSI controllers and motherboards. Pretty much the same skills, but not in competition with my old job.
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The problem is that the courts don't interpret noncompete clauses that way. If the companies compete, even if your position within that company would not cause you to directly compete, it's still a problem. That means that if you had a noncompete from some large company like Sony, IBM, Microsoft, Apple, etc. that produces products in a wide range of industries, you'd be hard pressed to find employment anywhere in the industry that wouldn't violate the terms of your noncompete.
That's why they are generally
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How on earth do schools have anything to do with socialism? Let me clue you in: schools are where people go to learn and get degrees. Companies are where people go to work after they get out of school. In the USA, in the tech sector, these places are rarely in the same places; instead, they're usually on opposite sides of the country. There's lots of great tech schools in places like Georgia, South Carolina, North Carolina, southwest Virginia, Cleveland Ohio, upstate NY, etc. How many big-name tech com
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State ownership of schools is by definition socialism (to wit: the public ownership of the means of production, in this case the production of educational services). State funding of private schools is something in the middle: kinda, not quite, almost, socialism. I suppose socialism is a bit of a bad word; that's somewhat here, and not quite there. :-)
C//
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In that case, it appears socialism isn't working out too well for the east-coast states, since they're investing a lot of money into education, only to have all their graduates flee after they graduate.
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Which is why housing is so cheap in Massachusetts and California.
It brings to mine Yogi Berra: "no one goes there anymore. It's too crowded."
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I believe silicone valley is a bit south of where you were intending to refer. And they're not really into tech, but the IP is pretty entertaining nonetheless.
(Sorry, that one was just too easy)