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The Courts Government Businesses News

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

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  • 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.
  • Re:Why compete? (Score:3, Interesting)

    by i.of.the.storm ( 907783 ) on Tuesday May 05, 2009 @07:08PM (#27839479) Homepage
    Hehe, you keep on whining about socialism, we'll keep on educating the best minds in the world at the best universities in the world. Between California and Massachusetts, I think we've got the top engineering universities in MIT, Berkeley, Stanford, and Caltech, not to mention some school called Harvard in Mass which I hear is pretty good. Unless this was some sort of crazy sarcasm, but if it is it sucks.
  • by Gravedigger3 ( 888675 ) on Tuesday May 05, 2009 @07:17PM (#27839577)

    "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 Lord Ender ( 156273 ) on Tuesday May 05, 2009 @07:32PM (#27839697) Homepage

    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.

  • by Abcd1234 ( 188840 ) on Tuesday May 05, 2009 @07:32PM (#27839701) Homepage

    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.

  • by _avs_007 ( 459738 ) on Tuesday May 05, 2009 @07:35PM (#27839737)
    My wife went through a law suit a few years ago for this... The Non-compete was eventually deemed unenforceable.

    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.
  • 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.

  • Re:IP (Score:3, Interesting)

    by tomhudson ( 43916 ) <barbara@hudson.barbara-hudson@com> on Tuesday May 05, 2009 @07:59PM (#27840021) Journal

    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 proprietary business methods, data structures, and implementations that you developed, the customer lists, etc.

    They don't own general knowledge, such as how to write a query or design a database. They do own their implementation of a database, and the queries used to manipulate the data, to the extent that the database and queries are not part of generally accepted practices or obvious.

    So, back to my point, using your statements as a jumping-off point. If you're going to re-implement something, you probably wouldn't want to do it the same as at a former employer, since you have a chance to do it better, avoid the mistakes you think they made, and you're probably doing it with a different set of design goals and customers (internal and/or external) in mind.

    Copying their IP wouldn't just be wrong, it would be stupid and counter-productive.

  • by PDG ( 100516 ) <> 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.
  • by Chemoboy ( 1548401 ) on Tuesday May 05, 2009 @08:15PM (#27840153)
    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?
  • Still a problem... (Score:3, Interesting)

    by spiffmastercow ( 1001386 ) on Tuesday May 05, 2009 @08:24PM (#27840231)
    That sounds great in theory.. Problem is, the non-compete still forces you to avoid any job that could in any way compete with the company you work for (which is to say, anything involving your skillset). So they can continue to pay you incredibly low wages to keep you from working for anyone else, even if you quit. This keeps you from looking for a better job, and in some cases would prevent you from getting a job after you're laid off (though you would at least get some amount of money for continuing the non-compete).
  • by Alien Being ( 18488 ) on Tuesday May 05, 2009 @08:35PM (#27840319)

    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 company has a legitimate cause of action against a former employee transferring proprietary info, then let them make the case and be subject to a penalty if they lose.

  • by corbettw ( 214229 ) <corbettw&yahoo,com> on Tuesday May 05, 2009 @09:07PM (#27840545) Journal

    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 mabhatter654 ( 561290 ) on Tuesday May 05, 2009 @09:26PM (#27840677)

    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 months to fulfil the non-compete obligations...but again the guy still got a paycheck during the time and that's what keeps the judge happy.

  • by Fulcrum of Evil ( 560260 ) on Tuesday May 05, 2009 @09:58PM (#27840919)

    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?

  • by stephanruby ( 542433 ) on Tuesday May 05, 2009 @10:39PM (#27841121)
    I never refuse. I cross it off. I sign. And I ask that they initial the change.
  • by caitsith01 ( 606117 ) on Tuesday May 05, 2009 @11:05PM (#27841325) Journal

    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 sensitive and highly valuable proprietary material, and there is a legitimate expectation that you cannot just walk across the road and use "your knowledge and expertise" to transmit the benefits of that investment directly to a competitor.

  • by Mr. Roadkill ( 731328 ) on Wednesday May 06, 2009 @01:37AM (#27842211)

    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 enforceable, then if that interpretation changes it may well be that currently-invalid non-compete agreements will suddenly become enforceable again. It'd all be under the one set of legislation, but changing interpretations of it.

    If it's a matter of the legislation currently saying they're unenforceable, and some lawyer comes up with a new spin on them that the courts say *does* make them enforceable, and that survives the appeal process, then it may also be that currently-invalid non-compete agreements suddenly become enforceable. Again, it'd all be under the one set of laws, with again different interpretations of them at different times.

    If the legislation currently says they're unenforceable, and the legislation gets changed to make them enforceable, then you'd have to expect that the law - as it stood at the time the agreement was signed, as also adjusted by any relevant case law during the lifetime of that legislation - should stand. But then, it's not unheard of for legislatures to try to get retroactive legislation through...

    So, it's in the employers interests to try to get non-compete agreements signed if they can - just in case.

  • Why EMC Sued... (Score:1, Interesting)

    by Anonymous Coward on Wednesday May 06, 2009 @04:20AM (#27843013)

    I know this isn't the premise of TFA, but there is an interesting strategy behind EMC's lawsuit which is independent of whether the non-compete is ultimately enforceable. It seems doubtful that they are just being vindictive here (though I'm sure there was more than one C-level exec who cursed Donatelli and HP). Rather, by demonstrating that they are willing to sue, costing HP and Donatelli time and money, they effectively discourage HP and Donatelli from pulling other EMC employees (who may actually possess technical IP) on Donatelli's coattails. Furthermore, the action discourages similar defections from EMC that may be wholly unrelated to this incident.

    They cannot allow this precedent to be set uncontested.

Executive ability is deciding quickly and getting somebody else to do the work. -- John G. Pollard