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Restrictive Covenants: Non-Solicit

We are continuing our discussion of restrictive covenants this week with an overview of non-solicit provisions.  In essence, a non-solicit provision prohibits a former employee from soliciting its former employer’s current, prior or prospective customers and/or employees for a specified period of time.

In general (it varies State by State), courts are more likely to enforce a non-solicit of employees or customers clause than a strict non-compete provision.  The main factors that a court will look at include whether the non-solicit:

  • provides adequate consideration for the employee’s agreement to this restrictive covenant;
  • has a valid, protectable interest in having the non-solicit provisions enforced; 
  • imposes restrictions on the geographic scope, duration, and type of prohibited activities that are reasonably limited to protect the employer’s protectable interest; and
  • allows the employee to earn a livelihood in their field of work.

The bottom line is that like a non-compete, the non-solicit provision typically must be fair and reasonable.   If you have questions, please make sure you follow up with your professional business advisors.

Here are a few other things that may be of interest:

As always, please don’t hesitate to email myself (jsanders@mpl-law.com), Andy Miller (amiller@mpl-law.com), Christian Miller (cmiller@mpl-law.com), Erik Spurlin (espurlin@mpl-law.com), Brad Leber (bleber@mpl-law.com) or anyone in our office with questions or comments.  

Please see all of our prior updates at this link or if you would like to be added to our email list, please click here.  

Restrictive Covenants: Non-Competes

Non-competes have been a hot topic of late with the FTC and President Biden taking a hard line to try and significantly limit and/or eliminate their usage.  They apply to employees and/or formers owners of a business.  For today’s purposes, we will be focusing on non-competes for employees.  Below are some of the key considerations when drafting a reasonable and enforceable non-compete:
What does it prevent a former employee from doing?

  • Taking and using company trade secrets & confidential information
  • Taking company clients, both existing or prospective
  • Using any specialized training provided by their former employer to compete

What are the typical restrictions on the former employee?

  • The former employee cannot go to a competitor company
  • The former employee cannot start a competitor company that offers the same products or services
  • The former employee cannot recruit former colleagues to join the competitor business

Is it enforceable (i.e, what do Courts look at)?

  • Does it protect your legitimate businesses interest?
  • Is the time restriction reasonable?
  • Is the geographic restriction reasonable?
  • Was the employee provided some type of consideration in exchange for the non-compete?

The above items are high level points that should be considered when implementing non-compete agreements with your employees.  However, remember there is a very real movement at both the State and Federal level to significantly limit their application.  If you have questions about their viability and/or enforceability, please make sure you consult with your professional business advisors.
Below are some good articles that can provide more insight:

You Must Protect This House! – Restrictive Covenants

I probably get a call or question once a week about the enforceability of restrictive covenants (i.e., non-compete/non-solicit/non-disparagement/confidentiality clauses).  It should be straightforward, right?  When you hire someone for a job, part of their agreement is they won’t go work for your competitor and take all your secrets when they leave.  Alternatively, if you are a partner or shareholder in a company and decide to move on, the trade secrets of the company should stay with the company.  Seems straight forward.

Okay, that’s a bit simplistic and it is not that easy.  In fact, every State has their own rules related to these often used and misunderstood provisions that range from allowing them all the way to not allowing them at all.  To make matters even more complex, the FTC has waded into this topic with a goal of eliminating non-competes (for the most part).  So, what is the right answer?

Over the next few weeks, we will explore the key restrictive covenants clauses that are used in employment, shareholder or partnership agreements.  Below is a quick over of each:

  • Non-Compete – a clause that prohibits a former employee/shareholder/partner from competing against their former employer or company within a particular geographic area for a specified period of time.
  • Non-Solicit – a clause that prohibits a former employee/shareholder/partner from soliciting its former employer’s/company’s current, prior and/or prospective customers for a specified period of time.
  • Non-Disparagement – a clause that prohibits employees/shareholders/partners (or former) from soliciting making negative statements about their employer/company.
  • Non-Poaching – a clause that prohibits a former employee/shareholder/partner from soliciting the former employer’s/company’s employees, for example, to work at a competing business.
  • Confidentiality – a clause that prevents a former employee/shareholder/partner from disclosing or using the proprietary information of the former employer/company.

Restrictive covenants, like Under Armour famously says in its advertisements, are effective ways to “Protect this house!” when drafted and implemented properly.  Companies and employers should make sure these provisions are reviewed on a regular basis with their professional business advisors and internal team members (namely legal counsel and HR).

Here are a few other things that may be of interest:

As always, please don’t hesitate to email myself (jsanders@mpl-law.com), Andy Miller (amiller@mpl-law.com), Christian Miller (cmiller@mpl-law.com), Erik Spurlin (espurlin@mpl-law.com), Brad Leber (bleber@mpl-law.com) or anyone in our office with questions or comments.  

Please see all of our prior updates at this link or if you would like to be added to our email list, please click here.  

Last Stop on the IP Tour – Patents

We are going wrap up our tour of IP with a review of patents this week.  Essentially, a Patent is a legal right granted by the applicable government organization to a creator for an invention that is new, useful or offers a new solution to a problem.

In the US, most patents are valid for 20 years and come in one of three different types:  Utility, Design and Plant.  Utility Patents cover new inventions and are the most commonly used type of patent.  A Design Patent covers original, new and ornamental designs for manufactured products.  Plant Patents deal with new and unique plants invented in a lab or cultivated area.

The process for applying for patent protection in the US is laid out on the US Patent and Trademark website.  It can be one of the more daunting and extensive IP filing processes.  However, if your invention has merit and value, it can be worth it. Check out some of the articles below detailing some of the higher profile patent disputes:

If you think you have a project that is worthy of a patent, I suggest you engage an experienced intellectual property attorney to help you navigate the process.

Here are a few other topics that may be of interest:

As always, please don’t hesitate to email myself (jsanders@mpl-law.com), Andy Miller (amiller@mpl-law.com), Christian Miller (cmiller@mpl-law.com), Erik Spurlin (espurlin@mpl-law.com), Brad Leber (bleber@mpl-law.com) or anyone in our office with questions or comments.  

Please see all of our prior updates at this link or if you would like to be added to our email list, please click here.  

Stop! Collaborate and Listen – Copyrights

One of the more famous legal cases occurred when David Bowie and Queen sued Vanilla Ice for copyright infringement.  They said that Ice used notes from their Under Pressure song in his Ice Ice Baby song.  In defending himself, Ice said he added an extra beat…..literally.  The two sides ultimately settled, but this is a classic copyright infringement case.  Check out the articles below for some other examples:

Essentially, copyrights protect creators of original content from unauthorized use or duplication.  Copyrighted items can include music, photos, writings, software and architecture.  A work or creation is considered original if the author created it from independent thinking.  A copyright is protected as soon as its attached to a tangible medium (e.g., written on a piece of paper, recorded on an audiotape or videotape, stored on a flash drive or in the cloud).

The easiest way to notify others of copyright protection is to register the work with the US Copyright Office.  The time for approval can take approximately a year depending on whether you submit the application electronically or by hard copy.

Once approved, the original copyright owners are protected by copyright laws the rest of their lives and 70 years after their death.  If the owner is an entity like a corporation, then the protection period is 95 years from the date of publication or 120 years after creation, whichever expires first.  FYI, these timeframes were updated in 1998 (prior version was the Copyright Act of 1976) pursuant to the passage of the Sonny Bono Act or Mickey Mouse Protection Act.

If you think you have a work worthy of being copyrighted, I suggest you engage an experienced intellectual property attorney to help you navigate the process.  Next week, we will review patents.

Here are some other items of interest:

As always, please don’t hesitate to email myself (jsanders@mpl-law.com), Andy Miller (amiller@mpl-law.com), Christian Miller (cmiller@mpl-law.com), Erik Spurlin (espurlin@mpl-law.com), Brad Leber (bleber@mpl-law.com) or anyone in our office with questions or comments.  

Please see all of our prior updates at this link or if you would like to be added to our email list, please click here.