InfoWorld reports that MicroStrategy, Inc. (Microstrategy) wins an appeals court ruling in a legal dispute concerning former employees who went to work for Business Objects S.A. (BOSA), a competitor in business-intelligence software. MicroStrategy complains that employees used confidential company information to solicit customers for BOSA. The appeals court determined that a "non-solicitation" clause in MicroStrategy's employment contract prohibited the employees from taking any action that "drives MicroStrategy customers away" from its products.
Microsoft Corporation (Microsoft) and Google dispute over Google's hiring of a former Microsoft employee, Kai-Fu Lee, to run its research and development efforts in China. Microsoft claims the hiring violates a non-competition clause in Lee's contract.
There seems to be some measure of equivocation in determining the enforceability of employee non-solicitation and non-competition provisions. The typical proprietary information and inventions agreement requires an employee to agree that he will not (after he leaves the employer) (I) recruit or induce any employee of his employer to leave the employ of the employer, and (II) solicit the business of any customer of the employer.
In California, in the event that an agreement includes some form of non-competition clause, such a provision might not be enforceable according to recent case decisions by the California Supreme Court, but the law is unsettled as to the circumstances in which a non-solicitation of customers provision will be enforceable. There is the possibility that a non-solicitation provision may be enforceable if it is limited: (a) to active solicitation of customers with which the employee had direct contact; (b) in time to a period of 24 months or less; and (c) to geographic areas in which the former employee was actively engaged during tenure with the former employee.
In California, a restriction on solicitation of other employees of a former employer may also be enforceable under limited circumstances. There is general hostility of the courts to contractual restrictions on the ability of a person to pursue a profession. The provision is more likely enforceable if the restriction on solicitation is limited in time, and to those employees with which the former employee worked during tenure with the former employer.
Because the enforceability of non-compete and non-solicitation restrictions is not clear, it is unsettled how much such provisions actually protect a company’s business and personnel interests.
.jpg)
Comment Preview