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Dec19
Noncompetes
The following is not meant to be legal advice.

 

 

On December 13, 2007, Perkins Coie, LLP gave a talk on noncompetes.  In California, noncompetes are not enforceable.  California prohibits noncompetes exceptin if a business is sold and the person was a key employee, such as the founder, or the company is protecting trade secrets. 

 

 

If a person moves to another state where the noncompete is enforceable, there needs to be a review of the governing law in the noncompete agreement. 

 

Instead of having noncompete agreements, the company should focus on protecting trade secrets and intellectual property, though the irony is that in Silicon Valley most companies may have never started or become successful if there was no theft of trade secret. 

 

 

A company should identify what is core to the business and document it.  Information found in the public is not trade secret.

 

 

In California, if a contract states that the person may not compete for 1 year, the entire agreement, not just the provision is void.  This leads to attorneys drafting one agreement for different subjects such that a noncompete provision cannot void provisions on nonsolicitation, stock vesting, and other agreements.  Having different agreements, such as one for noncompete and one for intellectual property protection prevents one provision voiding an agreement on another subject.   

Noncompete

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