How to Invent and Protect Your Invention: A Guide to Patents for Scientists and Engineers

10.4 NON-COMPETE AGREEMENTS

A non-compete agreement prevents a current or former employee from going to work for a competing company. Such agreements can be self-contained contracts or a clause in a larger employment contract. By signing a non-compete agreement, an employee contractually promises, in exchange for compensation, not to work for companies in a related industry or similar profession while they are employed and for a specific period of time after the employee ceases working for the current company. If the terms of the non-compete are violated, the company can sue its former employee to (a) enjoin (i.e., prevent) him from disclosing or using the information in his new job and (b) force the employee to pay monetary damages. California, by way of exception, has enacted laws that limit an employer's ability to enforce non-competes because California believes that enforcing a non-compete places an unfair burden on employees, who should have complete freedom to find a new job. Most other states honor the ability of parties to make their own agreements by allowing for enforcement of non-competes so long as the court finds the agreements are reasonable in extent of employment prohibited, breadth of geographic area, and length of time. For example, a court is likely to enforce a non-compete agreement that prohibits a former employee from working as a researcher creating cleaning solutions for one year within 25 miles of the research facility at which he previously worked. This ...