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Are Non-Compete Agreements void if you beat your former employer to market? [closed]
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I have a friend working at my previous company that is something of a domain expert in a very specialized business area of a non-IT related nature. He has been toying around with an idea and doing market research for a groundbreaking idea for a software tool that could potentially prove disruptive to this entire industry in this specific domain.
Biding his time he has been working on this silently and saving some money up, preparing a business plan and what not. An unfortunate turn of events happened to him recently where he discovered that he is being requested for interviews as a subject matter expert for another department in the company that is primarily focused on developing and building profitable software solutions.
Someone in this department somehow has a primitive form of this groundbreaking idea and they are hoping to start a new project to implement it, using my friend to fill in all the holes in their business plan as well as the holes in their technical knowledge to implement it correctly.
From what I understand they do not want to bring him into any kind of ownership stake of this as he is just an employee. They don't want anymore of his involvement than him to just answer questions and be interviewed by analysts so they can extract all of this information that he has worked very hard on building thus far.
Without tipping his hand, he tried to plead with his boss that he wants no part of this but this has suddenly become a critical priority project for the company and his boss is powerless here.
He is considering leaving his job so that he can pursue VC or an investor to try and rush something to market before his current company. He has a very good chance as I know that this software development department is very arrogant and like to think they are on the level of Google, but they historically perform very poorly, however they do have incredibly deep pockets and are led very ruthlessly by executives that are willing to spend whatever it takes to eliminate competition or "land grab".
He is concerned that when he started he isn't sure if he actually did sign a Non-Compete agreement or if this can be used against him if he attempts to start his company after leaving.
If he leaves the company immediately, starts his company and beats his former employer to market, does the typical Non-Compete Agreement carry any weight? I am not looking for a legal answer but what in essence and spirit a Non-Compete Agreement actually means when you sign it?
UPDATE: I missed an extraordinarily important part of this question. The department HE works for is technically considered a SEPARATE COMPANY. He doesn't technically work for the company that has this software development department but they are under the same Non-Profit umbrella. I wonder if he did sign a Non-Compete, if it even applies to the business endeavors of a "sister-company" that is highly linked with his non-profit company?
startup
asked Jan 9 '15 at 15:19
maple_shaft
15.7k75296
closed as off-topic by Joel Etherton, Chris E, alroc, Wesley Long, user9158 Jan 10 '15 at 7:15
This question appears to be off-topic. The users who voted to close gave this specific reason:
- "Questions seeking advice on company-specific regulations, agreements, or policies should be directed to your manager or HR department. Questions that address only a specific company or position are of limited use to future visitors. Questions seeking legal advice should be directed to legal professionals. For more information, click here." – Chris E, alroc, Wesley Long, Community
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I have a friend working at my previous company that is something of a domain expert in a very specialized business area of a non-IT related nature. He has been toying around with an idea and doing market research for a groundbreaking idea for a software tool that could potentially prove disruptive to this entire industry in this specific domain.
Biding his time he has been working on this silently and saving some money up, preparing a business plan and what not. An unfortunate turn of events happened to him recently where he discovered that he is being requested for interviews as a subject matter expert for another department in the company that is primarily focused on developing and building profitable software solutions.
Someone in this department somehow has a primitive form of this groundbreaking idea and they are hoping to start a new project to implement it, using my friend to fill in all the holes in their business plan as well as the holes in their technical knowledge to implement it correctly.
From what I understand they do not want to bring him into any kind of ownership stake of this as he is just an employee. They don't want anymore of his involvement than him to just answer questions and be interviewed by analysts so they can extract all of this information that he has worked very hard on building thus far.
Without tipping his hand, he tried to plead with his boss that he wants no part of this but this has suddenly become a critical priority project for the company and his boss is powerless here.
He is considering leaving his job so that he can pursue VC or an investor to try and rush something to market before his current company. He has a very good chance as I know that this software development department is very arrogant and like to think they are on the level of Google, but they historically perform very poorly, however they do have incredibly deep pockets and are led very ruthlessly by executives that are willing to spend whatever it takes to eliminate competition or "land grab".
He is concerned that when he started he isn't sure if he actually did sign a Non-Compete agreement or if this can be used against him if he attempts to start his company after leaving.
If he leaves the company immediately, starts his company and beats his former employer to market, does the typical Non-Compete Agreement carry any weight? I am not looking for a legal answer but what in essence and spirit a Non-Compete Agreement actually means when you sign it?
UPDATE: I missed an extraordinarily important part of this question. The department HE works for is technically considered a SEPARATE COMPANY. He doesn't technically work for the company that has this software development department but they are under the same Non-Profit umbrella. I wonder if he did sign a Non-Compete, if it even applies to the business endeavors of a "sister-company" that is highly linked with his non-profit company?
startup
asked Jan 9 '15 at 15:19
maple_shaft
15.7k75296
closed as off-topic by Joel Etherton, Chris E, alroc, Wesley Long, user9158 Jan 10 '15 at 7:15
This question appears to be off-topic. The users who voted to close gave this specific reason:
- "Questions seeking advice on company-specific regulations, agreements, or policies should be directed to your manager or HR department. Questions that address only a specific company or position are of limited use to future visitors. Questions seeking legal advice should be directed to legal professionals. For more information, click here." – Chris E, alroc, Wesley Long, Community
24
You're not looking for a legal answer? You should. You can get everyone's opinion on this and it will be nothing more than their opinion. In something as important as this seek legal advice.
– Styphon
Jan 9 '15 at 15:42
3
Essence/spirit of an NCA is to prevent employees from doing exactly what "your friend" is considering doing.
– Joel Etherton
Jan 9 '15 at 15:50
6
Short answer: it completely depends on the state and what he's signed, and he needs to seek legal assistance.
– Jon Story
Jan 9 '15 at 16:35
3
I'm voting to close, as this is DEFINITELY the domain of attorneys. Tell your friend to find one. The most relevant case that came to my mind was Mattel, Inc. v. MGA Entertainment, Inc., but your friend needs an IP attorney YESTERDAY!
– Wesley Long
Jan 9 '15 at 21:20
2
also "I am not looking for a legal answer" doesn't make any sense as the concept of 'non-competes' is purely a legal concept.
– DA.
Jan 9 '15 at 22:17
 |Â
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I have a friend working at my previous company that is something of a domain expert in a very specialized business area of a non-IT related nature. He has been toying around with an idea and doing market research for a groundbreaking idea for a software tool that could potentially prove disruptive to this entire industry in this specific domain.
Biding his time he has been working on this silently and saving some money up, preparing a business plan and what not. An unfortunate turn of events happened to him recently where he discovered that he is being requested for interviews as a subject matter expert for another department in the company that is primarily focused on developing and building profitable software solutions.
Someone in this department somehow has a primitive form of this groundbreaking idea and they are hoping to start a new project to implement it, using my friend to fill in all the holes in their business plan as well as the holes in their technical knowledge to implement it correctly.
From what I understand they do not want to bring him into any kind of ownership stake of this as he is just an employee. They don't want anymore of his involvement than him to just answer questions and be interviewed by analysts so they can extract all of this information that he has worked very hard on building thus far.
Without tipping his hand, he tried to plead with his boss that he wants no part of this but this has suddenly become a critical priority project for the company and his boss is powerless here.
He is considering leaving his job so that he can pursue VC or an investor to try and rush something to market before his current company. He has a very good chance as I know that this software development department is very arrogant and like to think they are on the level of Google, but they historically perform very poorly, however they do have incredibly deep pockets and are led very ruthlessly by executives that are willing to spend whatever it takes to eliminate competition or "land grab".
He is concerned that when he started he isn't sure if he actually did sign a Non-Compete agreement or if this can be used against him if he attempts to start his company after leaving.
If he leaves the company immediately, starts his company and beats his former employer to market, does the typical Non-Compete Agreement carry any weight? I am not looking for a legal answer but what in essence and spirit a Non-Compete Agreement actually means when you sign it?
UPDATE: I missed an extraordinarily important part of this question. The department HE works for is technically considered a SEPARATE COMPANY. He doesn't technically work for the company that has this software development department but they are under the same Non-Profit umbrella. I wonder if he did sign a Non-Compete, if it even applies to the business endeavors of a "sister-company" that is highly linked with his non-profit company?
startup
asked Jan 9 '15 at 15:19
maple_shaft
15.7k75296
I have a friend working at my previous company that is something of a domain expert in a very specialized business area of a non-IT related nature. He has been toying around with an idea and doing market research for a groundbreaking idea for a software tool that could potentially prove disruptive to this entire industry in this specific domain.
Biding his time he has been working on this silently and saving some money up, preparing a business plan and what not. An unfortunate turn of events happened to him recently where he discovered that he is being requested for interviews as a subject matter expert for another department in the company that is primarily focused on developing and building profitable software solutions.
Someone in this department somehow has a primitive form of this groundbreaking idea and they are hoping to start a new project to implement it, using my friend to fill in all the holes in their business plan as well as the holes in their technical knowledge to implement it correctly.
From what I understand they do not want to bring him into any kind of ownership stake of this as he is just an employee. They don't want anymore of his involvement than him to just answer questions and be interviewed by analysts so they can extract all of this information that he has worked very hard on building thus far.
Without tipping his hand, he tried to plead with his boss that he wants no part of this but this has suddenly become a critical priority project for the company and his boss is powerless here.
He is considering leaving his job so that he can pursue VC or an investor to try and rush something to market before his current company. He has a very good chance as I know that this software development department is very arrogant and like to think they are on the level of Google, but they historically perform very poorly, however they do have incredibly deep pockets and are led very ruthlessly by executives that are willing to spend whatever it takes to eliminate competition or "land grab".
He is concerned that when he started he isn't sure if he actually did sign a Non-Compete agreement or if this can be used against him if he attempts to start his company after leaving.
If he leaves the company immediately, starts his company and beats his former employer to market, does the typical Non-Compete Agreement carry any weight? I am not looking for a legal answer but what in essence and spirit a Non-Compete Agreement actually means when you sign it?
UPDATE: I missed an extraordinarily important part of this question. The department HE works for is technically considered a SEPARATE COMPANY. He doesn't technically work for the company that has this software development department but they are under the same Non-Profit umbrella. I wonder if he did sign a Non-Compete, if it even applies to the business endeavors of a "sister-company" that is highly linked with his non-profit company?
startup
asked Jan 9 '15 at 15:19
maple_shaft
15.7k75296
edited Jan 9 '15 at 16:18
asked Jan 9 '15 at 15:19
maple_shaft
15.7k75296
asked Jan 9 '15 at 15:19
maple_shaft
15.7k75296
asked Jan 9 '15 at 15:19
maple_shaft
15.7k75296
15.7k75296
closed as off-topic by Joel Etherton, Chris E, alroc, Wesley Long, user9158 Jan 10 '15 at 7:15
This question appears to be off-topic. The users who voted to close gave this specific reason:
- "Questions seeking advice on company-specific regulations, agreements, or policies should be directed to your manager or HR department. Questions that address only a specific company or position are of limited use to future visitors. Questions seeking legal advice should be directed to legal professionals. For more information, click here." – Chris E, alroc, Wesley Long, Community
closed as off-topic by Joel Etherton, Chris E, alroc, Wesley Long, user9158 Jan 10 '15 at 7:15
This question appears to be off-topic. The users who voted to close gave this specific reason:
- "Questions seeking advice on company-specific regulations, agreements, or policies should be directed to your manager or HR department. Questions that address only a specific company or position are of limited use to future visitors. Questions seeking legal advice should be directed to legal professionals. For more information, click here." – Chris E, alroc, Wesley Long, Community
24
You're not looking for a legal answer? You should. You can get everyone's opinion on this and it will be nothing more than their opinion. In something as important as this seek legal advice.
– Styphon
Jan 9 '15 at 15:42
3
Essence/spirit of an NCA is to prevent employees from doing exactly what "your friend" is considering doing.
– Joel Etherton
Jan 9 '15 at 15:50
6
Short answer: it completely depends on the state and what he's signed, and he needs to seek legal assistance.
– Jon Story
Jan 9 '15 at 16:35
3
I'm voting to close, as this is DEFINITELY the domain of attorneys. Tell your friend to find one. The most relevant case that came to my mind was Mattel, Inc. v. MGA Entertainment, Inc., but your friend needs an IP attorney YESTERDAY!
– Wesley Long
Jan 9 '15 at 21:20
2
also "I am not looking for a legal answer" doesn't make any sense as the concept of 'non-competes' is purely a legal concept.
– DA.
Jan 9 '15 at 22:17
 |Â
show 10 more comments
24
You're not looking for a legal answer? You should. You can get everyone's opinion on this and it will be nothing more than their opinion. In something as important as this seek legal advice.
– Styphon
Jan 9 '15 at 15:42
3
Essence/spirit of an NCA is to prevent employees from doing exactly what "your friend" is considering doing.
– Joel Etherton
Jan 9 '15 at 15:50
6
Short answer: it completely depends on the state and what he's signed, and he needs to seek legal assistance.
– Jon Story
Jan 9 '15 at 16:35
3
I'm voting to close, as this is DEFINITELY the domain of attorneys. Tell your friend to find one. The most relevant case that came to my mind was Mattel, Inc. v. MGA Entertainment, Inc., but your friend needs an IP attorney YESTERDAY!
– Wesley Long
Jan 9 '15 at 21:20
2
also "I am not looking for a legal answer" doesn't make any sense as the concept of 'non-competes' is purely a legal concept.
– DA.
Jan 9 '15 at 22:17
24
24
You're not looking for a legal answer? You should. You can get everyone's opinion on this and it will be nothing more than their opinion. In something as important as this seek legal advice.
– Styphon
Jan 9 '15 at 15:42
You're not looking for a legal answer? You should. You can get everyone's opinion on this and it will be nothing more than their opinion. In something as important as this seek legal advice.
– Styphon
Jan 9 '15 at 15:42
3
3
Essence/spirit of an NCA is to prevent employees from doing exactly what "your friend" is considering doing.
– Joel Etherton
Jan 9 '15 at 15:50
Essence/spirit of an NCA is to prevent employees from doing exactly what "your friend" is considering doing.
– Joel Etherton
Jan 9 '15 at 15:50
6
6
Short answer: it completely depends on the state and what he's signed, and he needs to seek legal assistance.
– Jon Story
Jan 9 '15 at 16:35
Short answer: it completely depends on the state and what he's signed, and he needs to seek legal assistance.
– Jon Story
Jan 9 '15 at 16:35
3
3
I'm voting to close, as this is DEFINITELY the domain of attorneys. Tell your friend to find one. The most relevant case that came to my mind was Mattel, Inc. v. MGA Entertainment, Inc., but your friend needs an IP attorney YESTERDAY!
– Wesley Long
Jan 9 '15 at 21:20
I'm voting to close, as this is DEFINITELY the domain of attorneys. Tell your friend to find one. The most relevant case that came to my mind was Mattel, Inc. v. MGA Entertainment, Inc., but your friend needs an IP attorney YESTERDAY!
– Wesley Long
Jan 9 '15 at 21:20
2
2
also "I am not looking for a legal answer" doesn't make any sense as the concept of 'non-competes' is purely a legal concept.
– DA.
Jan 9 '15 at 22:17
also "I am not looking for a legal answer" doesn't make any sense as the concept of 'non-competes' is purely a legal concept.
– DA.
Jan 9 '15 at 22:17
 |Â
show 10 more comments
5 Answers
5
active
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up vote
20
down vote
I am not looking for a legal answer but what in essence and spirit a
Non-Compete Agreement actually means when you sign it?
While you indicate that you are not looking for a legal answer, that's the only answer with any real meaning here. Anything else is speculation at best, and myth/legend at worst.
A Non-Compete Agreement is a form of contract and sometimes contracts mean whatever they say, sometimes whatever a court says.
Your friend should tread carefully here, and really needs legal advice before quitting or pursuing VC or other investor dollars.
Are Non-Compete Agreements void if you beat your former employer to
market?
Maybe, maybe not - it depends on the specifics of the Agreement.
And remember, no matter what your interpretation, people can spend a lot of time and money defending a lawsuit - even if they end up winning.
The department HE works for is technically considered a SEPARATE
COMPANY. He doesn't technically work for the company that has this
software development department but they are under the same Non-Profit
umbrella. I wonder if he did sign a Non-Compete, if it even applies to
the business endeavors of a "sister-company" that is highly linked
with his non-profit company?
Yet another reason to have a competent professional look over his non-compete agreement, and all other contracts before making such an important decision.
answered Jan 9 '15 at 16:18
Joe Strazzere
223k106656922
6
"contracts mean whatever they say" Not really. Many clauses in contracts can be invalid/unenforceable, especially in employment contracts.
– user9641
Jan 9 '15 at 21:50
1
Employment contracts are often filled with unenforceable garbage. The only way to know is to talk with a lawyer in your jurisdiction.
– Keltari
Jan 12 '15 at 21:46
suggest improvements |Â
up vote
12
down vote
Another thing that should be considered here is ownership, which would actually stop things before you even get to decisions about a non-compete.
Many employment agreements for tech companies include language that states any ideas/developments you have while in their employment are owned by the company. These can be sticky court cases and your friend absolutely needs real legal advice. If his employment agreement does in fact include this language, then leaving to start his own company could be construed as theft of IP.
Bottom line, your friend really needs to get some good legal advice on all of the issues before he makes any decisions or takes any action.
answered Jan 9 '15 at 17:18
cdkMoose
9,29822042
2
It's also worth noting in some states these all encompassing agreements have been deemed unlawful while others they are ironclad. You really need to consult a legal advisor.
– RualStorge
Jan 9 '15 at 19:03
Absolutely, every state and every contract add their own little twist. Almost always ends with lots of money in the lawyers' pockets.
– cdkMoose
Jan 9 '15 at 19:09
2
And he might need to be prepared to prove he did NONE of the work on his idea while at work.
– HLGEM
Jan 9 '15 at 20:56
In some jurisdictions and contracts, even that may not be sufficient. Very sticky business
– cdkMoose
Jan 9 '15 at 21:00
suggest improvements |Â
up vote
7
down vote
Considering what you say about the ruthlessness of the company, it would be a foolish and expensive move for him to try to do that. Even if they can't win, he would have to spend the money on lawyers and the time to defend and I suspect in a case like this, he could lose because this is exactly what non-competes are to prevent, someone taking his insider knowledge and using it to create a competing product. The fact that it hasn't gone to market yet would most likely be irrelevant since he gained the knowledge of what to create from his experience at the company and since his leaving the company could be shown as a reason for why their time to market got delayed.
From an ethical standpoint, it would almost certainly be the wrong move. It certainly violates the spirit of agreeing not to compete. From a practical standpoint, considering the potential cost of being sued and the destruction of his professional reputation that would almost certainly go along with it, it would be a wrong move. Further, potential clients in hearing that he is being sued might not want to buy his product since they won't know if he will still be in business. Legally, well you would have to ask a lawyer about that.
A far better move would be to come up with an idea that would not be in competition with them if he wants to leave and start his own company.
edited Jan 9 '15 at 21:10
Community♦
1
answered Jan 9 '15 at 15:46
HLGEM
133k25226489
-1 - ethics? in a company? yuck. it technically isn't "ethical" to use someone to make X profit and pay them anything less than X.
– bharal
Jan 9 '15 at 20:03
@bharal companies exist to make a profit, why is that unethical (unless it is an outrageous profit and people are paid peanuts which is another discussion)? I wasn't talking corporate ethics, but personal ethics. If he agreed not to compete, it is unethical to abbrogate that agreement. Just because someone else or some other organization is unethical does not mean you should be. If he felt like they took his idea, he should have pointed out he was pursuing it in his spare time when they asked the first question. Since he didn't, the company will consider this theft of intellectual property.
– HLGEM
Jan 9 '15 at 20:53
2
Disagree. Overly generic non-compete clauses are unethical because they restrict competition and harm the society. That's why there are strict rules on what is enforceable in most legal systems. "he gained the knowledge of what to create from his experience at the company" <- that's like the majority of entrepreneurs.
– user9641
Jan 9 '15 at 21:29
1
"It is unethical to sign something as a contract that you don't intend to pay attention to" -- not sure what you mean by "pay attention to", but if you believe a clause to be unenforceable then I don't think it's unethical to sign it with the full intention of later preventing it being enforced. I mean, it's not nice, but then it wasn't nice of the employer to try to stick an unenforceable clause on you in the first place. They probably knew what they were doing and if they didn't, well, they wrote the clause and they screwed it up. While not unethical it's still risky though, as you say.
– Steve Jessop
Jan 9 '15 at 21:46
1
@HLGEM: Companies push unfair terms to employees abusing their power all the time, which is why these rules can be found world wide. Considering this I don't think it's fair to simply say "don't sign it then".
– user9641
Jan 10 '15 at 8:56
 |Â
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up vote
6
down vote
I am not looking for a legal answer but what in essence and spirit a Non-Compete Agreement actually means when you sign it?
Developing products (and relationships) is a painful, costly process. The spirit of Non-Competes is that you won't take the end result of that process to a new company, who will take advantage of the "free" lessons learned. I certainly wouldn't hold your friend at fault, and I expect many others would not as well. They didn't get the idea from the company. They didn't leverage any of the company's costly research to further their potential new company.
All that said, the other answers are correct - being "right" isn't always enough in the business/legal world.
If your friend really is that valuable to the product, and it really is that disruptive then they have all sorts of leverage to renegotiate their value to the company. There are different ways to monetize ideas/expertise.
answered Jan 9 '15 at 17:11
Telastyn
33.9k977120
suggest improvements |Â
up vote
4
down vote
Lots of things are the deciding factors here. The most important:
1) The non-compete agreement he signed
2) The state. (If he's in California, he's in much better shape than most other states)
3) Does he also have an non-disclosure agreement?
He really needs to consult a lawyer to know for sure, but I know a lot of non-competes will be all encompassing of anything the company does. This is likely hard to enforce for something like a Fortune 500. For something in the < 200 employees range, it likely becomes harder for him to prove there was projects going on to which he was completely unattached, and therefore could not be breaking a non-compete.
I researched a bit while I was on the job hunt, and the truth is, there is definitely no silver-bullet on either side. They are very much like a divorce, and mirror them in court: two sides get lawyers and try to reach an agreement out of court.
For what it's worth, the last company I worked for was based in Illinois, and went after an employee that broke the non-compete, and were successful, AFAIK. I know that the non-compete for some employees was pretty ridiculous (I think 18 months, and not sure how the pay worked). When we broke off from said company and set up our domicile in California, the non-competes were suddenly a non-issue.
answered Jan 9 '15 at 15:48
kiss-o-matic
35125
2
We are in a ludicrously business friendly/employee screwed state.
– maple_shaft
Jan 9 '15 at 15:52
4
Agreed. What he should be doing: 1. Find everything he signed with the company. 2. Consult a lawyer ASAP. Alternatively, give up the idea entirely.
– Kai
Jan 9 '15 at 16:05
suggest improvements |Â
5 Answers
5
active
oldest
votes
5 Answers
5
active
oldest
votes
active
oldest
votes
active
oldest
votes
up vote
20
down vote
I am not looking for a legal answer but what in essence and spirit a
Non-Compete Agreement actually means when you sign it?
While you indicate that you are not looking for a legal answer, that's the only answer with any real meaning here. Anything else is speculation at best, and myth/legend at worst.
A Non-Compete Agreement is a form of contract and sometimes contracts mean whatever they say, sometimes whatever a court says.
Your friend should tread carefully here, and really needs legal advice before quitting or pursuing VC or other investor dollars.
Are Non-Compete Agreements void if you beat your former employer to
market?
Maybe, maybe not - it depends on the specifics of the Agreement.
And remember, no matter what your interpretation, people can spend a lot of time and money defending a lawsuit - even if they end up winning.
The department HE works for is technically considered a SEPARATE
COMPANY. He doesn't technically work for the company that has this
software development department but they are under the same Non-Profit
umbrella. I wonder if he did sign a Non-Compete, if it even applies to
the business endeavors of a "sister-company" that is highly linked
with his non-profit company?
Yet another reason to have a competent professional look over his non-compete agreement, and all other contracts before making such an important decision.
answered Jan 9 '15 at 16:18
Joe Strazzere
223k106656922
6
"contracts mean whatever they say" Not really. Many clauses in contracts can be invalid/unenforceable, especially in employment contracts.
– user9641
Jan 9 '15 at 21:50
1
Employment contracts are often filled with unenforceable garbage. The only way to know is to talk with a lawyer in your jurisdiction.
– Keltari
Jan 12 '15 at 21:46
suggest improvements |Â
up vote
20
down vote
I am not looking for a legal answer but what in essence and spirit a
Non-Compete Agreement actually means when you sign it?
While you indicate that you are not looking for a legal answer, that's the only answer with any real meaning here. Anything else is speculation at best, and myth/legend at worst.
A Non-Compete Agreement is a form of contract and sometimes contracts mean whatever they say, sometimes whatever a court says.
Your friend should tread carefully here, and really needs legal advice before quitting or pursuing VC or other investor dollars.
Are Non-Compete Agreements void if you beat your former employer to
market?
Maybe, maybe not - it depends on the specifics of the Agreement.
And remember, no matter what your interpretation, people can spend a lot of time and money defending a lawsuit - even if they end up winning.
The department HE works for is technically considered a SEPARATE
COMPANY. He doesn't technically work for the company that has this
software development department but they are under the same Non-Profit
umbrella. I wonder if he did sign a Non-Compete, if it even applies to
the business endeavors of a "sister-company" that is highly linked
with his non-profit company?
Yet another reason to have a competent professional look over his non-compete agreement, and all other contracts before making such an important decision.
answered Jan 9 '15 at 16:18
Joe Strazzere
223k106656922
6
"contracts mean whatever they say" Not really. Many clauses in contracts can be invalid/unenforceable, especially in employment contracts.
– user9641
Jan 9 '15 at 21:50
1
Employment contracts are often filled with unenforceable garbage. The only way to know is to talk with a lawyer in your jurisdiction.
– Keltari
Jan 12 '15 at 21:46
suggest improvements |Â
up vote
20
down vote
up vote
20
down vote
I am not looking for a legal answer but what in essence and spirit a
Non-Compete Agreement actually means when you sign it?
While you indicate that you are not looking for a legal answer, that's the only answer with any real meaning here. Anything else is speculation at best, and myth/legend at worst.
A Non-Compete Agreement is a form of contract and sometimes contracts mean whatever they say, sometimes whatever a court says.
Your friend should tread carefully here, and really needs legal advice before quitting or pursuing VC or other investor dollars.
Are Non-Compete Agreements void if you beat your former employer to
market?
Maybe, maybe not - it depends on the specifics of the Agreement.
And remember, no matter what your interpretation, people can spend a lot of time and money defending a lawsuit - even if they end up winning.
The department HE works for is technically considered a SEPARATE
COMPANY. He doesn't technically work for the company that has this
software development department but they are under the same Non-Profit
umbrella. I wonder if he did sign a Non-Compete, if it even applies to
the business endeavors of a "sister-company" that is highly linked
with his non-profit company?
Yet another reason to have a competent professional look over his non-compete agreement, and all other contracts before making such an important decision.
answered Jan 9 '15 at 16:18
Joe Strazzere
223k106656922
I am not looking for a legal answer but what in essence and spirit a
Non-Compete Agreement actually means when you sign it?
While you indicate that you are not looking for a legal answer, that's the only answer with any real meaning here. Anything else is speculation at best, and myth/legend at worst.
A Non-Compete Agreement is a form of contract and sometimes contracts mean whatever they say, sometimes whatever a court says.
Your friend should tread carefully here, and really needs legal advice before quitting or pursuing VC or other investor dollars.
Are Non-Compete Agreements void if you beat your former employer to
market?
Maybe, maybe not - it depends on the specifics of the Agreement.
And remember, no matter what your interpretation, people can spend a lot of time and money defending a lawsuit - even if they end up winning.
The department HE works for is technically considered a SEPARATE
COMPANY. He doesn't technically work for the company that has this
software development department but they are under the same Non-Profit
umbrella. I wonder if he did sign a Non-Compete, if it even applies to
the business endeavors of a "sister-company" that is highly linked
with his non-profit company?
Yet another reason to have a competent professional look over his non-compete agreement, and all other contracts before making such an important decision.
answered Jan 9 '15 at 16:18
Joe Strazzere
223k106656922
edited Jan 13 '15 at 15:28
answered Jan 9 '15 at 16:18
Joe Strazzere
223k106656922
answered Jan 9 '15 at 16:18
Joe Strazzere
223k106656922
answered Jan 9 '15 at 16:18
Joe Strazzere
223k106656922
223k106656922
6
"contracts mean whatever they say" Not really. Many clauses in contracts can be invalid/unenforceable, especially in employment contracts.
– user9641
Jan 9 '15 at 21:50
1
Employment contracts are often filled with unenforceable garbage. The only way to know is to talk with a lawyer in your jurisdiction.
– Keltari
Jan 12 '15 at 21:46
suggest improvements |Â
6
"contracts mean whatever they say" Not really. Many clauses in contracts can be invalid/unenforceable, especially in employment contracts.
– user9641
Jan 9 '15 at 21:50
1
Employment contracts are often filled with unenforceable garbage. The only way to know is to talk with a lawyer in your jurisdiction.
– Keltari
Jan 12 '15 at 21:46
6
6
"contracts mean whatever they say" Not really. Many clauses in contracts can be invalid/unenforceable, especially in employment contracts.
– user9641
Jan 9 '15 at 21:50
"contracts mean whatever they say" Not really. Many clauses in contracts can be invalid/unenforceable, especially in employment contracts.
– user9641
Jan 9 '15 at 21:50
1
1
Employment contracts are often filled with unenforceable garbage. The only way to know is to talk with a lawyer in your jurisdiction.
– Keltari
Jan 12 '15 at 21:46
Employment contracts are often filled with unenforceable garbage. The only way to know is to talk with a lawyer in your jurisdiction.
– Keltari
Jan 12 '15 at 21:46
suggest improvements |Â
up vote
12
down vote
Another thing that should be considered here is ownership, which would actually stop things before you even get to decisions about a non-compete.
Many employment agreements for tech companies include language that states any ideas/developments you have while in their employment are owned by the company. These can be sticky court cases and your friend absolutely needs real legal advice. If his employment agreement does in fact include this language, then leaving to start his own company could be construed as theft of IP.
Bottom line, your friend really needs to get some good legal advice on all of the issues before he makes any decisions or takes any action.
answered Jan 9 '15 at 17:18
cdkMoose
9,29822042
2
It's also worth noting in some states these all encompassing agreements have been deemed unlawful while others they are ironclad. You really need to consult a legal advisor.
– RualStorge
Jan 9 '15 at 19:03
Absolutely, every state and every contract add their own little twist. Almost always ends with lots of money in the lawyers' pockets.
– cdkMoose
Jan 9 '15 at 19:09
2
And he might need to be prepared to prove he did NONE of the work on his idea while at work.
– HLGEM
Jan 9 '15 at 20:56
In some jurisdictions and contracts, even that may not be sufficient. Very sticky business
– cdkMoose
Jan 9 '15 at 21:00
suggest improvements |Â
up vote
12
down vote
Another thing that should be considered here is ownership, which would actually stop things before you even get to decisions about a non-compete.
Many employment agreements for tech companies include language that states any ideas/developments you have while in their employment are owned by the company. These can be sticky court cases and your friend absolutely needs real legal advice. If his employment agreement does in fact include this language, then leaving to start his own company could be construed as theft of IP.
Bottom line, your friend really needs to get some good legal advice on all of the issues before he makes any decisions or takes any action.
answered Jan 9 '15 at 17:18
cdkMoose
9,29822042
2
It's also worth noting in some states these all encompassing agreements have been deemed unlawful while others they are ironclad. You really need to consult a legal advisor.
– RualStorge
Jan 9 '15 at 19:03
Absolutely, every state and every contract add their own little twist. Almost always ends with lots of money in the lawyers' pockets.
– cdkMoose
Jan 9 '15 at 19:09
2
And he might need to be prepared to prove he did NONE of the work on his idea while at work.
– HLGEM
Jan 9 '15 at 20:56
In some jurisdictions and contracts, even that may not be sufficient. Very sticky business
– cdkMoose
Jan 9 '15 at 21:00
suggest improvements |Â
up vote
12
down vote
up vote
12
down vote
Another thing that should be considered here is ownership, which would actually stop things before you even get to decisions about a non-compete.
Many employment agreements for tech companies include language that states any ideas/developments you have while in their employment are owned by the company. These can be sticky court cases and your friend absolutely needs real legal advice. If his employment agreement does in fact include this language, then leaving to start his own company could be construed as theft of IP.
Bottom line, your friend really needs to get some good legal advice on all of the issues before he makes any decisions or takes any action.
answered Jan 9 '15 at 17:18
cdkMoose
9,29822042
Another thing that should be considered here is ownership, which would actually stop things before you even get to decisions about a non-compete.
Many employment agreements for tech companies include language that states any ideas/developments you have while in their employment are owned by the company. These can be sticky court cases and your friend absolutely needs real legal advice. If his employment agreement does in fact include this language, then leaving to start his own company could be construed as theft of IP.
Bottom line, your friend really needs to get some good legal advice on all of the issues before he makes any decisions or takes any action.
answered Jan 9 '15 at 17:18
cdkMoose
9,29822042
answered Jan 9 '15 at 17:18
cdkMoose
9,29822042
answered Jan 9 '15 at 17:18
cdkMoose
9,29822042
answered Jan 9 '15 at 17:18
cdkMoose
9,29822042
9,29822042
2
It's also worth noting in some states these all encompassing agreements have been deemed unlawful while others they are ironclad. You really need to consult a legal advisor.
– RualStorge
Jan 9 '15 at 19:03
Absolutely, every state and every contract add their own little twist. Almost always ends with lots of money in the lawyers' pockets.
– cdkMoose
Jan 9 '15 at 19:09
2
And he might need to be prepared to prove he did NONE of the work on his idea while at work.
– HLGEM
Jan 9 '15 at 20:56
In some jurisdictions and contracts, even that may not be sufficient. Very sticky business
– cdkMoose
Jan 9 '15 at 21:00
suggest improvements |Â
2
It's also worth noting in some states these all encompassing agreements have been deemed unlawful while others they are ironclad. You really need to consult a legal advisor.
– RualStorge
Jan 9 '15 at 19:03
Absolutely, every state and every contract add their own little twist. Almost always ends with lots of money in the lawyers' pockets.
– cdkMoose
Jan 9 '15 at 19:09
2
And he might need to be prepared to prove he did NONE of the work on his idea while at work.
– HLGEM
Jan 9 '15 at 20:56
In some jurisdictions and contracts, even that may not be sufficient. Very sticky business
– cdkMoose
Jan 9 '15 at 21:00
2
2
It's also worth noting in some states these all encompassing agreements have been deemed unlawful while others they are ironclad. You really need to consult a legal advisor.
– RualStorge
Jan 9 '15 at 19:03
It's also worth noting in some states these all encompassing agreements have been deemed unlawful while others they are ironclad. You really need to consult a legal advisor.
– RualStorge
Jan 9 '15 at 19:03
Absolutely, every state and every contract add their own little twist. Almost always ends with lots of money in the lawyers' pockets.
– cdkMoose
Jan 9 '15 at 19:09
Absolutely, every state and every contract add their own little twist. Almost always ends with lots of money in the lawyers' pockets.
– cdkMoose
Jan 9 '15 at 19:09
2
2
And he might need to be prepared to prove he did NONE of the work on his idea while at work.
– HLGEM
Jan 9 '15 at 20:56
And he might need to be prepared to prove he did NONE of the work on his idea while at work.
– HLGEM
Jan 9 '15 at 20:56
In some jurisdictions and contracts, even that may not be sufficient. Very sticky business
– cdkMoose
Jan 9 '15 at 21:00
In some jurisdictions and contracts, even that may not be sufficient. Very sticky business
– cdkMoose
Jan 9 '15 at 21:00
suggest improvements |Â
up vote
7
down vote
Considering what you say about the ruthlessness of the company, it would be a foolish and expensive move for him to try to do that. Even if they can't win, he would have to spend the money on lawyers and the time to defend and I suspect in a case like this, he could lose because this is exactly what non-competes are to prevent, someone taking his insider knowledge and using it to create a competing product. The fact that it hasn't gone to market yet would most likely be irrelevant since he gained the knowledge of what to create from his experience at the company and since his leaving the company could be shown as a reason for why their time to market got delayed.
From an ethical standpoint, it would almost certainly be the wrong move. It certainly violates the spirit of agreeing not to compete. From a practical standpoint, considering the potential cost of being sued and the destruction of his professional reputation that would almost certainly go along with it, it would be a wrong move. Further, potential clients in hearing that he is being sued might not want to buy his product since they won't know if he will still be in business. Legally, well you would have to ask a lawyer about that.
A far better move would be to come up with an idea that would not be in competition with them if he wants to leave and start his own company.
edited Jan 9 '15 at 21:10
Community♦
1
answered Jan 9 '15 at 15:46
HLGEM
133k25226489
-1 - ethics? in a company? yuck. it technically isn't "ethical" to use someone to make X profit and pay them anything less than X.
– bharal
Jan 9 '15 at 20:03
@bharal companies exist to make a profit, why is that unethical (unless it is an outrageous profit and people are paid peanuts which is another discussion)? I wasn't talking corporate ethics, but personal ethics. If he agreed not to compete, it is unethical to abbrogate that agreement. Just because someone else or some other organization is unethical does not mean you should be. If he felt like they took his idea, he should have pointed out he was pursuing it in his spare time when they asked the first question. Since he didn't, the company will consider this theft of intellectual property.
– HLGEM
Jan 9 '15 at 20:53
2
Disagree. Overly generic non-compete clauses are unethical because they restrict competition and harm the society. That's why there are strict rules on what is enforceable in most legal systems. "he gained the knowledge of what to create from his experience at the company" <- that's like the majority of entrepreneurs.
– user9641
Jan 9 '15 at 21:29
1
"It is unethical to sign something as a contract that you don't intend to pay attention to" -- not sure what you mean by "pay attention to", but if you believe a clause to be unenforceable then I don't think it's unethical to sign it with the full intention of later preventing it being enforced. I mean, it's not nice, but then it wasn't nice of the employer to try to stick an unenforceable clause on you in the first place. They probably knew what they were doing and if they didn't, well, they wrote the clause and they screwed it up. While not unethical it's still risky though, as you say.
– Steve Jessop
Jan 9 '15 at 21:46
1
@HLGEM: Companies push unfair terms to employees abusing their power all the time, which is why these rules can be found world wide. Considering this I don't think it's fair to simply say "don't sign it then".
– user9641
Jan 10 '15 at 8:56
 |Â
show 2 more comments
up vote
7
down vote
Considering what you say about the ruthlessness of the company, it would be a foolish and expensive move for him to try to do that. Even if they can't win, he would have to spend the money on lawyers and the time to defend and I suspect in a case like this, he could lose because this is exactly what non-competes are to prevent, someone taking his insider knowledge and using it to create a competing product. The fact that it hasn't gone to market yet would most likely be irrelevant since he gained the knowledge of what to create from his experience at the company and since his leaving the company could be shown as a reason for why their time to market got delayed.
From an ethical standpoint, it would almost certainly be the wrong move. It certainly violates the spirit of agreeing not to compete. From a practical standpoint, considering the potential cost of being sued and the destruction of his professional reputation that would almost certainly go along with it, it would be a wrong move. Further, potential clients in hearing that he is being sued might not want to buy his product since they won't know if he will still be in business. Legally, well you would have to ask a lawyer about that.
A far better move would be to come up with an idea that would not be in competition with them if he wants to leave and start his own company.
edited Jan 9 '15 at 21:10
Community♦
1
answered Jan 9 '15 at 15:46
HLGEM
133k25226489
-1 - ethics? in a company? yuck. it technically isn't "ethical" to use someone to make X profit and pay them anything less than X.
– bharal
Jan 9 '15 at 20:03
@bharal companies exist to make a profit, why is that unethical (unless it is an outrageous profit and people are paid peanuts which is another discussion)? I wasn't talking corporate ethics, but personal ethics. If he agreed not to compete, it is unethical to abbrogate that agreement. Just because someone else or some other organization is unethical does not mean you should be. If he felt like they took his idea, he should have pointed out he was pursuing it in his spare time when they asked the first question. Since he didn't, the company will consider this theft of intellectual property.
– HLGEM
Jan 9 '15 at 20:53
2
Disagree. Overly generic non-compete clauses are unethical because they restrict competition and harm the society. That's why there are strict rules on what is enforceable in most legal systems. "he gained the knowledge of what to create from his experience at the company" <- that's like the majority of entrepreneurs.
– user9641
Jan 9 '15 at 21:29
1
"It is unethical to sign something as a contract that you don't intend to pay attention to" -- not sure what you mean by "pay attention to", but if you believe a clause to be unenforceable then I don't think it's unethical to sign it with the full intention of later preventing it being enforced. I mean, it's not nice, but then it wasn't nice of the employer to try to stick an unenforceable clause on you in the first place. They probably knew what they were doing and if they didn't, well, they wrote the clause and they screwed it up. While not unethical it's still risky though, as you say.
– Steve Jessop
Jan 9 '15 at 21:46
1
@HLGEM: Companies push unfair terms to employees abusing their power all the time, which is why these rules can be found world wide. Considering this I don't think it's fair to simply say "don't sign it then".
– user9641
Jan 10 '15 at 8:56
 |Â
show 2 more comments
up vote
7
down vote
up vote
7
down vote
Considering what you say about the ruthlessness of the company, it would be a foolish and expensive move for him to try to do that. Even if they can't win, he would have to spend the money on lawyers and the time to defend and I suspect in a case like this, he could lose because this is exactly what non-competes are to prevent, someone taking his insider knowledge and using it to create a competing product. The fact that it hasn't gone to market yet would most likely be irrelevant since he gained the knowledge of what to create from his experience at the company and since his leaving the company could be shown as a reason for why their time to market got delayed.
From an ethical standpoint, it would almost certainly be the wrong move. It certainly violates the spirit of agreeing not to compete. From a practical standpoint, considering the potential cost of being sued and the destruction of his professional reputation that would almost certainly go along with it, it would be a wrong move. Further, potential clients in hearing that he is being sued might not want to buy his product since they won't know if he will still be in business. Legally, well you would have to ask a lawyer about that.
A far better move would be to come up with an idea that would not be in competition with them if he wants to leave and start his own company.
edited Jan 9 '15 at 21:10
Community♦
1
answered Jan 9 '15 at 15:46
HLGEM
133k25226489
Considering what you say about the ruthlessness of the company, it would be a foolish and expensive move for him to try to do that. Even if they can't win, he would have to spend the money on lawyers and the time to defend and I suspect in a case like this, he could lose because this is exactly what non-competes are to prevent, someone taking his insider knowledge and using it to create a competing product. The fact that it hasn't gone to market yet would most likely be irrelevant since he gained the knowledge of what to create from his experience at the company and since his leaving the company could be shown as a reason for why their time to market got delayed.
From an ethical standpoint, it would almost certainly be the wrong move. It certainly violates the spirit of agreeing not to compete. From a practical standpoint, considering the potential cost of being sued and the destruction of his professional reputation that would almost certainly go along with it, it would be a wrong move. Further, potential clients in hearing that he is being sued might not want to buy his product since they won't know if he will still be in business. Legally, well you would have to ask a lawyer about that.
A far better move would be to come up with an idea that would not be in competition with them if he wants to leave and start his own company.
edited Jan 9 '15 at 21:10
Community♦
1
answered Jan 9 '15 at 15:46
HLGEM
133k25226489
edited Jan 9 '15 at 21:10
Community♦
1
edited Jan 9 '15 at 21:10
Community♦
1
edited Jan 9 '15 at 21:10
Community♦
1
1
answered Jan 9 '15 at 15:46
HLGEM
133k25226489
answered Jan 9 '15 at 15:46
HLGEM
133k25226489
answered Jan 9 '15 at 15:46
HLGEM
133k25226489
133k25226489
-1 - ethics? in a company? yuck. it technically isn't "ethical" to use someone to make X profit and pay them anything less than X.
– bharal
Jan 9 '15 at 20:03
@bharal companies exist to make a profit, why is that unethical (unless it is an outrageous profit and people are paid peanuts which is another discussion)? I wasn't talking corporate ethics, but personal ethics. If he agreed not to compete, it is unethical to abbrogate that agreement. Just because someone else or some other organization is unethical does not mean you should be. If he felt like they took his idea, he should have pointed out he was pursuing it in his spare time when they asked the first question. Since he didn't, the company will consider this theft of intellectual property.
– HLGEM
Jan 9 '15 at 20:53
2
Disagree. Overly generic non-compete clauses are unethical because they restrict competition and harm the society. That's why there are strict rules on what is enforceable in most legal systems. "he gained the knowledge of what to create from his experience at the company" <- that's like the majority of entrepreneurs.
– user9641
Jan 9 '15 at 21:29
1
"It is unethical to sign something as a contract that you don't intend to pay attention to" -- not sure what you mean by "pay attention to", but if you believe a clause to be unenforceable then I don't think it's unethical to sign it with the full intention of later preventing it being enforced. I mean, it's not nice, but then it wasn't nice of the employer to try to stick an unenforceable clause on you in the first place. They probably knew what they were doing and if they didn't, well, they wrote the clause and they screwed it up. While not unethical it's still risky though, as you say.
– Steve Jessop
Jan 9 '15 at 21:46
1
@HLGEM: Companies push unfair terms to employees abusing their power all the time, which is why these rules can be found world wide. Considering this I don't think it's fair to simply say "don't sign it then".
– user9641
Jan 10 '15 at 8:56
 |Â
show 2 more comments
-1 - ethics? in a company? yuck. it technically isn't "ethical" to use someone to make X profit and pay them anything less than X.
– bharal
Jan 9 '15 at 20:03
@bharal companies exist to make a profit, why is that unethical (unless it is an outrageous profit and people are paid peanuts which is another discussion)? I wasn't talking corporate ethics, but personal ethics. If he agreed not to compete, it is unethical to abbrogate that agreement. Just because someone else or some other organization is unethical does not mean you should be. If he felt like they took his idea, he should have pointed out he was pursuing it in his spare time when they asked the first question. Since he didn't, the company will consider this theft of intellectual property.
– HLGEM
Jan 9 '15 at 20:53
2
Disagree. Overly generic non-compete clauses are unethical because they restrict competition and harm the society. That's why there are strict rules on what is enforceable in most legal systems. "he gained the knowledge of what to create from his experience at the company" <- that's like the majority of entrepreneurs.
– user9641
Jan 9 '15 at 21:29
1
"It is unethical to sign something as a contract that you don't intend to pay attention to" -- not sure what you mean by "pay attention to", but if you believe a clause to be unenforceable then I don't think it's unethical to sign it with the full intention of later preventing it being enforced. I mean, it's not nice, but then it wasn't nice of the employer to try to stick an unenforceable clause on you in the first place. They probably knew what they were doing and if they didn't, well, they wrote the clause and they screwed it up. While not unethical it's still risky though, as you say.
– Steve Jessop
Jan 9 '15 at 21:46
1
@HLGEM: Companies push unfair terms to employees abusing their power all the time, which is why these rules can be found world wide. Considering this I don't think it's fair to simply say "don't sign it then".
– user9641
Jan 10 '15 at 8:56
-1 - ethics? in a company? yuck. it technically isn't "ethical" to use someone to make X profit and pay them anything less than X.
– bharal
Jan 9 '15 at 20:03
-1 - ethics? in a company? yuck. it technically isn't "ethical" to use someone to make X profit and pay them anything less than X.
– bharal
Jan 9 '15 at 20:03
@bharal companies exist to make a profit, why is that unethical (unless it is an outrageous profit and people are paid peanuts which is another discussion)? I wasn't talking corporate ethics, but personal ethics. If he agreed not to compete, it is unethical to abbrogate that agreement. Just because someone else or some other organization is unethical does not mean you should be. If he felt like they took his idea, he should have pointed out he was pursuing it in his spare time when they asked the first question. Since he didn't, the company will consider this theft of intellectual property.
– HLGEM
Jan 9 '15 at 20:53
@bharal companies exist to make a profit, why is that unethical (unless it is an outrageous profit and people are paid peanuts which is another discussion)? I wasn't talking corporate ethics, but personal ethics. If he agreed not to compete, it is unethical to abbrogate that agreement. Just because someone else or some other organization is unethical does not mean you should be. If he felt like they took his idea, he should have pointed out he was pursuing it in his spare time when they asked the first question. Since he didn't, the company will consider this theft of intellectual property.
– HLGEM
Jan 9 '15 at 20:53
2
2
Disagree. Overly generic non-compete clauses are unethical because they restrict competition and harm the society. That's why there are strict rules on what is enforceable in most legal systems. "he gained the knowledge of what to create from his experience at the company" <- that's like the majority of entrepreneurs.
– user9641
Jan 9 '15 at 21:29
Disagree. Overly generic non-compete clauses are unethical because they restrict competition and harm the society. That's why there are strict rules on what is enforceable in most legal systems. "he gained the knowledge of what to create from his experience at the company" <- that's like the majority of entrepreneurs.
– user9641
Jan 9 '15 at 21:29
1
1
"It is unethical to sign something as a contract that you don't intend to pay attention to" -- not sure what you mean by "pay attention to", but if you believe a clause to be unenforceable then I don't think it's unethical to sign it with the full intention of later preventing it being enforced. I mean, it's not nice, but then it wasn't nice of the employer to try to stick an unenforceable clause on you in the first place. They probably knew what they were doing and if they didn't, well, they wrote the clause and they screwed it up. While not unethical it's still risky though, as you say.
– Steve Jessop
Jan 9 '15 at 21:46
"It is unethical to sign something as a contract that you don't intend to pay attention to" -- not sure what you mean by "pay attention to", but if you believe a clause to be unenforceable then I don't think it's unethical to sign it with the full intention of later preventing it being enforced. I mean, it's not nice, but then it wasn't nice of the employer to try to stick an unenforceable clause on you in the first place. They probably knew what they were doing and if they didn't, well, they wrote the clause and they screwed it up. While not unethical it's still risky though, as you say.
– Steve Jessop
Jan 9 '15 at 21:46
1
1
@HLGEM: Companies push unfair terms to employees abusing their power all the time, which is why these rules can be found world wide. Considering this I don't think it's fair to simply say "don't sign it then".
– user9641
Jan 10 '15 at 8:56
@HLGEM: Companies push unfair terms to employees abusing their power all the time, which is why these rules can be found world wide. Considering this I don't think it's fair to simply say "don't sign it then".
– user9641
Jan 10 '15 at 8:56
 |Â
show 2 more comments
up vote
6
down vote
I am not looking for a legal answer but what in essence and spirit a Non-Compete Agreement actually means when you sign it?
Developing products (and relationships) is a painful, costly process. The spirit of Non-Competes is that you won't take the end result of that process to a new company, who will take advantage of the "free" lessons learned. I certainly wouldn't hold your friend at fault, and I expect many others would not as well. They didn't get the idea from the company. They didn't leverage any of the company's costly research to further their potential new company.
All that said, the other answers are correct - being "right" isn't always enough in the business/legal world.
If your friend really is that valuable to the product, and it really is that disruptive then they have all sorts of leverage to renegotiate their value to the company. There are different ways to monetize ideas/expertise.
answered Jan 9 '15 at 17:11
Telastyn
33.9k977120
suggest improvements |Â
up vote
6
down vote
I am not looking for a legal answer but what in essence and spirit a Non-Compete Agreement actually means when you sign it?
Developing products (and relationships) is a painful, costly process. The spirit of Non-Competes is that you won't take the end result of that process to a new company, who will take advantage of the "free" lessons learned. I certainly wouldn't hold your friend at fault, and I expect many others would not as well. They didn't get the idea from the company. They didn't leverage any of the company's costly research to further their potential new company.
All that said, the other answers are correct - being "right" isn't always enough in the business/legal world.
If your friend really is that valuable to the product, and it really is that disruptive then they have all sorts of leverage to renegotiate their value to the company. There are different ways to monetize ideas/expertise.
answered Jan 9 '15 at 17:11
Telastyn
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up vote
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I am not looking for a legal answer but what in essence and spirit a Non-Compete Agreement actually means when you sign it?
Developing products (and relationships) is a painful, costly process. The spirit of Non-Competes is that you won't take the end result of that process to a new company, who will take advantage of the "free" lessons learned. I certainly wouldn't hold your friend at fault, and I expect many others would not as well. They didn't get the idea from the company. They didn't leverage any of the company's costly research to further their potential new company.
All that said, the other answers are correct - being "right" isn't always enough in the business/legal world.
If your friend really is that valuable to the product, and it really is that disruptive then they have all sorts of leverage to renegotiate their value to the company. There are different ways to monetize ideas/expertise.
answered Jan 9 '15 at 17:11
Telastyn
33.9k977120
I am not looking for a legal answer but what in essence and spirit a Non-Compete Agreement actually means when you sign it?
Developing products (and relationships) is a painful, costly process. The spirit of Non-Competes is that you won't take the end result of that process to a new company, who will take advantage of the "free" lessons learned. I certainly wouldn't hold your friend at fault, and I expect many others would not as well. They didn't get the idea from the company. They didn't leverage any of the company's costly research to further their potential new company.
All that said, the other answers are correct - being "right" isn't always enough in the business/legal world.
If your friend really is that valuable to the product, and it really is that disruptive then they have all sorts of leverage to renegotiate their value to the company. There are different ways to monetize ideas/expertise.
answered Jan 9 '15 at 17:11
Telastyn
33.9k977120
answered Jan 9 '15 at 17:11
Telastyn
33.9k977120
answered Jan 9 '15 at 17:11
Telastyn
33.9k977120
answered Jan 9 '15 at 17:11
Telastyn
33.9k977120
33.9k977120
suggest improvements |Â
suggest improvements |Â
up vote
4
down vote
Lots of things are the deciding factors here. The most important:
1) The non-compete agreement he signed
2) The state. (If he's in California, he's in much better shape than most other states)
3) Does he also have an non-disclosure agreement?
He really needs to consult a lawyer to know for sure, but I know a lot of non-competes will be all encompassing of anything the company does. This is likely hard to enforce for something like a Fortune 500. For something in the < 200 employees range, it likely becomes harder for him to prove there was projects going on to which he was completely unattached, and therefore could not be breaking a non-compete.
I researched a bit while I was on the job hunt, and the truth is, there is definitely no silver-bullet on either side. They are very much like a divorce, and mirror them in court: two sides get lawyers and try to reach an agreement out of court.
For what it's worth, the last company I worked for was based in Illinois, and went after an employee that broke the non-compete, and were successful, AFAIK. I know that the non-compete for some employees was pretty ridiculous (I think 18 months, and not sure how the pay worked). When we broke off from said company and set up our domicile in California, the non-competes were suddenly a non-issue.
answered Jan 9 '15 at 15:48
kiss-o-matic
35125
2
We are in a ludicrously business friendly/employee screwed state.
– maple_shaft
Jan 9 '15 at 15:52
4
Agreed. What he should be doing: 1. Find everything he signed with the company. 2. Consult a lawyer ASAP. Alternatively, give up the idea entirely.
– Kai
Jan 9 '15 at 16:05
suggest improvements |Â
up vote
4
down vote
Lots of things are the deciding factors here. The most important:
1) The non-compete agreement he signed
2) The state. (If he's in California, he's in much better shape than most other states)
3) Does he also have an non-disclosure agreement?
He really needs to consult a lawyer to know for sure, but I know a lot of non-competes will be all encompassing of anything the company does. This is likely hard to enforce for something like a Fortune 500. For something in the < 200 employees range, it likely becomes harder for him to prove there was projects going on to which he was completely unattached, and therefore could not be breaking a non-compete.
I researched a bit while I was on the job hunt, and the truth is, there is definitely no silver-bullet on either side. They are very much like a divorce, and mirror them in court: two sides get lawyers and try to reach an agreement out of court.
For what it's worth, the last company I worked for was based in Illinois, and went after an employee that broke the non-compete, and were successful, AFAIK. I know that the non-compete for some employees was pretty ridiculous (I think 18 months, and not sure how the pay worked). When we broke off from said company and set up our domicile in California, the non-competes were suddenly a non-issue.
answered Jan 9 '15 at 15:48
kiss-o-matic
35125
2
We are in a ludicrously business friendly/employee screwed state.
– maple_shaft
Jan 9 '15 at 15:52
4
Agreed. What he should be doing: 1. Find everything he signed with the company. 2. Consult a lawyer ASAP. Alternatively, give up the idea entirely.
– Kai
Jan 9 '15 at 16:05
suggest improvements |Â
up vote
4
down vote
up vote
4
down vote
Lots of things are the deciding factors here. The most important:
1) The non-compete agreement he signed
2) The state. (If he's in California, he's in much better shape than most other states)
3) Does he also have an non-disclosure agreement?
He really needs to consult a lawyer to know for sure, but I know a lot of non-competes will be all encompassing of anything the company does. This is likely hard to enforce for something like a Fortune 500. For something in the < 200 employees range, it likely becomes harder for him to prove there was projects going on to which he was completely unattached, and therefore could not be breaking a non-compete.
I researched a bit while I was on the job hunt, and the truth is, there is definitely no silver-bullet on either side. They are very much like a divorce, and mirror them in court: two sides get lawyers and try to reach an agreement out of court.
For what it's worth, the last company I worked for was based in Illinois, and went after an employee that broke the non-compete, and were successful, AFAIK. I know that the non-compete for some employees was pretty ridiculous (I think 18 months, and not sure how the pay worked). When we broke off from said company and set up our domicile in California, the non-competes were suddenly a non-issue.
answered Jan 9 '15 at 15:48
kiss-o-matic
35125
Lots of things are the deciding factors here. The most important:
1) The non-compete agreement he signed
2) The state. (If he's in California, he's in much better shape than most other states)
3) Does he also have an non-disclosure agreement?
He really needs to consult a lawyer to know for sure, but I know a lot of non-competes will be all encompassing of anything the company does. This is likely hard to enforce for something like a Fortune 500. For something in the < 200 employees range, it likely becomes harder for him to prove there was projects going on to which he was completely unattached, and therefore could not be breaking a non-compete.
I researched a bit while I was on the job hunt, and the truth is, there is definitely no silver-bullet on either side. They are very much like a divorce, and mirror them in court: two sides get lawyers and try to reach an agreement out of court.
For what it's worth, the last company I worked for was based in Illinois, and went after an employee that broke the non-compete, and were successful, AFAIK. I know that the non-compete for some employees was pretty ridiculous (I think 18 months, and not sure how the pay worked). When we broke off from said company and set up our domicile in California, the non-competes were suddenly a non-issue.
answered Jan 9 '15 at 15:48
kiss-o-matic
35125
answered Jan 9 '15 at 15:48
kiss-o-matic
35125
answered Jan 9 '15 at 15:48
kiss-o-matic
35125
answered Jan 9 '15 at 15:48
kiss-o-matic
35125
35125
2
We are in a ludicrously business friendly/employee screwed state.
– maple_shaft
Jan 9 '15 at 15:52
4
Agreed. What he should be doing: 1. Find everything he signed with the company. 2. Consult a lawyer ASAP. Alternatively, give up the idea entirely.
– Kai
Jan 9 '15 at 16:05
suggest improvements |Â
2
We are in a ludicrously business friendly/employee screwed state.
– maple_shaft
Jan 9 '15 at 15:52
4
Agreed. What he should be doing: 1. Find everything he signed with the company. 2. Consult a lawyer ASAP. Alternatively, give up the idea entirely.
– Kai
Jan 9 '15 at 16:05
2
2
We are in a ludicrously business friendly/employee screwed state.
– maple_shaft
Jan 9 '15 at 15:52
We are in a ludicrously business friendly/employee screwed state.
– maple_shaft
Jan 9 '15 at 15:52
4
4
Agreed. What he should be doing: 1. Find everything he signed with the company. 2. Consult a lawyer ASAP. Alternatively, give up the idea entirely.
– Kai
Jan 9 '15 at 16:05
Agreed. What he should be doing: 1. Find everything he signed with the company. 2. Consult a lawyer ASAP. Alternatively, give up the idea entirely.
– Kai
Jan 9 '15 at 16:05
suggest improvements |Â
24
You're not looking for a legal answer? You should. You can get everyone's opinion on this and it will be nothing more than their opinion. In something as important as this seek legal advice.
– Styphon
Jan 9 '15 at 15:42
3
Essence/spirit of an NCA is to prevent employees from doing exactly what "your friend" is considering doing.
– Joel Etherton
Jan 9 '15 at 15:50
6
Short answer: it completely depends on the state and what he's signed, and he needs to seek legal assistance.
– Jon Story
Jan 9 '15 at 16:35
3
I'm voting to close, as this is DEFINITELY the domain of attorneys. Tell your friend to find one. The most relevant case that came to my mind was Mattel, Inc. v. MGA Entertainment, Inc., but your friend needs an IP attorney YESTERDAY!
– Wesley Long
Jan 9 '15 at 21:20
2
also "I am not looking for a legal answer" doesn't make any sense as the concept of 'non-competes' is purely a legal concept.
– DA.
Jan 9 '15 at 22:17