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Judge says Internet Obsoletes Lengthy Non-Competes 153

Posted by CmdrTaco
from the this-is-gonna-get-sticky dept.
dashNine writes "The NLJ's Law News Network has this story on a New York case in which a judge refused to enforce a Web firm's noncompete clause, saying that "in the Internet environment, a one-year hiatus from the work force is several generations, if not an eternity." Another well-deserved nail in the coffin of this instrument. " Non-competes are definitely an annoying part of the industry. Do you think this is legit?
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Judge says Internet Obsoletes Lengthy Non-Competes

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  • Not to read into things too much, and to let my train of thought go too off track...

    But is this a sign that rules for the Internet & Technology Industry aren't going to be the same as rules for say, the Tire Industry? When a guy working for Goodyear suddenly drops them, and works for Kelley, thats more of a direct threat than in the tech industry. There are a small number of companies in the tire industry, but nto the tech -- its wide open.

    New arena, new rules?

  • Sadly it's 95 years for corporate authors or 75 years from the creators death and appears to be on track to be extendeded indefinitely. There is an excellent resource [asu.edu] on the copyright extensions, the corporate lobbying by Disney and others, and the constitutional challenges to the extention. It is well worth reading.
    --
  • There are some rights that law does not allow us to consent to give away. For example, you are not allowed to sign your freedom away to become an indentured servant, at any price.

    You are right to a point.. but ever heard of something called the U.S. (and other countries as well I'm sure) Military.. I've often wondered how the goverment gets around this one.
  • I believe that contracts between unequal parties are justly and appropriately regulated by the government. First of all, my employer is handing me boilerplate written by lawyers, who are uniquely skilled at constructing contracts. Unless I am myself a lawyer, I am not uniquely skilled at interpreting contracts. And even if I do not like a clause I am in a much weaker position for negotiation. For the libertarian version to work at all, I would expect the two parties to have roughly equal knowledge as to the contents and effects of the contract as well as an equal role in writing that contract. I can't think of a good way of achieving this parity.

    Even if such parity were achieved, the resulting contract would probably be poorly worded and ineffective, as it had been crafted by non-experts. Lawyers and courts, although much maligned do play a necessary role in any system, including a libertarian one, in crafting unambiguous documents where possible and interpreting ambiguous ones where necessary.

    Libertarianism gives one enough rope to hang oneself, or more accurately gives enough rope to the more powerful party to hang the weaker party. The longer rope certainly allows more freedom and less government, but I worry about hanging individuals for their mistakes. I also worry about giving even more power to the powerful than they currently enjoy.
    --
  • Once you have been convicted of a crime, all bets are off. You have violated the contract with the society and you lose rights. There is still the restriction against cruel and unsual punishment. I think the way the courts get around the unfairness of unusual punishments such as keeping a hacker from using computers, or implanted contraceptives to drug addicts is to offer them as alternatives to extended prison sentences. Most restrictions that happen as part of a probation are constitutional.
    --
  • Party at your office :-)
    --
  • Why do I suspect you have no real idea about what marxism stands for.

    I would say the Slashdot party line is to be:

    libertarian wrt personal freedom and government(encryption, free speech etc., limited government powers)

    capitalistic wrt most economics (property ownership, free markets) although there is distrust of large corporations.

    anarchic wrt intellectual property (but not physical property)

    The only thing that comes close to marxism is opensourceism, which is really a conflation of libertarianism/anarchism (BSD), libertarianism/socialism (GPL), and libertarianism/pragmatism (Open Source (TM)).

    The main grey areas are in the degree to which government should intervene to promote the above values, and the protection of virtual property (e.g. should unauthorized computer entry be criminal). Social issues are largely undiscussed except when they touch on freedoms, as are issues of race or socioeconomic disparity.
    --
  • I've turned down otherwise good jobs because of legal BS like this - once I spent $1500 on a lawyer when a company I was working for tried to make me sign one (right before they went belly up). And here I thought slaverly was illegal...
  • you call me a snide, cynical smartass??!?!

    go back and reread your comment.

    pot kettle black.

    on top of that, you don't even have the guts
    to sign your name. pffft.
  • There are some gray areas though. I remember a contract I had to sign a few months back before I turned 18 - a Lawyer told me that my parents could not co-sign it because the contract was obligating me to work, and for my parents to sign it would be somewhat equivalent to slavery. In essence, noone can sign an agreement that requires *you* to do something. I never figured out if the contract would have held water if I had signed it b/c I waited until I turned 18. I do remember discussing something similar not long ago and I was told that often times a minor can sign an agreement and, if they fulfill their terms, they can require the other party to fulfill theirs - but the minor cannot be forced to fulfill theirs.
  • #include <ianal_disclaimer.h>

    Using the speed of technological change as an argument against them is novel, and I'm not sure how happy I am with that. It would be far better to strike down non-competion clauses completely.

    I'm not sure how happy I am with non-competition clauses in general. You do have to see it from the the employer's point of view.

    In this particular case, I don't think the company has a justification for suing the guy and I agree with the judge.

    But let's say you work for General Widgets Corp. and you are heavily involved with the design of what amounts to a technological breakthrough in widgets. Just before General Widgets is about to patent its UltraWidget XLT incorporating the breakthrough, competitor Widgets R Us learns of this and decides to hire you to implement the breakthrough on its new MegaWidget Deluxe, which is will compete with UltraWidget XLT. General Widgets spent hundreds of millions of dollars on developing UltraWidget XLT, and now Widgets R Us has hired you and essentially gotten the technology for free.

    Sure, UltraWidget XLT should also be covered by a Non-Disclosure Agreement, but these usually contain a clause non-compete clause.

    So is it fair that GW has spent all this money developing UWXLT only to lose it to WRU? I'm guessing that most people would say "probably not." In this case, I would have to say that the non-compete clause is justified.

  • by leitchn (96636)
    It is a perfectly valid statement. If a contract is defined by the law as legally binding, it can still be overturned by a judge. Any contract. So this case is no different to any other case where a contract previously thought binding has been deemed illegal under consideration of new circumstances. 3 yrs BA (Hons) European Law 7 years working for a London Law Firm. Your Ball.
  • Much of it depends on the scope of the agreement. If we are talking about a narrow field that competes for a small group of customers, then I'd say that non-competes are understandable. It would be one thing to demand that an employee not sell general programming services for a year after quitting. It would be quite another to demand that an employee of, say, Borland's compiler division, not quit and join Microsoft's compiler design team. (And actual event.)

    In addition, employees aren't always ethically free in these situations. If, for example, I worked for a web designer, became disgruntled, quit, contacted my former company's largest customer, and convinced them to switch to my new company, well, I don't see how that is particularlly "ethical". There the ones that did the work necessary to aquire the customers. Why should I profit off of that? I think that it is perfectly reasonable for a company to demand that I not deliberately go after their customers if I quit.

    On the other hand, it should be obvious that with a reasonable agreement, I should be able to quit and go off and form my own web design company, as long as I don't deliberately try to take my former company's customers with me.
  • by Wharper (13989) <<moc.noissimx> <ta> <reprahw>> on Friday October 29, 1999 @09:01AM (#1576825)

    At a previous company I worked for I was made to sign a non competition agreement as part of my employment. It really did not bother me to do this.

    Later in my employment at this company I had some legal questions about some of the things in my employee agreement so I went to see a lawyer. The lawyer told me that the non-competition clause in my employee contract wasn't worth the paper it was printed on. In a right to work state like Utah this type of agreement was not allowed. The only thing that a company could enforce was the employee could not use company secrets/patents/code in another company. Also the employee could not use the "goodwill" that the company has with vendors/customers etc. Other than that the employee is free to work for any competitor he chooses.

    Of course I am not a lawyer and this is not meant as legal advice. Also this may only pertain to the state of Utah, your mileage may vary.

    The moral of the story is that contracts are most effective because the person signing them thinks that it is legal and it keeps him from doing anything against that contract. The creators of the contract I signed knew that the non-competion clause was not valid but put it in there as an intimidation tactic to keep the employees from going to a competitor.

  • Back when I first was asked to sign one of these agreements, I actually went and talked to a lawyer (GASP). Even then, 9 years or so ago, he said that almost no non compete is enforceable unless:

    You are a senior officer of the company
    and
    The non compete specifically spells out the 1)Industry, 2)Time, and 3)Geographic local

    He said that basically, it has to be written in such a way that you can continue to make a living in your field, without moving from your home (But allowing LONG commutes) during the timeframe in question

    And this WAS in New York
  • by Anonymous Coward
    The basic question underlying most disputes about non-compete agreements is really about what contracts are, what the nature of the obligation of performance of a contract is, and what kinds of things people may agree to in contracts.

    The prevailing opinion in the law has usually been that some contracts are "against public policy" and therefore have no obligation. What this means is basically that some legislature or court has decided that it would be bad for society if people were allowed to oblige themselves to do certain things, and therefore declared that people are not allowed to oblige themselves to do those things.

    Libertarians usually dislike this process itself (believing basically that your contract rights have absolutely nothing to do with whether the contract is good for society), and other people usually take it case-by-case, not believing in an absolute right to contract.

    There are some interesting reductio arguments on either side; I think the libertarian position is basically right, but I worry about the nature of penalties for default in contracts (what happens to you if you don't perform).

    Interestingly, forbidding certain kinds of contracts also requires forbidding certain types of wagers, as well as certain types of escrow organizations, because those can be used to circumvent the restrictions.

  • Non competes exist solely to spite leaving exmployees, and really shouldn't be enforced anywhere. I mean, let's take a look at the possible scenarios that cause noncompete clauses to come into play.

    1. An employee becomes fed up with some aspect of his job, and it is not resolved. He quits. Now, because his prior employer didn't care enough to make sure he was happily employed, he can't work for anyone else, either.

    2. An employee is "downsized." On the merit that the company couldn't afford to keep him employed, no other company should be able to employ him either. Huh?

    3. An employee is fired for poor work. Does the firing company really care if he competes with them, if he was that bad? Let him work for your competitors and drain their payroll!

    I would venture that most times an employee leaves a job, it is for one of those reasons, #1 probably being a huge factor. The only time a noncompete clause could really work is if company A tries to lure away company B's best employees by offering to pay them more. BUt hey -- you get what you pay for! Give your employees raises, pay them competitively and you won't have to worry about them leaving for another job. Noncompete clauses really aren't a viable deterrent and really only hurt the employees that leave with a valid reason. A
  • by Ledge Kindred (82988) on Friday October 29, 1999 @09:05AM (#1576829)
    I've turned down a contract or few because of various "non-compete" and "IP" clauses in them.

    The main problem as I see it stems from the fact that most "older, more traditional" companies have not yet updated their contracts to reflect the fast-changing nature of the 'net. If the clause says something like "I will not compete in markets similar to the market this company operates in" that can be VAST if the company does something on the 'net, and most companies today at least have a 'net presence.

    What if you've built an e-Commerce website for a car company and you've signed a non-compete agreement like this. Does that mean now you can't build an e-Commerce website for that electronics firm who would like to contract you? What's the marketplace, autos and electronics or e-Commerce and Web?

    Another related problem comes from the sorts of "IP non-compete" clauses that has shown up in contracts I've read. The contract may say "I will not use knowledge acquired during the course of this project to assist other companies during similar projects."

    That's understandable and even acceptable if you're doing genetic engineering where things you've learned on the job are legitimately unique and very likely can't be acquired elsewhere, but, again, what if you're building a website and during the term of the contract, say some new Java package that makes building servlets easier. Does that mean you are never allowed to use those new packages for other clients you may work for because you learned about them during the course of your building a website for the people who made you sign the contract?

    Another scenario: What if you've used "Acmesoft sitebuilder" to build the site for Company A. Since you've signed this "IP non-compete" agreement, does that mean you can't use the skills with Acme Sitebuilder you've honed while building Company A's site to build more sites for other companies with Acme Sitebuilder?

    With the speed at which technology advances in this industry and the amount of effort it takes for programmers and technicians and consultants to keep up with it, it's silly to expect that anything you might learn during the course of one job should not be applied to a subsequent job. In this industry you can't help but learn new stuff no matter what the job might be!

    If nothing else, what you should learn from this sort of thing is: READ THOSE CONTRACTS CAREFULLY !

    And don't just look for non-compete clauses! I had to refuse to put my name on a contract once because for whatever reason, everyone else involved in the process missed the clause that stated that any work I or anyone else in the company I represented produced would be wholly and solely owned by the company for whom we were contracting, even though I was the only person working on the contract!

    Newcomers to contracting, naieve programmers and people who are simply too lazy to read their contracts carefully can get burned by any of this sort of thing. Having laws that make it illegal, or at least imply that they are unethical and unenforceable are nice, but ultimately it really falls onto the person signing the contract to make the decicion whether or not they can bide by the terms therein.

    -=-=-=-=-

  • The effectiveness of a non-compete clause all depends on where it's written. If it is part of a contract, one that stipulates not only the non-compete clause, but also length of employment, salary structure, bonuses, etc. , then they should be valid (although signing one maybe not the smartest thing to do).

    If it is part of a employee policy procedure, then it should be null and void, since these are unilateral statements (only the company benefits), even if you sign that you agree with the policies. Signed policy manuals are not considered contracts in many, if not all, states (especially right-to-work states), but that doesn't stop some companies from believing that they are contractual. Unfortunately. :(

  • I'll keep this short, but this is good news and should be a nice first step toward setting reasonable precedents in internet law. By law, I don't mean regulating the net - I mean its nice that this judge recognized that some laws that apply to other industries don't apply to IT and the net.

    Now if somebody would rule "Patent laws are just plain stupid when it comes to IP and a different set of rules are needed"... well, I guess I'll wait and see what happens. But this is really good news that the judicial system is recognizing how fast things move.
  • ethical... heeeellll no!
    you see... so long as the employee signs it, it's legit, I think.. but the company can't force you to sign. And if they fire you for not signing, then you can sue them..
    unfortunatly, legit and ethical are a far cry apart.
    I for one would never sign one of those damn things.. it's like signing your own industrial death warrant

    ---
  • hahaha....some weasel little moderator marked my comment as redundant! I had the second post yet I'm redundant! Leave it to weasel bastard moderators lacking any semblance of a life to mark the second post as redundant! Only in slashdot! This place has gone to the shitter !
  • This doesn't surprise me at all. This is something that I have always signed, knowing that it would never hold water. It is good to see the judicial system recognizing and understanding technology. Now, if we could only get Congress up to speed...




    First post?
  • There is no software older than 50 years old.
    You could make a case for the cards used to "program" Jaquard looms being a form of software, although the looms have no state information or jump instructions. Jaquard looms are far older tech than ENIAC.
    --
  • It seems that non-competes are an anachronism. Go for it!

    --
    Max V.
    • You could make a case for the cards used to "program" Jaquard looms being a form of software...

      Yes, and it would make my point yet again. These would be of no value to anyone, except perhaps for historical interest, but they are in the public domain.

      Woohoo! Those Jaquard loom programs are quite a windfall to us Open Source types!

  • Absolutely.

    In it's basest form a non-compete agreement is a form of indentured servitude. If not illegal, it is certainly immoral.
  • You claimed that there is no software older than 50 years. When you said "Yes...", you just admitted that your claim was false. You might as well have quit right after that, because you were just refuting your own words.

    As for the far greater value of recent versus ancient "software", I cannot disagree. Unless one is reproducing an historical cloth weave, Jaquard loom cards would be of little use.
    --

  • ethics smethics. If your employer asks you to do anything that abridges your rights, in this case to make a living, then the courts are right in ruling them unenforceable.

    Chalk one up to the lil guy.


  • >That's news to me.

    Send my 50 cents by email :) [pity I can only charge him for a newspaper and not an hour :)]

    >I've heard anti-non-competition rules called
    >"right-to-work laws" on any number of occaisions.
    >I suppose that's what I deserve for learning law >from human resource people. :^)

    not just law :)

    Check Black's, or any of the literature on the National Labor Relations Act.

    Also, those anti-non-competition rulese aren't needed, since the Common Law already does that. And the areas where the Common Law *does* permit them are so narrow that legislation to strike the clauses would usually be unconstitutional anyway--it would (usually) take away either the right to sell a business, or the ability to enter into a contract to perform one's trade (in the cases where noone would pay for the work without the protection of non-competiton).

    hawk, esq.
  • They basically took my desicion beyond that of a bussiness move into being a personal blow to them. They thought by having the court issue me a restraining order it would stop me and make me go back. Based probably on the thought that I wouldn't be able to afford a lawyer to fight them on this decision. But I was able to, and won....
  • It's about time that our legal system started to realize that there are some major differences in the computer industry where traditional laws and interpretations have a significantly different impact. Let's hope we see more 'net-savvy judges in times to come!

  • by troyboy (9890) on Friday October 29, 1999 @08:18AM (#1576848)
    The classical argument for such agreeements is that the employee consented to the clause and therefore knew what he was doing when he signed away his freedom to work at a competitor. These are good for the employer to the extent that they protect trade secrets and hurt the competition. They are good for the employee to the extent that the employee might get a higher salary in return.

    On the other hand, this was likely a boiler-plate contract that the employee had no real control over (no sign, no job). Thus, is there really consent? It would amount to near slavery to force the employee to stay on the job or leave the industry. I would agree that such a contract provision is unconscionable, particularly in the Internet industry where time flies.
  • by Anonymous Coward
    In support of more limited non-competes, if I am paid by a company to develop a specific technology (company owned, because of the agreement (contract or employment), should I have a right to then sell this same technology to another company? Especially a competitor? I think not.

    What I object to (and have turned down assignments where they were required) are the agreements that try to go beyond the minimum required to defend trade secrets.

    Let me end by saying that I am usually very pessimistic about the judiciary in the U.S., having seen and read about too many bad decisions over the last few years. However, this judge appears to be clued in and right on the money with his decision(s) in the specific case, not because he ruled against the non-compete, but because of how and why. (Quoting)

    The judge said that Mr. Schlack had no access to the company's advertiser list, source codes, configuration files, had no direct contact with EarthWeb's highest executive officers and was not involved in developing or planning EarthWeb's overall business strategies or goals. "Thus, while the central nature of Schlack's position necessarily offered him a broad perspective over EarthWeb's day-to-day operations, in many important respects his access to highly confidential information was limited," he said.

    This is significant. If Mr. Schlack had obtained information such as mentioned above, it sounds to me like the judge might have in fact enforced the non-compete. Which wouldn't have stopped the man from working, just from working in direct competition in the exact same industry).

    Which is why (even though I am a very well compensated programming consultant), all of the source code, documentation, etc. that I write for a specific client stays with that client, even when the tools, etc. that I created could be reused elsewhere. The critical item is that I am allowed to take the skills with me, so I can still make a living and not be in violation of the "non-disclosure non-competes."

  • Prostitutes have a right to do whatever they want to do, laws may restrict their rights, but that doesn't mean that the rights go away.

  • by hawk (1151) <hawk@eyry.org> on Friday October 29, 1999 @09:08AM (#1576852) Journal
    Disclaimer: I am a lawyer, but this is not legal advice. If you need legal advice, see an attorney licensed in your jurisdiction.

    The level of misinformation and erroneous explanations of law I'm seeing in other posts is unusually high . . .

    The law has *always* been hostile to agreements in restraint of trade, *including* non-competition clauses. Not just in some states, not just in the U.S., but the entire English speaking world which inheritted the Common Law of England.

    In front of me is a case on the subject from 1711. Yes, nearly 300 years old. [Mitchel v. Reynoldds, 1 P. Wms. 181, 24 Eng. Rep 347 (K.B. 1711)]

    It applies the same rules used today. An agreement in restraint of trade, particularly one barring a man from engaging in his trade, is presumed illegal, and must be shown to be necessary, Particularyly, a non-competition clause must be necessary to accomplish the purpose of the contract.

    In Mitchell, a baker sold his bakehouse, and agreed not to compete in that parish for five years--which he promptly violated, claiming that the bond was void by law. The court found the clause enforceable because it was the only way the business could possibly be transferred--if the old baker could open again across the street, he would take all of the business that had supposedly sold to the new baker. So in that one parish (not even the entire city), the baker couldn't sell--but he could in the rest of England.

    Essentially the same rules apply today. To enforce such a clause, it must
    1) actually be necessary to achieve the contract,
    2) be as limited in time as possible--only long enough to achieve the purpose needed, and
    3) be limited in geography, only covering the minimal region needed.

    Overstep any of these by even a little bit, and the entire clause is thrown out. In five years of full-time practice, I only saw one non-compete clause that it wasn't clear I could have thrown out [hint: *don't* try to write your own--pay someone who knows what he's doing.].

    So there's nothing new or shocking here. If there's no trade secrets (these could include in-house techniques for getting the job done faster), you fail part one. Today, a year is forever, and it would be hard to conceive of any internet related field where a year wouldnt' be too long, and two fails. Three, however, isn't clear--the entire world might be a single geography for purposes of competition.

    Just for an example: suppose that a week after they sold slashdot, rob, hemos, & rob quit andover and formed the new cmdrtaco site, covering the exact same topics, and with discussion forums. If this were possible, and the non-compete clause couldn't be enforced, andover would be nuts to pay anything, and would certainly pay much less than they did. On the other hand, if andover could prevent them from competing for a year, andover would probably keep the audience if, a year later, they opened a competing site. In fact, much less than a year would do.

    hawk, esq.
  • FYI, (IANAL,B) I understand that the term for a contract which is illegal - a contract in which one party signs away rights which the law says they cannot sign away - is a "contract of adhesion".

    I presume what people are saying is that in places like CA, a non-compete is a contract of adhesion.

    The problems with contracts of adhesion are

    1. While the judge should throw them out if it goes to court, you may get hauled into court because of one (with concommitant lawyers fees) and you may get a flakey or confused judge. It happens.
    2. The other party can threaten you with hauling you into court - since you signed the damn thing - which may be punitive enough (time, money spent defending yourself) that you capitulate to their control.
    3. Often, one or both of the signers don't know it's a contract of adhesion, and forfit rights which they needn't or shouldn't. When used as a tool to trick one party into forfitting rights they don't know they can't be deprived of, it's egregiously unethical.
      ----------------------------------------------
  • I have a friend who is an IT contractor, and has repeatedly warned my about the evils of non-compete clauses. Her particular field is in technical writing/software documentation, which tends to be a feast-or-famine type of endeavor at best. She's seen non-competes used against contractors in the following way:
    • Staffing agency or IT consultancy hires a contractor on extended basis, to use on contracts as supplements to their full-time staff. Contractor must sign non-compete.
    • Times get rough. Work dwindles.
    • Consultancy scales back work to contractor in order to keep full-timers flush.
    • Contractor is barred from looking elsewhere for work by the terms of the non-compete.

    It's really a nasty scenario, and one that happens more than you might think. The consultancy doesn't mind you working if they can get a cut, but if the market-space starts to dwindle, they'd rather starve their competitors for talent using non-compete agreements than let their contractors work. Sucks bad, but it's life.
  • IANAL, but i took some classes on it, and i'm pretty sure that when you turned 18 and continued to show up to work, you were demonstrating that you still agree to the terms on the contract: i.e. it was like signing it again when you showed up to work that day.
  • Is your previous company really responsible for the customer's goodwill? Why shouldn't you attempt to acquire a new customer, after all, you're the one who did the work.

    If your previous employer is on their game, they will be making sure the customer is taken good care of. If you can promise them something better and then deliver, well... that makes a happy customer, a well-deserved profit for you, and should be a lessen to the company who didn't recognize the depth of your talents when you worked for them. Maybe they'll steal the customer back.

    Non-competes are unrealistic, against common-sense (especially free-market common sense) and don't work.




    Razor Blue, TechnoMage
    shackled to tranquility / silenced for eternity / four walls no windows / in your bounding box

  • by leitchn (96636)
    Isn't it the point of lawyers to give convoluted comments?
    (Pockets the ball, offers the peace pipe, cos I hate non-competes too.)
  • I can only speak for US, and I'm not entirely sure if its federal or just state to state, so don't quote me, but my understanding was that in most, if not all states, no contract is legally binding to anyone under the age of 18 unless signed by a guardian. Again, IANAL, I don't know the laws, but I know people who way back when that used that to get out of being harassed by Colombia House and it worked.
  • as I see it, the right to pursue gainful employment is always going to win out in the end.

    yes, I had to sign a non-compete when I started with my current employer, but I've never worried about it. for one thing I live and work in california where (as previously mentioned) these sort of contract provisions have no teeth.

    beyond that, it all comes down to how they attempt to define a "competitor". they might conceivably be able to stop you from going to work for their number one rival (and even that is a long shot here in california), but there is absolutely no way they can claim the primary business to be "web" and bar you from working for _any_ other web firm. ludicrous!

    - mark
  • must be the end of time. Patents and copyrights were never meant to keep dead technology dead. Look at the situation with posting M.A.M.E. ROMSs. We're talking about arcare games from 20 years ago that are no longer being manufactured, sold, supported, no parts available, EPROMS finally reaching their estimated 12-15 year decay life, etc., yet if someone posts ROM images on their web site, they get harassed by and attorney armada from some umbrella organization of software publishers. Patents and copyright should be like bank accounts are now. You either use it or it's ruled "dormant" and you lose it. Patents are 20 years. What was the computer industry like 20 years ago? And copyrights are worse as they keep getting extended (Disney lobbies hard to keep old 190x Mickey Mouse [uh oh, I said it] eps from becoming public domain) and extended from 50 years to 75 years to 100 years now? WTF?! Software should have a 5 year copyright max maybe with dependence on the type of software (less for games, more for other stuff).
  • I was working for a small ISP and decided to move to another for various reasons, one being I saw more room for advancement with the new company. I had signed a no compete agreement when I was 20 and being offered 6.25/hr to do tech support. Which is total BS anyways. Over the course of two years my duties increased and I became a bigger part of the company. But being 22, I wanted to do different things and had an offer with better advancement options. I took the job. I got a restraining order. I went to court. And I won back my right to work. Now I am a happy system administrator for the ISP whos office is about 1/2 mile away from my old job :>
  • The classical argument for such agreeements is that the employee consented to the clause and therefore knew what he was doing when he signed away his freedom to work at a competitor.

    There are some rights that law does not allow us to consent to give away. For example, you are not allowed to sign your freedom away to become an indentured servant, at any price.

    This seems like a very similar situation.

    It is for this reason that employment agreements are typically held to be at the pleasure of both parties. Anyone can quit at any time, anyone can be fired at any time. Extending your rights over someone's services with these non-competes seems to be trying to get around this.

    I appreciate where trade secrets or privileged information is at stake, but normally such a claim, under law, would normally be up to a plaintiff to prove in court.

  • >In the case of non-compete clauses, courts have
    >generally enforced them.

    No, they haven't. The courts have always been hostile to these, and only enforced them when absolutely necessary.

    >But, it would be great if more courts did side
    >with the little guy like this!

    The courts have been siding with the little guys on this for hundreds of years.

    hawk, esq.
  • The post contained more than mere opinion and a quotation when I read it.
  • by mochaone (59034)
    yeah, I guess you're right. That's probably why a lot of these non-competes get signed. After the first paragraph and the headache that comes with that, you're happy to sign the thing so you can go on with your life.

    (accepts peace pipe and apologizes about letting ball roll in shit.)
  • Don't ever agree to sign a non-compete clause. It's nothing more than an excuse for the company to bully and (try to) control you. I've never heard of a non-compete case won by a company over an individual. Real Companies(tm) don't require them anyway.

    Look at http://www.flash.net/~cmiller/ctgweb.htm [flash.net] for a great example of how a company can (try to) use a non-compete to bully you.

    But of course, CTG eventually lost.

    The bad PR this case generated will probably cost CTG millions of dollars of lost business in the long run. Was it worth it?

  • So, a judge realizes that in the Internet age, lengthy non-competes don't make any sense.

    When will we see Congress wake up and realize that 50 year copyrights on software don't make any sense whatsoever?

    Hmmm... IBM, Microsoft, CA, and the rest of the big software vendors would throw all their lobbying efforts against any change in the absurd copyright duration on software. I wonder when I can count on this changing?

    I'm looking forward to the day when the first software copyright expires. I, for one, am anxious to get my hands on all that great ENIAC code!

  • by Anonymous Coward
    If this was legal advice an invoice would have been attached.

    Injured worker wins against Mattel! [sorehands.com]

  • Is that Carly Fiorina could leave Lucent all of a sudden to become CEO at HP one week later, while Lucent would like to (and quite possibly legally do) own all code I write in my spare time until a year after my contract expires.
  • <<I guess companies figure that if you don't know the clause is worthless, you might obey it. One invalid clause doesn't invalidate the whole contract (it usually says so in the fine print somewhere, at least it always has on mine) so they have nothing to loose. >>
    I think in the case of small companies it's more a matter of blind copying. Most of the employment agreement from my last company (a startup I cofounded) was just taken from employment agreements the CEO had been subjected to in previous jobs...

    <<My current company actually doesn't have a non-competition clause, even though they loose a lot of people to competitors.>>
    Sounds like your present company is run by people who are in it for "the love of the game" as it were... More motivated by developing cool stuff than by profit motive?



    Jon Frisby, Senior Internet Software Engineer,
    Personal Site (MrJoy.com) [mrjoy.com]
  • While stealing your previous employer's customers may not be illegal (I'm not sure), using confidential and proprietary knowledge (that is necessarily not in the public domain) to do so is. I think you'd better be careful about what you tell your new employer about your old employer's customers.

    Using confidential info is a different issue from non-competition clauses.
  • There is a pizza place in teh Cleveland area where my brother worked for a year. They make you sign a non-compete clause to get teh job, no way around it. Even if you are just a driver and you go into fast food afterwards, or if you were a driver and you opened a place of your own as a franchise owner, the owner of this pizza place had enough contacts in the "industry" to find you and sue for a rather heafty ammount, and has done so according to people my brother has worked with, and he won.

    Now this has good and bad effects for the people in the position of fast food. Many people it forces them to get a real job. My brother landed a job as an electrical engineer after working there, so it forced him to get a real job and use his degree, which he wanted to do anyways, but had a hard time finding a job with a physics degree and a 2.0 GPA.

    For other people, this is a hardship such as the high school student who works there, then gets his drivers liscence and decideds to work someplace farther away that pays better. He or she is in a heap of shit because of a stupid non-compete clause, and a boss who is moronic enough to track them down.

    just what I've heard, this is all second hand so the info may have errors, but the scenerio has hapened to people, and I know this.

    Best part is that this restraunt didn't even have very good pizza, the recipe wasn't a trade secreat it was so bad!

    later all
  • Okay, I'll take your word for it.

    I think that I have confused two concepts:
    1. The courts' willingness to enjoin an employee from working for a competitor when the employee breaches the employment contract, and
    2. The courts' willingness to enforce con-compete clauses of contracts.

    I seem to remember from my contracts course in law school that one of these existed. Or, are both wrong?
  • Another scenario: What if you've used "Acmesoft sitebuilder" to build the site for Company A. Since you've signed this "IP non-compete" agreement, does that mean you can't use the skills with Acme Sitebuilder you've honed while building Company A's site to build more sites for other companies with Acme Sitebuilder?

    This reminds me of one that I was forced to sign. Basically they told all the IT people they had to sign it. It was written (badly) by our legal department. It included clauses such as "employee may not at any time now or in the future use any software or hardware used by Company during period of employment without written consent of Company" and another saying we couldn't use any skills that we had learned working there. And, this was a "sign or resign" deal--I had been working there for over 2 years at the time.

    One guy got upset and quit over it, the rest of us laughed at it and signed it anyway. So basically they pissed off one guy enough to make him leave and made themselves look incredibly stupid to the the IT department. If this were actually legally binding I wouldn't be able to ever use PC-DOS, Win 3.1, OS/2, Token Ring, or an AS/400 again--as if I would anyway! Of course I probably wouldn't be able to use the telephone either.

    The sad thing is that they actually did have IP and trade secrets to protect. By trying to force employees into an overly broad non-compete agreement they ended up with no protection at all.

    All in all it was a great place to work (I spent nearly five years there.) Just an annoying legal department and clueless upper level management. That's why I let them "force" me to sign and just laughed it off. Instead of just saying "No", I just said "Yes."

    numb
    ?syntax error

  • by Chris Johnson (580) on Friday October 29, 1999 @11:30AM (#1576883) Homepage Journal
    I can name a company that uses noncompete clauses and has repeatedly won in court when they were challenged. It's Mackay Envelope, run by the book-writing cool guy Harvey Mackay, and he explains exactly why that is: here's how it works.
    First of all, the Mackay noncompete is justifiable- it's for salesmen, and sales is such a personal occupation that one salesman can walk out of a company with basically the whole future of the company. Mackay did this to start his own envelope company, and vowed never to let anybody do it to _him_. As he put it, if he'd backed a truck up to the factory and taken every envelope in the place he'd have done his previous employer less damage- he took their _future_, 'cos he wanted to be an envelope king :)
    Secondly, the way Mackay gets around this problem with his contracts is simple- his noncompete clauses are incredibly fair and reasonable. A new salesman is given a bunch of accounts to take over and service when the salesman starts the job. Those names are written in the contract, and the guy can't take those with him when he leaves. Also, a large percentage of the customers are within the county Mackay operates in- the guy can't walk away with the customers _within_ the county for one year, after which it's open season. Outside the county, there are no rules.
    The whole arrangement is designed to make it perfectly reasonable for a departing envelope salesman to continue making a living, even for the company's archrival, even still selling envelopes. The customers the guy can't walk away with are specified. The area where the noncompete agreement protects Mackay is intentionally very limited- _one_ county in size. All this adds up to one fact- in order to have a problem with this agreement, a saleman would have to be trying very hard to hose Mackay. And that's been tried, and Mackay won in court, apparently several times, and was right to do so because what was being asked was quite reasonable and it wouldn't have been too hard to comply.
    Real companies do require noncompete clauses. The wrong guy walking out could really hose a company, and it's not like anybody these days is so fat and happy that they can ignore being hosed and having tons of clients taken away. The trick is, of all the noncompete clauses, most of them _are_ crap. The ones that are not crap are the ones which are really very reasonable: "You can't take the clients I handed you when you started, for a year. You can't go after the guy across the street for a year, go down the street some. After a year, go nuts, if I can't keep the client that long I don't deserve it..." and that's how to do it.
    As for the why to do it- Harvey Mackay started being an illustrious envelope tycoon ( ;) ) by walking off with most of the clients for a whole company, essentially killing them.
    As for the time constraint- that's a smokescreen though it is a valid concern. Read the statement: he was forbidden to work with 'an on-line service whose "primary business is to provide information technology professionals with a directory of third-party technology, software, or developer resources," an "on-line reference library" or an on-line store whose primary purpose is to "sell or distribute third-party software or product uses for Internet site or software development."' That's WAY TOO BROAD! Way way too broad. Forget 'internet time', this is the noncompete equivalent of those stupid patents. If it had been more sharply defined and less of a sweeping generalisation, the year duration might have even held up. I'd suggest narrowing it to _specific_ IT professionals, or to only 'sell Internet site development software' (basically, a noncompete saying 'For a year, do not work for a site created to serve webmasters'), or even geographical or computer-platform limits. As it is, that agreement seems vaguely specific, but to be a good noncompete agreement it has to be _painfully_ specific, protecting only the absolute heart of the business and only the most critical clients, and even then you're better off if you can specify particular ones, not _classes_ of client.
    But instead, it's "Thou shalt not work for anybody selling access to information, or software, or web tools, or telling people where they are!" *furrfu*. This has little to do with 'internet time'. The whole noncompete agreement is fatally broad.
    Again, it has to be _really_ specific. "Thou shalt not try to woo away Fred, or Bob, or Harold for a year, so we can get a head start 'cause we gave you those accounts in the first place. Also, don't work for a company that steals our mission statement, trademarks, and mailing list." _That_ would be a slamdunk. Who'd argue with that?
  • Yes, that's exactly the difference.

    1) is an injunction which is readily given. It came up with a famous actress a couple of years ago when she refused to make a movie (though the claim that there was a binding contract sounded questionable to me). The courts will grant these unless there's a really good reason not to (being a disguised non-competition clause might be such a reason, or there being something illegal about what the company would do with the work if the person completed the contract [e.g., it turs out to be the control software for an anthrax bomb . . .]).

    2) are rarely enforced, unless very narrowly drawn.

    hawk, esq.
  • An issue that is doubly sticky when that new employer is you, yourself. You can't exactly unlearn confidential knowledge.

    If I work for four years for company X, and then go off to form a competing company, I have something none of company X's competitors do. That is, I have a complete working knowledge of company X's source code.

    (Of course, for most of the companies I've worked for, that would only have been good the amusement value, but you get the idea...)
  • Heavens, no. A summary of how it had been charged to the already paid retainer :)

  • >>Right-to-work laws are pretty widespread in the US.

    >annecdotal

    Actually, it's irrelevant :) Right-to-work laws are laws that make closed union shops (where one must belong to the union to work) illegal. The rules treating non-competiton clause hostilly go back at least thee hundred year.

    Hawk, esq.
  • I currently work for a consulting firm, in the contract it states that you cannot be hired by the company you are being contracted to for 180 days prior to the end of the contract, don't know if it's the exact same thing as what's being disussed here, but how are these things enforceable? That's like denying you're right to quit a job, it ain't going to happen, these things can not be that easy for coperations to enforce, and then they would have to want to deal with the courts and the costs, would it be worth it? Isn't this a basic non issue from the start? Honestly, have you ever heard of anyone being "blacklisted" or anything because of this?
  • No - I read it quite thoroughly. But I don't have any recollection of internet time being a factor at all in previous cases - all the other factors aren't new, they've been used in previous non-compete invalidations. This, on the other hand, represents something new.

    - -Josh Turiel
  • And perhaps I can steal the customer because my costs are lower, those costs being lower because I don't have to train the guy doing all the work (me) the way my former employer did.

    Why shouldn't you attempt to acquire a new customer, after all, you're the one who did the work.

    It is very, very rare that one person in a company does all the work.
  • by Anonymous Coward
    In some states, there's an inherent "Right To Earn a Living" (Texas for example). I know at least one high-ranked person who has no qualms about signing non-compete clauses, because of this right in Texas -- he says that the clause is totally unenforcable, because no entity can prevent another from earning a living. I don't know (for a fact) that there's truth to this, but the person is relatively competent. Maybe your state has something similar?
  • My condolescences if you live in an area where
    you don't have a choice, or don't have the
    negotiation skills to get out of signing one.
  • by Anonymous Coward
    I currently have a non-compete clause in my contract. HOWEVER, it give the company an option to have me not sign up with competing companies for a period up to a year... And, more importantly, if the choose to do so they have to keep paying me my normal wage.

    It was acceptable for me because the work included stock (I even got it up front), the pay is very good, and I am in a key position in the company, with knowledge of almost every detail of what's going on.

    Still, I'm going to quit next week.

    So what if they invoke the non-compete? Then I'll take a nice long vacation, and after that sign up with a company not competing with them, and collect one pay check for working, and one for not competing :-)

    But this is also fundamentally different from "normal" non-competes. Normal non-competes are one sided contracts that give your employer rights, and take away yours without compensation. In many countries the one sidedness of that alone would be enough to make a court throw out the clause.

    My non-compete on the other hand, includes an admission that this is a severe restriction on me, and an agreement that if they impose the restriction, paying me my normal salary to do nothing (or to take work for a company they don't compete with), is a fair compensation.

    It also means that they won't invoke it unless they really see a reason to it (if I'd been receiving calls from the competition :-)

  • I've never even heard of a non-compete that restricted people for over a year. They serve good cause I guess theoretically, but I've only seen ones that were limited in terms of months.
  • by vlax (1809) on Friday October 29, 1999 @12:04PM (#1576899)
    Sounds like your present company is run by people who are in it for "the love of the game" as it were... More motivated by developing cool stuff than by profit motive?

    I work for a very large computer hardware and OS company that is frequently discussed (and often maligned - sometimes rightly so) here on /. and certainly nearly every poster here would recognise it. They are in it for the money. It's a good company, where lots of people do care about their work and about doing cool stuff. But make no mistake, the lawyers who run this shop do not work for the joy of building cool programs - they expect cold hard cash.

    The reason we don't have a non-competition clause is, I suspect, that we also poach many employees from our competitors. Imagine if someone sued us because we hired somebody in violation of their non-competition agreement? (I imagine we must hire such people all the time.) We would look pretty stupid in court claiming that what we were doing was legal while trying to convince employees to sign away to us those same rights.

    No, we would just look dumb and opportunistic. Looking dumb is very bad in the technology business, far worse than in other sectors.

    At least that's my guess. I'm a small cog here and at least five layers of management are between me and the CEO, so I can only guess at our hidden motives.
  • Right-to-work laws are pretty widespread in the US.

    annecdotal

    I always thought non-competion clauses were a barbaric, anti-labour practice

    opinion

    Using the speed of technological change as an argument against them is novel, and I'm not sure how happy I am with that. It would be far better to strike down non-competion clauses completely.

    opinion

    The business community will, of course, complain that this prevents them from securing their intellectual property and acts to undermine business

    opinion

    However, since the computer industry is more concentrated in Calfornia than anywhere else, and California hasn't allowed such contracts for years

    annecdotal

    Workers should own their own skills and should be free to seek employment wherever they choose. To me, this ought to be a basic human right.

    opinion


    The comment should have been marked interesting, if anything. Not trying to knock the comment, just the silly moderation process.

  • It's comical, really, to see how many so-called independent thinkers here at Slashdot are just the same old marxist suckers of the past.

    Cheers,
    ZicoKnows@hotmail.com

  • I'm looking forward to the day when the first software copyright expires. I, for one, am anxious to get my hands on all that great ENIAC code!
    Since the "code" for ENAIC was plugboards used to re-wire it, if any of it still exists (in a museum somewhere) you can *literally* get your hands on it (unlike most software, where you can only get your hands on the physical medium into/onto which it is printed/written).
    --
  • Level 1 response: "I'm sorry. My salary is a private matter between me and that company. I'm sure that you wouldn't want me to divulge your confidences to another company, would you?"

    Level 2 response: "I'm sorry. I consider my salary to be an intensely personal matter and I feel that your refusal to respect my personal privacy is quite as rude as if I were to demand to know your bra size." (alternative: "who made your toupee")

    Level 3 response: "I'm glad that we cleared the air on the matter of an employee's right to privacy. Thank you for wasting my time."

  • Right-to-work laws are laws that make closed union shops (where one must belong to the union to work) illegal.

    That's news to me. I've heard anti-non-competition rules called "right-to-work laws" on any number of occaisions. I suppose that's what I deserve for learning law from human resource people. :^)

    Although courts in common law jurisdictions have long taken a dim view of contracts that have the effect of restraining competition, non-competition wording has been standard and enforced in employment contracts for high-paid workers and in high-demand sectors for some time. As I understand it, it is only in relatively recent years that legislation and courts have begun dismantling them. Employment has not always been considered a market in which the courts should insure free competition.

    At least, that's how I thought it had worked. Courts have long overturned contracts between businesses that reduce competition and contracts that undermine someone's right to enter into a competing business, but the right to seek employment per se has not always been so secure. Once again, I have to admit that much of the fairly little legal training I had was not in a common law environment. The country where I originally studied legal affairs was in part a Code Napoléan jurisdiction, where none of this would necessarily apply.
  • If what this judge believes to be true--that a year away from the internet is several generations, then would'nt it follow that Kevin Mitnick, who has a three-year probation completely removed from computers and the internet after his forthcoming release, will have missed several lifetimes or possibly an eternity? Too bad an appeal such as this is unlikely to work.
  • Again, I'm not a lawyer but:

    If a truck driver is convicted of drunk driving, it seems to me that it is in the public interest for the court to ban him from working as a trucker. That has nothing to do with whether a trucking company can keep him from quitting if a competitor offers him more money.

    A conflict in an employment contract falls under civil law, and the court system is somewhat different than the criminal system. The two haven't that much to do with each other. A criminal court can order a great many things that a private contract can't.

    This doesn't mean that I agree with Mitnick's punishment (actually, let me take this opportunity to explicitly not express any opinion either way on that matter) but it does mean that I don't think the anything is coming out of the one case that could affect the other.
  • I can see the logic behind having your key people sign non-compete clauses (star developers, executives, and the like), but in those cases a non-compete often isn't used because the would-be employee will refuse to sign it - and the position they are in has enough clout that they can get away with it.

    In practice, non-competes are generally used to keep worker bees from moving to better jobs, it seems. They're definitely used too often, and on average don't really accomplish much at all. I've seen a few articles in recent months citing non-competes that were struck down for reasons of just being too restrictive: this is the first one I've seen that used Internet Time as a reason. But any reason to strike down a non-compete clause is fine by me.

    - -Josh Turiel
  • This is awesome. Although, in some states, a non-compete which doesn't allow you to continue working in your field anywhere else is illegal (Namely south carolina). However, this makes me feel much better about telling an employer to kiss-off when it comes to the non-compete.
    SL33ZE, MCSD
    em: joedipshit@hotmail.com
  • I come from a background of consulting and I have had to deal with this unpleasant side effect of my employment more than once. Luckily I live in Texas, a right-to-work state, so this can not be legally enforced here but I have heard many horror stories from my associates along the west coast. Anyone wanna share 1 or 2 ?

    Regards,

    Ray
  • I guess you didn't read the article. The part about internet time wasn't the sole factor. The judge touched on some of the issues you've mentioned, specifically that the defendant in the case was not an officer or high level executive and was not in possession of "trade secrets".

  • by Analog (564) on Friday October 29, 1999 @08:24AM (#1576913)
    I agree with you completely. It's interesting to note that where I live (California), non-competes are illegal, yet still seem to be common.

    There was a case in the news a while back about an engineer who signed a non-compete (knowing it was unenforceable, he didn't worry about it) and when he left was sued by his former employer. He went to court and won, but he was forbidden from accepting employment in his field while the case went on (over a year), and went bankrupt in the process. Then at the end, noone would hire him because he had been off work for a year suing his former employer.

    I think this points out the real purpose of non-competes. Employers aren't willing to keep their people happy by paying and treating them well, so they'll keep them under threat of ruining their lives. Wonderful world we live in.

  • Wrong - If you sign it, it's as legally binding as anything else. As previously stated though, they have no legal grounds to force you to sign it, which is obviously the wiser course.
  • by Bucko (15043) on Friday October 29, 1999 @08:25AM (#1576915)
    there's a slightly bigger issue underlaying this. Judge Pauley's decision doesn't address a company's covenant preventing employees from leaving to form their own start-up, which is potentially much more lucritive and dangerous. This is a much bigger problem that has existed in the manufacturing industries for 100 years.

    J
  • I'm sorry but I'm not sure what your comment means. Can you elaborate?
  • Uh, that was the whole point of the post. Your observation of that fact was redundant then.
  • >I currently work for a consulting firm, in the contract it states that you cannot be hired by the
    >company you are being contracted to for 180 days prior to the end of the contract, don't know if
    >it's the exact same thing as what's being disussed here, but how are these things enforceable?


    I recently went permanent at my job after working through an agency for 6 months. They had a similar restriction. The point of the restriction isn't to prevent you from working directly for the client, it's to make the client pay the agency for their "work" in "finding and screening" you.

    My wife had a similar situation - she was an office temp on a construction site, and her boss wanted to hire her onto the payroll. (Nothing's permanent in the construction business!) Her boss had to negotiate a deal with the temp agency and pay a fee (which was negotiated down from book rate), because of the contract. However, there, the important parties to the contract are the agency and the client.

    There is an out for you if you can prove you'd applied to the client before the contract came in - I once tried to contact a headhunter, who, after seeing my list of already-contacted businesses, wasn't interested. If she set me up with a company I'd already sent a resume to, they could blow off her fee.

  • The law in many jurisdictions (California, Florida and other states have statutes that make things different, and common law varies all over the place, so your mileage may vary) is simply this: A non-compete is protectable only to the extent that it is protecting a legitimate business interest and to the extent that the limitations are reasonable.

    The meaning of those words varies widely, and the scope of what Courts may do varies as well, but too many judges fall back upon prior cases that have held 1 or two years to be "reasonable" per se -- this judge did exactly right, by looking at the totality of the circumstances, and making a determination. Whether the arguments there are applicable to any particular job remains to be seen, but the judge's legal analysis (and, intuitively, determination of the facts) appears right on: the question is where the balancing of the protectible interests versus the reasonableness of the constraints balances too much to the plaintiff.

    Note that non-compete and non-disclosure are two radically different bodies of law. The mere fact you can work for a competitor under the policies of the Thirteenth Amendment and antitrust statutes is entirely different from the policies protecting real and legitimate trade secrets.

    But don't try to do this at home, kids . . . every case is different, and every case can go 180 degrees the other way on the subtlest of factual differences.
  • <<In California, they are already considered against public policy and have no force.>>
    Really? That's odd then... I've had several employers -- from book stores where I was a sales associate to software companies -- that had lengthy non-compete clauses. And I am firmly planted in Silicon Valley!

    I guess someone needs to tell them that these clauses are a joke... :)


    <<Using the speed of technological change as an argument against them is novel, and I'm not sure how happy I am with that. It would be far better to strike down non-competion clauses completely. >>
    Yes, if the argument is that an entire year is just too long, then companies will make it 3 months. That is more reasonable after all -- within 3 months, their IP becomes essentially worthless externally. Time to market is everything. But that doesn't obsolete the engineer... :)



    Jon Frisby, Senior Internet Software Engineer,
    Personal Site (MrJoy.com) [mrjoy.com]
  • I work in Silicon Valley too. My last employer, a small start-up, had me sign one of these non-competition clauses too. The clause still wasn't valid. I actually turned down an offer from one of their competitors - but it certainly wasn't due to any terms in my contract.

    I guess companies figure that if you don't know the clause is worthless, you might obey it. One invalid clause doesn't invalidate the whole contract (it usually says so in the fine print somewhere, at least it always has on mine) so they have nothing to loose.

    My current company actually doesn't have a non-competition clause, even though they loose a lot of people to competitors.
  • by smoondog (85133) on Friday October 29, 1999 @08:29AM (#1576937)
    Maybe I'm ignorant, or naive, but i actually support non-competes. Non-competing clauses are signed by both parties. They know what they are getting into before they sign, if they sign and have a problem with that, its their fault. Also, I think that in the volatile world of the internet, non-compete clauses can prevent internet only companies from being totally hosed by someone with inside info.

    We rant about patents alot. I think that non-competes are have much more benign "patent-like" effects. I would rather sign a non-compete clause for a short period than have to leave a company with patents barring me from doing anything...

    -- Moondog
  • by vlax (1809) on Friday October 29, 1999 @08:32AM (#1576938)
    Non-competion clauses are already illegal in many places. Right-to-work laws are pretty widespread in the US. This New York decision, assuming it isn't appealed, applies only to NY and states with court agreements with them (if any - I don't know which states have such agreements.)

    A good quote from the judge:

    Read collectively, the effect of these provisions is to indenture the employee to EarthWeb. This court will not allow EarthWeb to expand the agreement's confidentiality provision so that it potentially has that result, (...) nor can EarthWeb make an end-run around the agreement by asserting the doctrine of inevitable disclosure as an independent basis for relief.

    I always thought non-competion clauses were a barbaric, anti-labour practice. In California, they are already considered against public policy and have no force.

    Using the speed of technological change as an argument against them is novel, and I'm not sure how happy I am with that. It would be far better to strike down non-competion clauses completely.

    The business community will, of course, complain that this prevents them from securing their intellectual property and acts to undermine business. However, since the computer industry is more concentrated in Calfornia than anywhere else, and California hasn't allowed such contracts for years, I doubt businesses can make a good case that it harms innovation.

    Workers should own their own skills and should be free to seek employment wherever they choose. To me, this ought to be a basic human right.
  • You seem to imply that a contract is a contract no matter what. That's just plain wrong from a legal point of view.

    Some notable exceptions in the common law:
    - A contract entered into for the purpose of committing an illegal act is null and void.
    - A contract entered into by a minor is null and void.
    - And especially... a contract which nullifies your ability to make a reasonable living is null and void.

    Also know that the judge has wide discretion here since this is a common law case and no written law is involved. While he has to follow precedents from higher courts, the rest is up to his own judgement.
  • by FreeUser (11483) on Friday October 29, 1999 @08:41AM (#1576940)
    Right now computer professionals of all kinds (yes, even MSCE weenies) are in very high demand. This places us in a position of strength when negotiating our contracts, not just in terms of wages, but in terms of other conditions as well. Even back in the early 90s, when demand (and compensation) was lower, I refused to sign non-compete clauses. While this may have cost me one particular opportunity or another, it did not seriously hamper my ability to get a job and make a good living.

    An immediate gain is not worth the potentially crippling of one's career down the road, and immobility through a required 1 year hiatus gives your employer far too much of an advantage should you become dissatisfied with the job in any way (wages, working conditions, working hours, toxic boss, or relocation to name just a few possibilities). Far better to shop around a little longer than hamstring oneself by signing such an agreement, even if it impacts one's credit rating a little.
  • I didn't know prostitutes had to sign non-competes. I can imagine a pimp trying to enforce a non-compete:

    Pimp: "Bitch...I kill you if you go work for Louis. Didja read my no-compete, ho?"

    Prostitute: "I'm sorry Big Daddy, but your no-compete is illegal in NY state"

    Pimp: "Goddamnit...the man always be trying to keep me down"
  • by PenguinDude (27312) on Friday October 29, 1999 @08:47AM (#1576945) Homepage
    From my observations, my employer requires all employees to sign non-competes and employees still go off to other competitors after a year or so and nothing happens to them. I think my employers reasoning behind letting us programmers go is that they know they have a better chance of getting us back sometime down the road if they don't make a big deal over it (and many, many people do return, as weird as that sounds). I think some posts above have said similar things.
    Now, my question is, when I was first hired as a programmer, I was 17. Now, does the non-compete agreement I signed considered null and void since I was under the legal age to sign binding contracts (18? 19?)? I don't know (and I'm not entirely worried about it, since I've seen that it's never enforced), just mildly curious.
  • Wow, a judge with a clue about the Internet!

    This strikes me as mighty unusual. I hope this guy gets some more important cases, especially some about bogus patent claims.

    I also hope he realizes that his jurisdiction is limited to just one piece of land, and does not extend to the Internet itself. Probably a difficult pill to swallow for someone in legal power.
  • I believe this is correct. I'm curious though, it sounds like we had the same professor. Granted, there is a lot of common ground between most introductory courses, but it sounds like the exact same course. Where do/did you go to school, if you don't mind my asking? :)
  • by TestGeek (102950) on Friday October 29, 1999 @08:49AM (#1576957)
    I was on the receiving end of one of these a few years back, and my one would not hold, either. The reasons are quite simple really:

    Non-compete agreements may not be enforced simply to reduce competetition. In other words, a non-compete does not bar you from working from a competitor unless one of 3 allgations is sustained -

    You had access to trade secrets and your new employer ( who is in direct competition ) could and would use those secrets or

    You were given specialized training at company expense that you would otherwise not have been able to receive or

    You are taking industry goodwill from your old company to your new one. This case is usually for salespeople who have 'their' clients. Those clients might follow the salesperson rather than stick with the original company.

    In this case, the judge looked at the allegations and found they did not meet the requirements above. He also noted quite correctly that a year is an infinity in this business. Non-competes may be successfully challenged if they have the effect of preventing a person from working. So the judge first dismissed the actionable claims, and then also found it non-enforceable for work prevention. Seems a reasonable ruling to me.

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