For businesses, creating unique, marketable goods and services which are competitive in the marketplace, as well as creating a unique brand and protecting proprietary information from competitors, are key to success. This is especially important in industries where there is constant innovation as there is in the technology sector.
There are a variety of tools businesses can use to protect their productions from competitors. These include making use of trademark, copyright, and patent protections, as well as protecting trade secrets. It also includes, or can include, strategic use of non-compete agreements.
Non-compete agreements are dealt with different by different states. California public policy, of example, is that non-compete agreements are void. They will not be enforced in court. Among states which recognize the validity of these agreements, some are more restrictive than others. Here in Virginia, the general rule is that non-compete agreements are enforceable as long as they are reasonable.
The reasonableness of a non-compete agreements depends on an analysis of several factors. First of all, such agreements may not be unduly restrictive on an employee’s ability to earn a living. Second, non-compete agreements must not be stricter than is necessary to protect the employer’s legitimate business interests. Third, non-compete agreements must not violate Virginia public policy. In considering these requirements, courts do not go by hard and fast rules, but consider the totality of the circumstances in each case.
In our next post, we’ll take a closer look at these requirements, as well as a recent development on the issue of non-compete agreements.