{"id":1156,"date":"2012-01-27T09:39:55","date_gmt":"2012-01-27T17:39:55","guid":{"rendered":"https:\/\/berkonomics.com\/?p=1156"},"modified":"2012-01-27T09:39:55","modified_gmt":"2012-01-27T17:39:55","slug":"watch-out-for-the-gray-areas-in-non-competes","status":"publish","type":"post","link":"https:\/\/berkonomics.com\/?p=1156","title":{"rendered":"Watch out for the gray areas in non-competes."},"content":{"rendered":"

\u00a0\u00a0 What if you are the seller of a previous business or shares amounting to more than an insignificant percentage of a previous business?\u00a0 Certainly the buyer\u2019s asset purchase documents included a non-compete clause, usually valid for two years from the date of the closing.\u00a0 And because there was consideration paid to you in the sale, that clause is binding upon you and is effective almost everywhere.<\/span><\/span><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Well, what if the buyer is now bankrupt?\u00a0 That does nothing to regain your right to its purchased information.\u00a0 The estate of the bankrupt company retains and can resell those rights into the infinite future.\u00a0 (Patents expire after 14 or 20 years \u2013 depending upon type – and publicly disclosed patent information is no longer subject to the agreements after that expiration, as long as you use only the publicly disclosed information as filed within the patents themselves.)<\/span><\/span><\/p>\n

\u00a0[Email readers, continue here…]\u00a0<\/em><\/span>What if the buyer abandons your previous product?\u00a0 That does not change their purchased rights to it.\u00a0 What if you invent a substantial enhancement or change to the product?\u00a0 As long as you did not use patented processes or trade secret material from you previous company, you should be protected, but you might be prepared for a fight.<\/span><\/span><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 How about after the two year limitation in your agreement?\u00a0 Separate confidentiality from non-compete, and obey the confidentiality clauses.\u00a0 The non-compete agreement does expire when stated.\u00a0 But watch it. Some clever buyers try to slip in an unlimited non-compete, and some courts have upheld this.\u00a0 And there are gray areas for former key employees who signed a non-compete with a limited life as part of the sale, but remained on for some time thereafter employed by the buyer.\u00a0 Does the non-compete start anew upon the employee\u2019s departure?\u00a0 Courts tend to apply only the reasonableness standard to these gray area cases, looking to see how much the person now competing gained from the original sale.<\/span><\/span><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The safest advice is to avoid using any materials from the previous company, and compete only after the expiration of any written agreements or clauses signed with the buyer. <\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

\u00a0\u00a0 What if you are the seller of a previous business or shares amounting to more than an insignificant percentage of a previous business?\u00a0 Certainly the buyer\u2019s asset purchase documents included a non-compete clause, usually valid for two years from … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[8,4,20],"tags":[],"class_list":["post-1156","post","type-post","status-publish","format-standard","hentry","category-depending-upon-others","category-ignition-starting-up","category-protecting-the-business"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1156","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1156"}],"version-history":[{"count":0,"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1156\/revisions"}],"wp:attachment":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1156"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1156"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1156"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}