In a non-compete agreement an owner, officer, employee or contractor of a corporation agrees not to enter into or start a business in competition with the corporation within a well-defined geographical region during a specific, limited time frame.
At first blush, it may not be apparent how such agreements can help protect intellectual property, but the reasoning is simple. A person's motivation to misappropriate intellectual property assets can be significantly diminished if the person can't use such assets to in the operation of a competing business.
The law disfavors non-compete agreements as such agreements can be a significant restraint both on trade and on the ability of persons to pursue employment opportunities. Thus, such agreements must be narrowly drafted. In Florida, non-compete agreements must, at a minimum, comply with the requirements of Florida Statute 542.335. The most important requirements of the statute provide that:
- A non-compete agreement must be signed and in writing.
- A non-compete agreement must serve a legitimate business interest such as, for example, the protection of trade secrets or other valuable confidential information, the protection of preexisting business relationships and/or the protection of good will associated with a trademark, marketing area or geographic location.
- The non-compete agreement must be reasonably necessary to protect the specific legitimate business interest at stake.
- The term of the agreement must be reasonable.
- What is reasonable depends on the relationship of the parties and the interests at stake, for example, where a post term non-compete agreement is in place to protect trade secrets, a duration of 5 years or less is presumptively reasonable.
Bear in mind that when a person is asked to sign a non-compete agreement, it can provoke a very visceral and negative reaction. Of all the various agreements discussed above, non-compete agreements seem the most intrusive, and indeed, they can impose significant economic hardship on the signer. The solution to this problem, to the extent one exists, is to limit the scope and duration of the agreement to the absolute minimum necessary to protect the interests at stake.