Comments on: Non-Compete Agreements in Texas

By: Katy

Katy — Tue, 23 Jun 2009 23:20:03 +0000

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By: Kris G

Kris G — Tue, 23 Jun 2009 18:48:53 +0000

In my experience non-competes are less about talent going to a competitor and more about IP protection for the company. If you have intimate knowledge of internal techniques, algorithms or processes that give the company a competitive advantage and you leave to go work at a competitor then you can, without stealing any physical material, deliver that knowledge to the competitor. While there are a number of measures in every employment contract that prohibits these actions they won't stop a highly disgruntled employee. It's very difficult and expensive to legally prove that a competitor is using stolen IP and that it came from a particular employee. It's much easier to attempt to prevent the employee working at the company by threatening to sue both the competitor and the employee.

In startups the violator the VC is worried about is a founder. As commented here and many other blogs most founders end up getting terminated. The VC backed startup is an entity that specializes in creating highly disgruntled employees with intimate knowledge of the companies IP.

By: Marty S

Marty S — Tue, 23 Jun 2009 04:32:06 +0000

Fortunately most violators of non-competes are not significant contributors to their original position or they wouldn't have left. This reduces the harm that can be imposed.

By: Rob R.

Rob R. — Mon, 22 Jun 2009 20:47:30 +0000

The Texas Supreme Court chimed in in favor of non-competes a few months ago. Below is a link to my discussion of the opinion:

http://www.smoothtransitionslawblog.com/articles/...

By: KublaiKhan

KublaiKhan — Mon, 22 Jun 2009 16:08:34 +0000

While non-competes can affect startups, what about things like doctors? Many young doctors gain experience working for more experienced doctors. Often these doctors have specific localized agreements to prevent their protégé from opening a practice nearby. (7-15 miles, is the trend I have seen.) I also saw it in high end software support where competitors are across the street and the analysts have specific knowledge that would be detrimental to lose to specific competitors.
I would not support legislation to restrict the rights of people to trade on their ability to leave. First, if an individual does not want to agree to not run to a competitor at the outset then they can just not accept the position. Secondly, I would rather the government not take away yet another individual right. (Caveat: Industry specific antitrust situations would fall outside of this concern.)

By: Stacey C

Stacey C — Mon, 22 Jun 2009 15:29:50 +0000

Absolutely, this is a prevalent myth in Texas. They are enforceable, but they have to be pretty specific as to work, location, etc.. We are fortunate in that regard..but they are still out there.