What is the reach of non-compete agreements in software
May 29, 2013 4:55 PM   Subscribe

I signed an agreement before taking my current job that simply says I will not compete for a year. I work for a company selling software and occasionally using the same software for consulting. I want to quit and consult for a company that would be an end user, and I would develop for them to use in-house a software with some common components with what I worked on at my current company. Basically they are both wrappers for a third party software which is open source. I would not be selling what I develop, it would be for in-house use by this prospective client. I'm live in one state, the company I currently work for is in another state, and the prospective client is in yet another state. None of these states is California. Can my current employer file suit against me?
posted by spacefire to Work & Money (10 answers total)
I usually think AskMeFi-ites are too quick to say "get a lawyer".

This is not one of those times.

Get a lawyer.
posted by saeculorum at 5:41 PM on May 29, 2013

Response by poster: The two companies are not competitors, company B does not sell software.

The product for which customizations would be developed is open-source.

Also, by your logic, you can say that any sort of coding skills acquired during a job belong to the company not the employee, which would prevent the employee from having a livelihood for the duration of the non-compete, and I find THAT immoral!
posted by spacefire at 6:02 PM on May 29, 2013


Something to consider - most non competes in my area (Delaware Valley) reference non-competes within the region. Case law in my area has determined that the "region" does not equal "state" - as the individual could easily commute to both Delaware and New Jersey. The three states are considered part of the "region" covered in non-competes. It looks like you're in the NYC area - so you may want to confirm if New Jersey is considered part of your "region"

So while you are only customizing a wrapper for separate companies - you may have more issues than use of your current company's intellectual property/industry secrets.

This may be something to address with the lawyer that you should be getting for this.

Also - keep in mind that some companies can be negotiated out of their non-compete when you leave. I have gotten previous companies to release me from my non-compete and received a smaller severance package when I left. If your leaving is not contentious - it may be something to bring up.
posted by Suffocating Kitty at 6:06 PM on May 29, 2013

You absolutely, 100% need a lawyer. None of us can even come close to answering specific questions about a contract you've signed and how it applies to a future situation you're considering entering.

The short answer to your last question, however, is that your current employer can file a lawsuit against you about anything they want, for any reason they want, at any time they want. Your employer could file a lawsuit against you right now for wearing a green shirt. The court would accept their paperwork and open a case file. If the lawsuit is frivolous, it will be dismissed, and the level of frivolity would determine how long that dismissal would take and how much it might cost you.

So yes, your employer could file suit against you for quitting and going to work for another company. The questions you need to ask the attorney you're going to consult might include: Is my non-compete agreement a valid, enforceable contract? What does my non-compete actually prohibit, and what does it allow? Is my company likely to file a lawsuit given the specific circumstances under which I am considering leaving? If they were to file, what would be the likely outcome, given the contract I've signed and what I'm hoping to do? If they did file, what would be the costs to me in terms of time, energy, and money? Are there other things the company could do, other than file a lawsuit, that might be detrimental to my future?

But you absolutely need a lawyer, and no one here can answer the questions you will be asking your lawyer. Anyone talking here about the specifics of the contractor-client relationship or your hypothetical use of your consulting skills or proprietary claims on software is spouting off about things they can't possibly know without being a licensed attorney specializing in this area of law who is giving you legal advice after having examined your contract and the specifics of your future plans. Hire a lawyer!
posted by decathecting at 6:36 PM on May 29, 2013

I took a business law class once and the professor said the answer to "can someone sue me for such-and-such" is always going to be YES. Anyone can file suit for anything. The question you want to ask is "based on the current laws and legal precedent, is it likely that someone could successfully sue me?"
posted by radioamy at 6:51 PM on May 29, 2013 [1 favorite]

This is almost completely down to state law, so if you can't tell us that then there's not a lot that we can tell you besides to see a lawyer. "Not California" doesn't narrow it down.
posted by rhizome at 7:32 PM on May 29, 2013

You need, in particular, a lawyer familiar with the software industry. In some businesses, being in another state virtually automatically means that the two are not in competition. Not so in software.
posted by megatherium at 4:42 AM on May 30, 2013

In practice, to get involved in a noncompete lawsuit you generally have to either 1: be doing something egregiously and obviously directly competitive (stealing clients, or going into head-to-head competition) or 2: have a vindictive or angry ex-boss.


with some common components with what I worked on at my current company.

This part in particular makes me think you're treading on very thin ice -- both because of the noncompete and because those "common components" are likely the property of your current company, if you built them as part of your current job. People quit and go to work for the competition all the time, that's pretty normal, but you can't expect to bring the old company's intellectual property along with you -- that's pretty much verboten, for obvious reasons.

I find THAT immoral!

Well, congratulations, I guess. I don't think that'll help you very much if it comes to a lawsuit, though.
posted by ook at 7:36 AM on May 30, 2013

(To be clear: bringing "skills" from the previous job is obviously allowed. Bringing along actual code written at the previous job is obviously not. Bringing along concepts or algorithms and rewriting them just enough to be safe is... see-a-real-lawyer territory, because it depends on how unique those concepts or algorithms are, whether they count as invented intellectual property or the sort of general knowledge that any developer working in that space would come up with independently.)
posted by ook at 7:41 AM on May 30, 2013

IAAL, IANYL. If you came to me for advice, here are a few questions I would ask you:
- How much overlap is there between what you're doing for your current company and what you'd be doing for the new company?
- Is the new company currently a client, or is it a potential client, of the current company?
- What's the current company's history with enforcing noncompetes?

And obviously, I'd need you to provide a copy of the contract and tell me what states are involved.

As other have said, yes, your current employer can file suit. You want to assess the risk of that happening and being successful. Worst-case scenario is probably that you quit, they sue, and you aren't allowed to do your consulting for a year, plus you're out some legal fees.
posted by chickenmagazine at 8:34 AM on May 30, 2013

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