Massachusetts Court Case Underscores Need for Non-Compete Agreements

Posted by Andrew Botti on Feb 24, 2012 9:03:00 AM

Editor's Note – Andrew Botti is an attorney with AIM Member law firm McLane Graf Raulerson & Middleton.  He specializes in business litigation related to labor and employment law, non-competes and trade secrets.  

A recent Superior Court case out of Suffolk County illustrates the need to preserve current Massachusetts law governing the enforceability of non-competition agreements.

Non-Compete AgreementsLife Image was a relatively new start-up company that had developed a “dramatic, cost-cutting” shared-imaging product for radiologists that could be accessed over the Internet via so-called “cloud” technology. Before selling any products, Life Image hired a director of business development tasked with establishing sales avenues for the company. The individual who was hired eventually became vice president of business development. He was apparently involved in the many major strategic business development decisions being made by the start-up.

The vice president’s employment with Life Image was subject to written confidentiality and non-competition covenants. The non-compete language provided that for a period of 12 months following a termination the vice president would not “engaged directly or indirectly and any business presently engaged in by life Image or in which Life Image engaged during the term of his employment."

Approximately two years later, after Life Image had gone to market and caught the attention of a major competitor, the V.P. resigned and went to work for that competing company. The Superior Court found the competitor was well aware that “Life Image was developing and marketing a powerful Internet tool that was ground breaking,” and that it had “no equivalent product.” In fact, the competing company had reached out to the vice president prior to his resignation from Life Image. The court found that the competitor had targeted the vice president for recruitment because of his position with Life Image.

Prior to his departure from the start-up, the V.P. apparently copied the contents of his Life Image laptop computer onto a brand-new Macbook and returned the Life Image computer on the final day of his employment.

The court found that the V.P. carried the complete Life Image product with him on his computer when he left his employer. Forensic evidence also showed that a large amount of Life Image’s files were exported from the V.P.’s company laptop onto an external hard drive prior to his departure.

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Topics: Issues, Non-Compete Agreements

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