TRO Issued Enjoining Breach Of Non-Compete Agreement Clauses

California Business and Professions Code Section 16600 provides that “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” As discussed in this legal alert, the California Supreme Court in Edwards v. Arthur Andersen, 44 Cal. 4th 937 (2008), shut the legal door on non-competition agreements that do not fit within specific statutory exceptions. In doing so, the California Supreme Court considered the so-called “narrow-restraint” exception applied in several Ninth Circuit Court of Appeals decisions.

Thus, it was interesting to see that U.S. District Court Judge Lucy H. Koh recently issued a temporary restraining order enjoining breach of certain provisions of a non-compete agreement. In Richmond Technologies, Inc. v. Aumtech Busines Solutions, 2011 U.S. Dist. LEXIS 71269 (July 1, 2011), Judge Koh found that the non-solicitation and non-interference provisions of a non-disclosure agreement were likely to be found unenforceable under California law.

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