Restrictive Covenants

News & Analysis as of

Pennsylvania Supreme Court Delivers Clear Message to Employers Regarding Restrictive Covenants in Employment Agreements

In a case of first impression, the Pennsylvania Supreme Court recently held that an employee may challenge an employment agreement containing a restrictive covenant for lack of consideration, even though the agreement...more

Pennsylvania Supreme Court Finds That UWOA Language Does Not Waive Right to Challenge Adequacy of Consideration for Restrictive...

On November 18, 2015, in a highly anticipated decision, the Pennsylvania Supreme Court held that employers could not use the language set forth in Pennsylvania’s Uniform Written Obligations Act (“UWOA”) to avoid providing...more

PA Supreme Court Addresses Consideration Required To Enforce Restrictive Covenants

In a highly anticipated decision, the Pennsylvania Supreme Court ruled earlier this week that “new and valuable” consideration must be conveyed to an employee entering into an agreement containing a restrictive covenant after...more

Pennsylvania Supreme Court Rules that Words Alone Not Sufficient to Support Non-Compete Covenant

Earlier this week, the Pennsylvania Supreme Court rejected a challenge to the longstanding requirement that post-employment restrictive covenants must be supported by actual consideration to be enforceable under Pennsylvania...more

Non-Competes Must Be Supported By Consideration in Pennsylvania: No Exception Based On Employee’s Agreement To Be Legally Bound

The Pennsylvania Supreme Court has ruled that a non-compete entered after the onset of employment without additional consideration is not enforceable even if the employee expressly agreed “to be legally bound.” See Socko v...more

Pennsylvania Supreme Court Finally Kills Hope That Magic Words Can Substitute for Valuable Consideration in Exchange for...

To most practitioners, Pennsylvania law governing the consideration required for an employment agreement containing a restrictive covenant (e.g., a non-competition clause or non-solicitation clause) has been simple: (1) if...more

Trend In The Courts: It’s Getting Harder To Obtain Preliminary Injunctions In Restrictive Covenant Cases

In recent weeks, courts almost routinely have been denying preliminary injunctive relief in cases alleging violation of non-compete and similar employment agreements. Three examples: Burleigh v. Center Point Contractors,...more

Safeguarding Trade Secrets: What You Need To Know

Chances are your business is built on carefully cultivated client lists and finely honed business-development strategies. You might believe that such information is a trade secret and assume that it’s automatically protected...more

Perspectives From the Bench: A Recap of the AIPLA Trade Secret Law Summit’s Judicial Panel

Several members of Seyfarth’s Trade Secrets, Computer Fraud & Non-Competes Practice Group attended the AIPLA’s annual Trade Secret Law Summit on November 12-13, 2015. Rick Lutkus spoke on a panel that was moderated by Erik...more

Supreme Court unshackles the rule on penalties

The Supreme Court has reviewed the basis on which courts will uphold as non-penal a contractual term providing for a sum to be paid, or other sanction to apply, on breach of contract. The Supreme Court has recast the rule on...more

Enforcement of contractual provisions: the Supreme Court reviews the law on unenforceable penalty clauses

Cavendish Square Holding BV (Appellant) v Talal El Makdessi (Respondent); ParkingEye Limited (Respondent) v Beavis (Appellant) [2015] UKSC 67 - The Supreme Court has upheld the validity of two disputed penalty clauses,...more

Illinois Court Leaves Former Employer Without Remedy After Invalidating Its Overly Broad Restrictive Covenants

Just days before Halloween, the Illinois Appellate Court sent a scary message to employers: We will not enforce or judicially modify your overly broad restrictive covenants! In AssuredPartners, Inc. v. Schmitt, No. 13 CH...more

Restrictions on Condominium Conversions

Now that the recession is beginning to become a memory of the past, the demand for housing is on the rise, and with it is the explosive interest in the multifamily market. As more Americans are choosing to marry later and...more

Religious Institutions: October 2015

Timely Topics - A non-compete clause, covenant not to compete or restrictive covenant is a contract provision under which one party agrees not to enter into or start a similar profession, trade or business in competition...more

NC Court of Appeals Finds $100 Adequate Consideration to Support Non-Compete

In North Carolina, an initial offer of employment serves as adequate legal consideration to support non-competition and non-solicitation restrictive covenants. However, once a person is already employed, the employer must pay...more

The Chill is Gone: SEC Wants Unfettered Whistleblowers

The SEC continues its efforts to support whistleblowers. The whistleblower program promulgated by the Commission under the Dodd-Frank Act offers rewards to individuals who report securities law violations. As we have...more

Essential Protection: Restrictive Covenants of Your Employees

No one knows your company better than your employees. And while great employees can be your most valuable asset, disloyal employees can use their insider information to harm or compete against you. You need protection, and an...more

New Development In The Enforceability of Non-Compete Agreements

As many of our readers may recall, the Illinois Appellate Court in the First District dramatically changed (in our view) the law two years ago in its infamous Fifield decision, by holding that if employment (or continuing...more

Eight-Figure Judgments in Trade Secret Cases – Do We Have Your Attention Now?

The conventional wisdom among attorneys and litigants in the noncompete and trade secret arena is that the cases are all about the injunctions, usually at the TRO and interlocutory injunction stage. Some judgments handed...more

Leveraging employment restraints to protect business assets

When a key employee subject to an employment restraint leaves a business to join a competitor, fast decisions need to be made to protect client goodwill or guard against misuse of confidential information....more

IP Law Tracker Docket Review

Each month, we review significant intellectual property decisions from the U.S. Court of Appeals for the Sixth Circuit and the U.S. District Courts for the Eastern District and Western District of Michigan. Below is the...more

Eleventh Circuit Decision Weakens Injunctive Enforcement of Restrictive Covenants

Last month, in Transunion Risk and Alt. Data Sols., Inc., v. MacLachlan, the Eleventh Circuit held that the district court should have considered hardship to an employee when it enforced a restrictive covenant in an...more

What Happens When a Franchise Agreement Ends, Part Three: Rescission

In our previous posts (See Part 1 and Part 2), we reviewed restrictive covenants and cancellation rights under franchise laws. In a recent decision out of the Ontario Court of Appeal, the dispute focussed on the right of...more

“Silicon Valley”: Start Me Up

Mike Judge has done it again. A few months ago, I wrote about one of my favorite workplace flicks, Office Space, and the dangers of pushing off uncomfortable employment issues (specifically Milt Waddams, a mumbly...more

Five Questions to Consider Before Seeking to Restrain a Former Employee from Engaging in Competitive Activity

Determining whether to enforce a restrictive covenant or confidentiality agreement against a former employee requires the careful consideration of legal, economic and practical considerations. Here are five questions an...more

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