In our earlier post (Are Non-Competition Restrictions Enforceable?), we
reviewed "restrictive covenants" - these are clauses
under which employees are bound by restrictions such as
non-competition restrictions, non-solicitation obligations, and
other controls on the employee's behaviour which bind the
employee after termination.
Eagle alleged that its ex-employees took confidential
information from Eagle, and began soliciting clients, employees,
and contractors of Eagle to work for Maplesoft. The defendant
ex-employees argued that they did not use any confidential
information to solicit business. They asserted that any contact
information that they used was already publicly available through
LinkedIn or Facebook accounts.
When reviewing the enforceability of restrictive covenants in
the employment context, the court reiterated a three-part test
(when in doubt, there is always a handy three-part test ):
Does the employer have a proprietary interest entitled to
Are the temporal and spatial features of the restrictive
covenant too broad? (Put another way, are there reasonable limits
in time and geographic space?);
Is the covenant unenforceable as being against competition
generally, as opposed to a more limited covenant against
solicitation of former clients?;
The court concluded that "there is no evidence from Eagle,
other than a very bald assertion, that it had any proprietary
interest entitled to protection. According to the Defendants, the
information that they learned at Eagle was all publicly available
and obtained from such sources as social media websites."
There are a few take-aways from this decision:
When drafting restrictive covenants in the employment context,
non-solicitation and confidentiality clauses are more likely to
stand up, whereas non-competition clauses are likely to be struck
down as unenforceable, as in this case. Make sure to have your
If a "confidential customer list" is virtually the
same as the employee's LinkedIn or Facebook contacts, then
there will be no proprietary interest to protect, since the
information will be publicly visible to anyone;
The court will assume that the employer will lead with its
strongest evidence. Compelling evidence of specific cases of
solicitation or competition is critical for success in an
application by the employer - as the court quipped "Lead with
trump or risk losing". In this case, the evidence was
ambiguous or it fell outside the non-competition period.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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