When drafting a non-compete agreement, a critical concern is whether the restrictive covenant contained within the agreement will be enforceable by a court. Consider, for example, an employer drafting a non-compete agreement for new employees. If the employer drafts a non-compete agreement that is too broad and overbearing, the employer may have trouble finding talented employees who are willing to work for the employer. Florida Statute § 542.335(1)(c) provides that "[i]f a contractually specified restraint is overbroad, overlong or otherwise not necessary to protect the legitimate business interest or interests, a court shall modify the restraint and grant only the relief necessary to protect such interest or interests." (Emphasis added). Florida law requires courts to modify non-compete agreements that overreach.
An employer trying to avoid drafting an overly broad non-compete agreement runs the risk of drafting a restrictive covenant that is too narrow and limited in scope. That was one of the issues addressed earlier this year by the United States District Court for the District of Minnesota in Dentsply Int'l, Inc., et al. v. Rene, Civ. No. 13-394(DWF/JJG)(D. Minn. March 6, 2013). In Dentsply, an employer's motion seeking to enforce a non-compete agreement was denied due, in part, to the court's finding that the agreement at issue was "narrowly crafted to cover only the use of [the employer's] confidential information." Opinion at *6.
The former employee in Dentsply left the employer and later went to work for one of the employer's competitors. Relying on the language of the non-compete agreement, the employee argued that the agreement's limitation on working for a competitor was limited to the sale of products which were connected to the use of "confidential information" as defined in the agreement. According to the employee, the only way she could violate the non-compete agreement was to engage in work that involved the use of confidential information. Opinion at 5-6.
After considering the evidence, the court in Dentsply found that the employer had not met its burden of establishing that the employee used any confidential information while working for her new employer. The court also found that the employer had not shown that the employee used information not generally known in the trade or industry or that the employee took documents or other electronic information when leaving the company. Opinion at *6. Finally, the court found that because the agreement was so narrowly drafted as to only protect confidential information, the employer did not establish a likelihood of success on the merits which was required in order to receive a temporary restraining order. Id.
Dentsply serves as a reminder of the importance of drafting a non-compete agreement that protects all of an employer's legitimate business interests. Florida's non-compete statute, section 542.335, provides a non-exhaustive list of legitimate business interests. These interests include trade secrets, confidential business information, customer relationships, customer goodwill and extraordinary or specialized training. Employers, or any party seeking to draft a non-compete agreement, should keep these interests in mind when drafting an agreement that is subject to Florida law.
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