5 ms·

CA State Supreme Court rejects noncompete clauses

33 points by iamelgringo 18y ago

jcromartie 18y ago
Now the question is: what constitutes a "trade secret?" Could one take what they do in their current corporate job and turn it into a startup using some of the (non-patented, general knowledge) techniques you learned on the job, but using different technology? Say, to make a competing product to one that you are currently working on? Obviously the guys at Cuil did this. Are there other precedents?
- emmett 18y ago
  A trade secret is "a plan, process, tool, mechanism or compound which a company desires to keep confidential as a competitive advantage." By definition, trade secrets are not patented (that would be public exposure). Also by definition, they are not general knowledge (they must be known only to those inside the company). A trade secret from Google might be the exact set of elements and weightings that go into the search algorithm.
tptacek 18y ago
This is good news. Two thoughts: (1) This may cause (stupid) companies to incorporate and operate out of other areas, like Austin and Atlanta. (2) Though other states haven't "rejected" noncompete clauses, they remain notoriously hard to enforce; in jurisdictions like Massachusetts and Illinois, your noncompete has to be specific to your role, tied to a "reasonable" business concern, and exchanged for extra compensation, and the court can "rewrite" the agreement from the bench before enforcing it.
- pfedor 18y ago
  Aren't pretty much all companies incorporated in Delaware anyway?
  - tptacek 18y ago
    For purposes of noncompete, the jurisdictions that seem to matter are the place you work from, and the place your employer operates out of. I'm not a lawyer, I've only ever observed noncompete drama.
- hypermatt 18y ago
  Georgia is work at will state also, non competes don't really work here either.
  - tptacek 18y ago
    "At will" usually just means you can get fired for nothing.
callmeed 18y ago
I've done more than a few freelance jobs in CA where I was asked to sign a NC. I always try to explain things to them.
- deleted 18y ago
  [deleted]
byrneseyeview 18y ago
The ruling "advances the strong California policy favoring open competition and employee freedom," Wait, what? How does it favor 'employee freedom' to say that employees cannot agree not to work for a competitor? Being able to make an enforceable promise about your own future behavior is an important freedom -- some Game Theory texts claim that the most crucial right we have is the right to be sued for breaching a contract. Noncompetes are probably, usually, a bad idea -- but banning them altogether is far worse.
- ajross 18y ago
  I'm not following. Being able to work for more companies is pretty clearly a greater "freedom" than not being able to work for some of them. Your idea that the ability to contract away that right is somehow itself a "freedom" sounds awfully orwellian, no? The freedom to choose not to be free? Please. And I don't follow your game theory point at all. This decision was about one particular kind of contract in the multiverse of possibilities. It certainly didn't throw out our "right to be sued" (again, Pravda much?) for breach of contract generically.
  - byrneseyeview 18y ago
    Okay, how about a simpler example: if California announced that, from now on, all restaurants must allow all patrons to smoke, would we be a) more free, because if we smoke we can smoke in any restaurant, or b) less free, because we can no longer elect to eat in a smoke-free restaurant, decide whether or not to allow smoking in our own restaurant, compare the benefits of a smoke-free or smokable restaurant, etc.? When you no longer have the right to make an agreement, you are not more free just because that agreement restricts your freedom. A state could ban loans (you're more free -- you never have to pay interest again!) or marriages (screw this "'til death do us part" shit) or promises of any kind. You would be free of the obligation entailed by the promise, but you would no longer be free to trade restrictions for benefits. It's profoundly misguided to say that being free means never being free to limit your future actions. This is a lot more clear when you study game theory -- people who can restrict their future actions have far more bargaining power. People who can't restrict their actions are, to that extent, unable to make promises. Anyway, this should be a moot point: if you think noncompetes are a bad idea for you, you can turn them down. For someone who thinks noncompetes might be okay (e.g. a company can only afford to hire a new researcher if they know they can restrict this researcher from handing off ideas to a competitor), this ruling only restricts their freedom. Irrelevant to you, bad for other people -- how could you possibly desire this?
ckinnan 18y ago
Summary: "As long as you don't steal trade secrets or confidential information, you can do what you want."
wastedbrains 18y ago
I have always thought this was a horrible idea. If you work for years in some specialty say machine learning. If you leave one job chances are you are still going to work in that same specialty. NCs really ruin a persons options. You shouldn't take any code, and if there was a particular area a past employer was innovating in perhaps steer a bit clear of that specific thing.
globalrev 18y ago
Oh my god it is so incredibly offensive. How can it be the land of freedom if something like this would have been ok? It is f*g absurd. I'd rather die standing than live on my knees and I will fight this anti-freedom bullshit til I die.

33 points by iamelgringo 18y ago

Now the question is: what constitutes a "trade secret?" Could one take what they do in their current corporate job and turn it into a startup using some of the (non-patented, general knowledge) techniques you learned on the job, but using different technology? Say, to make a competing product to one that you are currently working on? Obviously the guys at Cuil did this. Are there other precedents?

emmett 18y ago
A trade secret is "a plan, process, tool, mechanism or compound which a company desires to keep confidential as a competitive advantage." By definition, trade secrets are not patented (that would be public exposure). Also by definition, they are not general knowledge (they must be known only to those inside the company). A trade secret from Google might be the exact set of elements and weightings that go into the search algorithm.

tptacek 18y ago

This is good news. Two thoughts: (1) This may cause (stupid) companies to incorporate and operate out of other areas, like Austin and Atlanta. (2) Though other states haven't "rejected" noncompete clauses, they remain notoriously hard to enforce; in jurisdictions like Massachusetts and Illinois, your noncompete has to be specific to your role, tied to a "reasonable" business concern, and exchanged for extra compensation, and the court can "rewrite" the agreement from the bench before enforcing it.

pfedor 18y ago
Aren't pretty much all companies incorporated in Delaware anyway?
- tptacek 18y ago
  For purposes of noncompete, the jurisdictions that seem to matter are the place you work from, and the place your employer operates out of. I'm not a lawyer, I've only ever observed noncompete drama.
hypermatt 18y ago
Georgia is work at will state also, non competes don't really work here either.
- tptacek 18y ago
  "At will" usually just means you can get fired for nothing.

callmeed 18y ago

I've done more than a few freelance jobs in CA where I was asked to sign a NC. I always try to explain things to them.

deleted 18y ago
[deleted]

byrneseyeview 18y ago

The ruling "advances the strong California policy favoring open competition and employee freedom," Wait, what? How does it favor 'employee freedom' to say that employees cannot agree not to work for a competitor? Being able to make an enforceable promise about your own future behavior is an important freedom -- some Game Theory texts claim that the most crucial right we have is the right to be sued for breaching a contract. Noncompetes are probably, usually, a bad idea -- but banning them altogether is far worse.

ajross 18y ago
I'm not following. Being able to work for more companies is pretty clearly a greater "freedom" than not being able to work for some of them. Your idea that the ability to contract away that right is somehow itself a "freedom" sounds awfully orwellian, no? The freedom to choose not to be free? Please. And I don't follow your game theory point at all. This decision was about one particular kind of contract in the multiverse of possibilities. It certainly didn't throw out our "right to be sued" (again, Pravda much?) for breach of contract generically.
- byrneseyeview 18y ago
  Okay, how about a simpler example: if California announced that, from now on, all restaurants must allow all patrons to smoke, would we be a) more free, because if we smoke we can smoke in any restaurant, or b) less free, because we can no longer elect to eat in a smoke-free restaurant, decide whether or not to allow smoking in our own restaurant, compare the benefits of a smoke-free or smokable restaurant, etc.? When you no longer have the right to make an agreement, you are not more free just because that agreement restricts your freedom. A state could ban loans (you're more free -- you never have to pay interest again!) or marriages (screw this "'til death do us part" shit) or promises of any kind. You would be free of the obligation entailed by the promise, but you would no longer be free to trade restrictions for benefits. It's profoundly misguided to say that being free means never being free to limit your future actions. This is a lot more clear when you study game theory -- people who can restrict their future actions have far more bargaining power. People who can't restrict their actions are, to that extent, unable to make promises. Anyway, this should be a moot point: if you think noncompetes are a bad idea for you, you can turn them down. For someone who thinks noncompetes might be okay (e.g. a company can only afford to hire a new researcher if they know they can restrict this researcher from handing off ideas to a competitor), this ruling only restricts their freedom. Irrelevant to you, bad for other people -- how could you possibly desire this?

ckinnan 18y ago

Summary: "As long as you don't steal trade secrets or confidential information, you can do what you want."

wastedbrains 18y ago

I have always thought this was a horrible idea. If you work for years in some specialty say machine learning. If you leave one job chances are you are still going to work in that same specialty. NCs really ruin a persons options. You shouldn't take any code, and if there was a particular area a past employer was innovating in perhaps steer a bit clear of that specific thing.

globalrev 18y ago

Oh my god it is so incredibly offensive. How can it be the land of freedom if something like this would have been ok? It is f*g absurd. I'd rather die standing than live on my knees and I will fight this anti-freedom bullshit til I die.