PA non-compete is it valid

Upon employ with my current company "XYZ software", I signed a Proprietary Information & Non-Compete Agreement.

The non-compete clause states " It is understood that upon termination of employment by the Company for any reason, voluntary or involuntary, for a period of (1) year following such termination, the Recipient will not compete with the Company, either directly or indirectly, individually or as an employee, partner, officer, or director of a competing company, in any territory in which the company does business, nor will the Recipient solicit, canvass, divert, or attempt to divert any employee, customer, or prospective customer away from the company".

I have interviewed with a different software company. This new company is a partner of "XYZ software". I am not aware of the new company having ever competed for a sale with "XYZ software". "XYZ software" is developing a product to compete with the new company, but the product is not released yet...

Could these companies, though partners, be considered competitors -- though I am not aware of any competitive situations to date (though there may be in the future? Is the geographic restriction of "any territory" valid? These are both global companies.
Is my non-compete cause valid?

1 answer  |  asked Aug 19, 2003 09:32 AM [EST]  |  applies to Pennsylvania

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Answers (1)

Christopher Ezold
The answer is complex.

The question you raise may not be the question you want answered. From the facts that you set forth, I cannot tell whether your noncompete is valid; there are several factors missing that would need to be evaluated. It may well be true that your noncompete is valid. The language you provided is likely overbroad, but would most likely be restricted by a court, not thrown out.

However, the question you want to ask is whether working for the partner company violates the noncompete. If the partner company does not compete, then there is no violation. Again, without further information I cannot fully evaluate your question. It does seem that there is the potential for violation of the agreement, but that the potential violation may be avoided.

If you wish to discuss this issue further, please feel free to call me at my number, below.

/Christopher E. Ezold/
Nancy O'Mara Ezold, P.C.
401 City Line Avenue,
Suite 904
Bala Cynwyd, PA 19004
(610) 660-5585

posted by Christopher Ezold  |  Aug 19, 2003 1:55 PM [EST]

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