The recent lawsuit by Hewlett Packard against Mark Hurd (former HP CEO) highlights interesting issues for technology companies in the Southeast.   (Read the complaint filed by HP against Hurd here).  Here are a few practical pointers to be considered:

1.    If you have executives in California, you can generally forget about being able to enforce non-competition covenants to prevent them from working for a competitor. 

2.    HP is relying on Mr. Hurd’s agreement to hold trade secret information in confidence and not disclose it to others.   On the other hand, Oracle will likely assert that Mr. Hurd is being fenced off from sharing such information with other Oracle employees, so he is not violating this HP confidentiality obligation.

3.    Most Southeastern states will enforce non-competition covenants, at least to some degree.  Georgia is considering a new law (that likely will become effective in November) that substantially enhances the enforceability of non-competition covenants.

4.    In the absence of  an enforceable non-competition provision, HP (like many tech companies) will rely on a theory of inevitable disclosure – – given everything that Mr. Hurd knows about HP, it is inevitable that he will have to disclose valuable information to his new employer in violation of his HP agreement.  The inevitable disclosure doctrine has been adopted by other courts in Southeastern states. 

5.    Relying only on a non-disclosure clause is an uphill battle.   However, the higher the executive level, the more likely that the covenant will protect the former employer.

6.    The laws of each State in which your executives or employees reside will need to be analyzed to determine which restrictive covenants are enforceable – – and which ones must be removed to enhance the likelihood of enforceability by a court.

This information is presented for educational purposes and is not intended to constitute legal advice; see disclaimer at http://www.www.mmmtechlaw.com/privacy-policy-and-disclaimer/. Contact John Yates for more information at jyates@mmmlaw.com; 404-504-5444.