Innovation That Matters

By Andrew P. Botti

The U.S. Chamber of Commerce, in conjunction with several other similar groups, issued a report this week entitled, “Innovation That Matters.” The report looked at the high-tech start-up environments of twenty five U.S. cities and concluded that Boston was the number one start-up city in the so-called “digital economy.” The top five cities were:

  1. Boston
  2. San Francisco Bay Area
  3. Denver
  4. Raleigh-Durham
  5. San Diego

Of these top five, three are situated in states which have for decades routinely enforced non-compete agreements and other forms of restrictive covenants. This legal reality appears once again to have no “stifling effect” on the business climates of 3 of the top 4 cities listed.

This national report is consistent with a December 2015 report from the MIT Industrial Performance Center, “Growing Innovative Companies to Scale/How does Massachusetts Measure Up?” This report found that in the area of life sciences, “Massachusetts has been on par with or surpassed California” when it comes to life sciences companies which are on a pathway to scale or have achieved scale or super-scaled status. Again, there is not even the mention of non-compete enforcement as having a negative effect on this reality. The report concludes that “Massachusetts has a solid track record of growing innovative companies to scale[.]”

The enforcement of post-employment restrictive covenants – such as non-compete and non-solicitation agreements – started as early as 1811 in the Commonwealth. Given these two reports, one can conclude that the abilities of MA companies to protect trade secrets and other confidential and proprietary business information through the mechanisms of restrictive covenants has contributed greatly to the successful business start-up and growth climate.