Dodging the Bullet When Market Matters: Salesman Avoids Full Enforcement of Non-Competition Agreement with Ex-Employer

By Andrew P. Botti

A recent case out of the Superior Court Business Litigation session in Boston illustrates the Court’s inherent power – when sitting in equity – to fashion an injunction which appears fair to all parties, given the circumstances of the case. In Simplivity Corporation v. Hofdahl, the Plaintiff corporation attempted to stop an ex-salesman from working for a company which had developed a similar high tech software product. The salesman had signed a “Proprietary Information and Inventions Agreement” which, among other things, prohibited him for one year after termination of employment, from:

Acting in any capacity in or with respect to any Competing Business located within the Commonwealth of Massachusetts, the rest of the region known as New England, the rest of the United States, or anywhere else in the world.

Nevertheless, the salesman did go to work for a smaller software company which made a similar product to that of the salesman’s previous employer. The previous employer sued, seeking to enforce the one year restriction cited above, which would have effectively prevented the salesman from working for the new company during the proscribed period.

The Superior Court took the unusual step of holding an evidentiary hearing with live witnesses. After hearing the witnesses, the Court ultimately found that the Defendant salesman was “not in a position to assist [his new employer] in enhancing its products by using Simplivity’s trade secrets.” The Court also rejected the Plaintiff’s argument that the ex-salesman possessed proprietary knowledge of a unique approach to the sale of Simplivity’s product.

In refusing to keep the Defendant ex-salesman from working at the smaller specialty software company, the Court found that it was “undisputed that Simplivity has never competed with Maxta for a sale; indeed, it has never even encountered Maxta in the marketplace.”

The Court focused on the fact that there was no evidence presented that “Maxta was competing for the same customers as Simplivity, or about to compete for them[.]” Had there been such evidence presented, the Court would have been inclined to enjoin the ex-salesman from working for the new company for some period of time.

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