Good News For Innovation: California Confirms That Noncompetes Are Unenforceable

from the phew dept

Fri, Aug 8th 2008 12:37pm — Mike Masnick

Last year, I outlined a bunch of research from the past few years that show how damaging noncompete agreements are to innovation. In fact, some of the research suggests that the single biggest factor in explaining why Silicon Valley became such a hub for tech innovation is the fact that noncompetes are unenforceable here. Studies comparing Silicon Valley to Boston and Michigan are quite convincing on the importance of allowing greater job mobility in order to promote more innovation. In fact, there's a vocal group in Massachusetts that has put a lot of effort into (finally) getting that state to ban noncompetes.

Of course, it appeared that some were pushing in the opposite direction in California (at least via lawsuit). But the good news is that California's Supreme Court has now reiterated that noncompetes are unenforceable here. This is a huge victory for innovation in the Valley.

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Filed Under: california, noncompetes

5 Comments

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s, 8 Aug 2008 @ 1:27pm

Please oh please...
... get the ban turned into law in NJ.
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Mass. lawyer, 9 Aug 2008 @ 5:29am

I don't think that Massachusetts has banned non-competes, or that the link says so either. The sentence is a little misleading (it's the placement of the "finally" that does it, I think).
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Buzz, 10 Aug 2008 @ 5:31pm

I hate non-competition agreements.
I completely understand and agree with non-disclosure agreements. Non-competition, agreements, make no sense whatsoever. These agreements essentially admit that the business in question is so fragile that anyone could create a similar business in his/her basement. It is unethical to simply lock out opposition instead of innovate to stay ahead of the competition.

My current employer required a non-competition agreement; I signed it because it restricts itself to the current region I live in. Once I finish school, I plan on moving anyway, so, I tolerate it for now.
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Mike (profile), 11 Aug 2008 @ 2:01am

Re:
I don't think that Massachusetts has banned non-competes, or that the link says so either.

I wasn't say they had. I was saying that there's an effort underway in Mass to get them banned.
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Anonymous Coward, 11 Aug 2008 @ 8:26am

Non Competes
I am not a practicing lawyer but I did attend law school. As I recall the basic use of non compete clauses was really to avoid taxes in corporate sales. Will this dodge still work in California?
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