Enforced non-compete and non-solicit against automation engineer.

Issue: Non-Compete | Non-Solicitation | Preventive Strategies

Court: 

Industry: Technology and Automotive

Judge: 

Case Description

I enforced my client’s non-compete and non-solicitation agreement against a former automation engineer. The engineer had resigned and joined a competitor. The competitor then sought to use the engineer’s relationships with my client’s automotive customers, as well as the engineer’s knowledge of those customer’s systems and preferences, to win a bidding war. This is classic unfair competition; the maneuver failed after I got involved.

My client provides automation design solutions to a number of industries, including within the automotive industry. My client hired an automation engineer to help provide those services. As part of the engineer’s work, he became familiar with my client’s operations and technologies. But, perhaps even more importantly, the engineer was introduced to my client’s key customers. As the engineer continued to work with my client’s customer, the engineer began to under each customers’ technology preferences and how to implement those preferences within the customer’s business systems.

Any employer who puts its employees in a similar situation faces certain competitive risks. If an employee with this knowledge and relationships—created through the employee’s employment—joins a competitor, there is a significant chance, if not a likelihood, that the business will go with that employee.

This risk plays out somewhat differently in different industries. For instances, in the automotive industry, technology work, such as automation services, are typically bid out to various technology outfits. The bidding process will often require the bidding company to identify who will work on the project. Thus, when a former employee leaves, the employer faces dual challenges: not only does the employee take his knowledge of the employer’s systems and relationships, but a competitor can use the former employee’s name on a bid submission to great effect.

This is precisely the sort of situation that screams for an agreement with non-compete and non-solicit provisions. These provisions protect the employer should the employee leave and decided to solicit (or even accept) business from the former employee.

Fortunately, my employer had entered an agreement with its automation engineer, and the agreement contained the appropriate provisions to prevent unfair competition, including the engineer leveraging his knowledge to solicit my client’s customers. I was able to use the agreement–and my understanding of this industry and how its interplay with competition law–to negotiate a favorable resolution that ensured my client’s business relationships and contracts were not disrupted.

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