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CA Vs. MA In Battle Over Non-Compete Clause
Lucas123 writes "A case was filed with superior courts in California and Massachusetts involving a former EMC top executive who is trying work for HP. The case is throwing into relief Massachusetts's and California's differing approaches to non-compete clauses in employment contracts. California courts have argued that non-competes hamper a person's ability to traverse the marketplace freely for work, while Massachusetts courts say the agreements actually afford freedom to develop technology without the fear of IP theft."
you have someone who made enough money not to have to work again during the non compete period- otherwise what the hell are you supposed to do, work at burger king?
In Australia, non-compete clauses are classed as restraint of trade, and thus illegal. Sucked in ex-EMC executive!
XML is like violence. If it doesn't solve the problem, use more.
But which is more important? Or actually: which state really has jurisdiction in this case?
Probably the State in which the contract was executed or otherwise specified in the contract.
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It seems IP doesn't only belong to the company- but also at least to some degree to the person who actually developed said IP. As it is located in his/her intellect and it is sort of difficult to remove without destroying it.
Not that this argument about IP works in the first place - this guy is an executive.
Prediction: The real iPhone killer is going to be sex robots from Japan. Think about it.
But which is more important?
I'm almost always in favor of more open markets over regulation and control, so, IMHO, non-competes are stupid and a restraint of fair trade. In addition,
"IP theft" can be dealt with in other ways, since that's what courts are for.
Or actually: which state really has jurisdiction in this case?
Since I'm not a lawyer, I can't really answer this part with any real authority, but most likely it depends what companies have a presence where, if there were any jurisdiction clauses in EMC's employment agreement, etc..
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To some extent, both positions are right. To me, the problem is in how broadly do you define competitor. As an example, let's say I was doing graphics work for an MMORG. Clearly, working for a different MMORG would be working for a competitor. Working on CGI for an animated feature wouldn't be, at least to me. Would working for a different company bringing out a first person shooter, or turn based strategy game be working for a competitor? Personally, I wouldn't think so, but again, that could be argued either way.
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Ask yourself this: which state has Silicon Valley? Which state is home to the vast majority of tech companies?
And which state is known for overreacting to animated LED characters by deciding they're bombs and evacuating the state capital over them?
By the way, this has already been answered in a previous Slashdot article. Someone has done the research: California's lack of non-compete agreements helped them become a center of technology in the US. Massachusetts' non-compete agreements helped ensure that no tech company prospered there. (The only company I can think of that was based in Massachusetts is Digital, and they died what, over a decade ago?)
The freedom to seek gainful employment should not be infringed.
While not a specifically enumerated right of the people, it is both expected that we work in a productive manner, and beneficial to the society in which we live.
The only way I could possibly agree with the enforcement of such a contract would be through compensation - have them pay his salary for each of the 12 months they expect him to be employed.
Even then, it deprives society of the good work he could be doing. Why should the government agree to such a thing?
It appears most of EMC is technically "located" in foreign tax havens (click Locations & Production). As such, I don't think the US Justice System should waste US taxpayer money enforcing EMC contracts. They like the low taxes in the Bahamas and Bermuda, let's see them protect EMC.
Hehe, you keep on whining about socialism, we'll keep on educating the best minds in the world at the best universities in the world. Between California and Massachusetts, I think we've got the top engineering universities in MIT, Berkeley, Stanford, and Caltech, not to mention some school called Harvard in Mass which I hear is pretty good. Unless this was some sort of crazy sarcasm, but if it is it sucks.
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"HP is no more guilty than EMC when it comes to wooing talent from competitors. EMC has hired several HP executives, including Mark Lewis, former vice president of worldwide marketing for HP's network storage solutions group, who is now EMC's president of Content Management and Archiving, and Howard Elias, HP's former senior vice president of business management and operations, who is now president of EMC's Global Services and Resource Management Software group."
Hahaha silly EMC. At first read I could see EMC's argument but if they aren't playing by the same rules they are trying to get enforced then I don't believe this glaring hypocrisy will go overlooked.
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While I agree those are very prestigious schools, how is it relevant? Those schools predate the recent "omg socialism" trend.
"Action without philosophy is a lethal weapon; philosophy without action is worthless."
I'm almost always in favor of more open markets over regulation and control, so, IMHO, non-competes are stupid and a restraint of fair trade.
Sounds a little self-contradictory there. The non-compete was not part of "regulation and control"; it was part of a contract negotiated supposedly in good faith by both parties in an open employment market. If you think non-compete's are a restraint of fair trade, then I suppose your head asplode, because it's the regulations that forbid them and nothing else. Only government regulation is supporting fair trade here, not the open market.
Of course, those of us who aren't ideological fanatics and who realize that governments of the people are the only thing standing between us and outright slavery by corporate/military/religious/political overlords aren't a bit surprised. Governments that are too big or too small both lead to slavery, and finding a reasonable balance in between is almost impossible, which is why the phrase 'Situation Normal, All F***ed Up' was coined. :)
Yes, these states should have a free market instead! And by free market, I mean a market where the only regulating done is by the private sector, I don't actually mean it's free from regulation. It's perfectly ok to regulate away competition, as long as its the private sector doing it.
http://techdirt.com/articles/20071204/005038.shtml
How on earth do schools have anything to do with socialism? Let me clue you in: schools are where people go to learn and get degrees. Companies are where people go to work after they get out of school. In the USA, in the tech sector, these places are rarely in the same places; instead, they're usually on opposite sides of the country. There's lots of great tech schools in places like Georgia, South Carolina, North Carolina, southwest Virginia, Cleveland Ohio, upstate NY, etc. How many big-name tech companies are located in these places? Approx. zero.
I went to school at Virginia Tech. Good school, but there weren't exactly a lot of jobs nearby. Most engineering students left the state as soon as they graduated. The state and local governments complained about it all the time, even trying to set up and promote some stupid "Virginia Technology Corridor" in the southwest for a while. It was funny driving along some rural road and seeing a sign proclaiming "Now entering Virginia's Technology Corridor" and seeing falling-apart trailer homes scattered around. I believe they finally gave up, after they realized that making up a silly name wasn't going to magically attract tech companies to backwoods Virginia. (For those unfamiliar with Virginia geography, this was in the southwest, about 6 hours' drive from Northern Virginia where there actually are some tech companies, especially ones that work with the government.)
Just because some place has great schools doesn't mean that students are going to stick around when they finish. They're going to go where the money and jobs are.
Is this "Intelectual" property?
Is it like owning a Sean Penn lookalike and flogging it with a ninetail until it stops squirmin'?
NO SIG
State ownership of schools is by definition socialism (to wit: the public ownership of the means of production, in this case the production of educational services). State funding of private schools is something in the middle: kinda, not quite, almost, socialism. I suppose socialism is a bit of a bad word; that's somewhat here, and not quite there. :-)
C//
Because that's what it really amounts to. Spend more than a few years at a company, get really good at what you do. Then, if the company pisses you off, you are faced with three options:
1) Bend over and take it.
2) Completely change your profession, and start from scratch. All knowledge you have acquired has been rendered useless.
3) Be unemployed for the term of the non-compete.
Alright, so it isn't quite slavery. You're not caned if you stop working for the master. But it's a damn risky proposition to actually stand up to any abuse.
Is any more proof necessary that overzealous IP laws will strangle our economy? As someone else pointed out, Silicon Valley is Silicon Valley because talent is free to move between companies.
Those who can, do. Those who can't, sue.
In that case, it appears socialism isn't working out too well for the east-coast states, since they're investing a lot of money into education, only to have all their graduates flee after they graduate.
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California was admitted to the union as a Free State. I think that once you set a foot in California you immediately become free.
Companies use non-compete agreements to cement their monopolies, like Microsoft. I wonder why non-competes aren't attacked by the anti-trust lawyers.
Silicon Valley and California benefit from the lack of non-competes, people move around more and ideas are "cross-pollinated" to many locations.
"..., those of us who aren't ideological fanatics and who realize that governments of the people are the only thing standing between us and outright slavery by corporate/military/religious/political overlords aren't a bit surprised."
wow. actually believing that MAKES you a fanatic.
Non-compete are bad becasue when implemented in a state it become impossible to find work without signing one. So no, there isn't any free market or fair trade when forced to sign one.
Forced by practicality might be better.
When non-compete where enforced in CA, it was basically impossible to switch jobs. So no pay raises, bad working conditions. What are you going to do? leave and not work for 3 years?
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I work for a California company, and they had me sign a non-compete. I asked them why considering that California courts will not enforce them. Response from the legal department--just in case the court changes their mind.
"Where is my mind?"
I'm almost always in favor of more open markets over regulation and control,
Since non-compete clauses are contracts voluntarily signed, then, you're in favor of enforcing them, right?
So, IMHO, non-competes are stupid and a restraint of fair trade.
Well, sure. But are you in favor of regulation prohibiting stupidity? Are you in favor of regulations enforcing fair trade?
Which is more important to you?
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I was thinking along the same lines. In this case, it seems like less regulation by government actually causes a reduction in freedom of employment. Seems a bit contradictory -- I'd like to hear someone well versed in Austrian economics to help work it out.
Firstly, I would say that the company implementing non-compete clauses would immediately have to increase salaries -- since each employee would doubtless prefer to work without, and given two equivalent positions always choose the non-competeless (competeful?) job. Secondly, in the long term a non-compete clause would create a reduction in labor available to a sector (as the employee is forced to work another area), which if it happened enough would lower the supply of labor and increase all salaries. Of course, this cost would be borne by an entire industry.
Anybody else with a libertarien/free market approach?
That sounds great in theory.. Problem is, the non-compete still forces you to avoid any job that could in any way compete with the company you work for (which is to say, anything involving your skillset). So they can continue to pay you incredibly low wages to keep you from working for anyone else, even if you quit. This keeps you from looking for a better job, and in some cases would prevent you from getting a job after you're laid off (though you would at least get some amount of money for continuing the non-compete).
is why the 128 corridor never produced to the extent that silicone valley.
no matter how good it is, it is human nature always wants to make things better
I think you're misunderstanding my argument. Non-compete clauses are part of a contract; nothing to do with regulation, except insofar as the government enforces contracts in general. The only thing stopping non-compete clauses is specific regulation (in CA and other places). GPP said that regulation is bad and non-competes are bad. I was trying to get him to explain this contradiction.
Non-competes are not "implemented in a state"; they are frequently regulated against in particular states, though. By default, with no more government except that minimum required to enforce contracts and property law and defend against foreign invaders (which some people espouse as a libertarian ideal), non-compete clauses would be the rule of the day. Only regulation declaring them null-and-void preserves a free market.
True, but then no one can compete with a good goatse. Even Ron Jeremy was shocked at seeing his first goatse.
Similar to the upcoming US election results
I think you're misunderstanding my argument. Non-compete clauses are part of a contract; nothing to do with regulation, except insofar as the government enforces contracts in general. The only thing stopping non-compete clauses is specific regulation (in CA and other places). GPP said that regulation is bad and non-competes are bad. I was trying to get him to explain this contradiction.
Not regulation per se, simply "judicial activism".
Non-competes are unconstitutional. Activist judges allow them to stand in court, ergo, legislation through adjudication.
In many states without non-compete legislation, non-competes aren't worth the paper they're written on.
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Which is why housing is so cheap in Massachusetts and California.
It brings to mine Yogi Berra: "no one goes there anymore. It's too crowded."
There are lots of tech jobs in boring, sprawled wastelands in Massachusetts (the Rt. 128 stuff that people mention), New Jersey (Bell Labs comes to mind), and Virginia (ever hear of the Research Triangle?), just like there are in the boring sprawled wasteland of Silicon Valley. Furthermore, lots of programmers and math types sell their dignity for big paydays from investment banks and consulting firms in eastern financial centers (New York, obviously, but plenty of other northeastern cities).
I think the Midwest and maybe the South (I'm not as familiar with the South) are doing much worse in terms of having tech schools but not much of a tech sector. A lot of the manufacturing that drove a need for engineers in the area has left the region, and the computing industry hasn't done much. Graduates of the University of Illinois' fine CS and CompE programs have to go to the coasts to find the jobs they trained for. Well, that or go the investment/consulting route, but there's no amount of money you could pay me to put up with the bullshit that I hear goes on at those companies.
Why? Why do they have to increase salaries? They can just throw the paperwork at existing employees and say "sign this or be terminated". Same goes for any prospective employee - "sign this or don't get hired". Getting compensation for this undoubtly unfavorful clause in the contract is up to the employee, e.g. by saying "ok, no one mentioned this stuff. Up my salary by 25% or pay me for the time I'm not allowed to compete, or I'm not signing".
Anybody else with a libertarien/free market approach?
Non-competes are a facet of a liberatarian/free market approach. More specifically, they are a representation of the freedom of economic parties to enter contracts without government interference. Don't like a contract? Don't sign it.. Don't whine for the government to ban it if you're really a libertarian.
I can see this being an issue for niche skills / markets. The more you are engaged in building knowledge / skills etc on a particular niche service the more likely you're going to go to a competitor where your knowledge is an asset you'll be paid extra for. You're not likely to switch career paths, throw out much of what specialist knowledge you have to start at a lower level and build a new path. In that case I'd refuse point blank to sign a non-compete clause.
In general the concept of a non-compete clause seems morally wrong to me. You are loyal to your employer while you are an employee. You are expected to be honest, hard working and a valuable asset to their business. You are expected to respect their private property while an employee. The day you stop becoming an employee, those commitments vanish. You are then free to market your skills to another employer, regardless of who they are. If your previous employer no longer wants to employ you, they have no say over your future abilities to earn a living.
I wouldn't really call it upstate, but sure, it's in NY about 30 miles north of Manhattan.
I know this isn't the premise of TFA, but there is an interesting strategy behind EMC's lawsuit which is independent of whether the non-compete is ultimately enforceable. It seems doubtful that they are just being vindictive here (though I'm sure there was more than one C-level exec who cursed Donatelli and HP). Rather, by demonstrating that they are willing to sue, costing HP and Donatelli time and money, they effectively discourage HP and Donatelli from pulling other EMC employees (who may actually possess technical IP) on Donatelli's coattails. Furthermore, the action discourages similar defections from EMC that may be wholly unrelated to this incident.
They cannot allow this precedent to be set uncontested.
Non-competes are neither regulation nor control. Only the government can do either of the two. Non-competes are a contract between two parties. Very important difference here. If the government declares non-competes unenforceable (or explicitly makes them illegal), then that would be regulation and control.
There are many top engineering schools that are not in MA or CA. Yes, they are prominent, but there are many more in other states.
http://grad-schools.usnews.rankingsandreviews.com/best-graduate-schools/top-engineering-schools/rankings
Overrated, Troll, and Flamebait mod points are not to be used towards posts you disagree with. That IS censorship.
Presumably the concept you left out - trade secrets. If I go to work for a competitor, it doesn't mean they can use our copyrighted software, or our patented stuff, or our trademarks. That's easy to handle. However, I also know a lot about our operations that we consider trade secrets.
Trade secrets, formally, are secrets held by the company. They must be protected from disclosure, and have some legal protections.
Of course, what they're trying to protect is probably none of the above. I know a lot about operations here that would likely be useful to a direct competitor, that probably doesn't count as trade secrets, and is not covered by the law.
So, I'd figure that they're using IP to mean stuff that isn't physical that they rely on, use, sorta own, have some control over, or whatever. The very term IP encourages sloppy thinking and overgeneralization, as a union of four different concepts.
"When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes
There are lots of tech jobs in boring, sprawled wastelands in Massachusetts (the Rt. 128 stuff that people mention), New Jersey (Bell Labs comes to mind), and Virginia (ever hear of the Research Triangle?),
I agree with your point, but isn't Bell Labs long gone (or turned into Lucent)? And isn't the Research Triangle in North Carolina (Raleigh-Durham-Chapel Hill)?
I do know there's a lot of tech jobs in northern Virginia and Maryland, because of all the government work there.
Thank you. I was mostly just joking/trolling for responses or whatever, playing devil's advocate etc. I just felt like tossing it out there since the OP threw in a complete non-sequitur (IMO, a no-compete clause is corporatist, and far from socialist).
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It's not relevant, but neither is the OP. I actually had no good reason to post what I did, I just felt like throwing it out there/bragging/trying to stir up discussion. I guess maybe what I might have been trying to imply is that #1, CA and MA are better than other states so maybe what we're doing is better, and #2 the OP is an idiot and without those two states the US would be much worse of. I would also bring up those recent statistics about how "socialist" states like CA and MA get less benefit from taxes than "conservative" states, although it's really more of a dichotomy between large and small states and it just happens that most of the larger states lean left. I don't really take much meaning out of the things I just said in this post, but they were some of the things I was thinking about when I posted. But basically, the OP is an idiot.
All your base are belong to Wii.
Well, California is a bit of an exception in that regard, since the tech industry is right here. But really, I wouldn't read too much into my post, it was mostly just a thought I wanted to throw out there to maybe spur some discussion. Thanks for bringing up something actually interesting. I was also sort of implying that the OP is stupid for bashing CA and MA when they are probably doing better than whatever state he is from.
All your base are belong to Wii.
Which is why the west coast is better! :P. I'm just kidding though, talking about socialism should be a new corollary to Godwin's law, or something. Socialism does not really apply here at all, I was really trying to point out that the OP is an idiot. I may have been unwittingly feeding the troll though, but at least I got to boost my ego or something.
All your base are belong to Wii.
Libertarians believe that contracts are always for the benefit of all involved parties, and parties would not enter contracts that are not beneficial to them (and that government should absofrickinlutely not decide what's beneficial and what's not). Contracts involving indentured servitude would not need to be regulated by the government, since no one would enter them freely.
Libertarian does not equal anarchist.
I'm not disputing that, but it's irrelevant to the question. Libertarians have no problem with the government having a monopoly on using force, as long as force is only used to back up violations of existing rights (e.g. life or property) and contracts (e.g. to enforce civil court rulings). In an anarcho-capitalist system, such functions would be handled by private institutions (probably the good old-fashioned squad of hired goons).
Oops, you're right, North Carolina. Bell Labs isn't what it was but I think there's other stuff in Jersey. I almost never go to the east (have only been east of Indiana once, can probably count the number of times I've been east of Illinois on two hands) so it's easy for me to lose track of what's there other than in a really broad sense.
A free individual has the right to practice his/her trade. Under current law, even without a non-compete, a former worker cannot legally disclose intellectual property that is true trade secret. Many corporations want to enforce non-compete agreements because it gives them a competitive advantage, they do not want a well trained player playing against them with another team. These corporations have no sense of ethics and could really care less about individual rights.