Should I Sign This Non-Solicitation Agreement Can This Backfire on Me

[DaveG8]

What is the name of your state (only U.S. law)? NJ

Hi all. I hope to get some help from folks here as I need to make up my mind fast or risk loosing a very good job offer.

Before I can join their company as a VP of Marketing, I am being asked to sign a Non-solicitation agreement that has the below pasted paragraph. If I do sign it, does it mean that I can never work for their competitor? Now, is that pretty standard or is this clause unreasonable? Thank you.

-----------------------------
Non-solicitation
Employee shall not, during the term of his or her employment with "COMPANY", or at any time after Employee ceases rendering services in any capacity to "COMPANY" for any reason, directly or indirectly, on his own behalf, on behalf of his employer or any other entity in which Employee has a direct or indirect interest, solicit, divert, pirate, take away or interfere with any of "COMPANY"’s customers, trade, business, patronage, employees, agents, or consultants or any other person which has (or, within the 24-month period preceding the termination of Employee’s employment with "COMPANY", had) a business relationship with "COMPANY" or induce or seek to induce any such person or entity to discontinue or reduce the extent of such relationship with "COMPANY".
----------------------------

one more section that was of concern to me ... if I think of a business idea and patent it or do trademarks while I am still employed by this company, they can claim that it is their idea?

---------------------------
During the term of his or her employment with "COMPANY", Employee may create certain Work Product that may be copyrighted or copyrightable under the laws of any applicable jurisdiction. With respect to such Work Product, Employee will be considered to have created a Work Made for Hire as defined in 17 U.S.C. §101, and "COMPANY" will have the sole right to the copyright. In the event that any such Work Product does qualify as a Work Made for Hire, Employee hereby assigns his copyright and all rights, throughout the world, in and to such Work Product to "COMPANY" without further compensation or consideration.
-----------------------------

Bottom line is ... are these clause pretty standard or is this company making me sign my life away?
Thank you!

 

[eerelations]

See my response to you over on ExpertLaw. I don't have an issue with you posting in two places, but it's too much for me to type all over again.

 

[quincy]

What is the name of your state (only U.S. law)? NJ

Hi all. I hope to get some help from folks here as I need to make up my mind fast or risk loosing a very good job offer.

Before I can join their company as a VP of Marketing, I am being asked to sign a Non-solicitation agreement that has the below pasted paragraph. If I do sign it, does it mean that I can never work for their competitor? Now, is that pretty standard or is this clause unreasonable? Thank you.

-----------------------------
Non-solicitation
Employee shall not, during the term of his or her employment with "COMPANY", or at any time after Employee ceases rendering services in any capacity to "COMPANY" for any reason, directly or indirectly, on his own behalf, on behalf of his employer or any other entity in which Employee has a direct or indirect interest, solicit, divert, pirate, take away or interfere with any of "COMPANY"’s customers, trade, business, patronage, employees, agents, or consultants or any other person which has (or, within the 24-month period preceding the termination of Employee’s employment with "COMPANY", had) a business relationship with "COMPANY" or induce or seek to induce any such person or entity to discontinue or reduce the extent of such relationship with "COMPANY".
----------------------------

one more section that was of concern to me ... if I think of a business idea and patent it or do trademarks while I am still employed by this company, they can claim that it is their idea?

---------------------------
During the term of his or her employment with "COMPANY", Employee may create certain Work Product that may be copyrighted or copyrightable under the laws of any applicable jurisdiction. With respect to such Work Product, Employee will be considered to have created a Work Made for Hire as defined in 17 U.S.C. §101, and "COMPANY" will have the sole right to the copyright. In the event that any such Work Product does qualify as a Work Made for Hire, Employee hereby assigns his copyright and all rights, throughout the world, in and to such Work Product to "COMPANY" without further compensation or consideration.
-----------------------------

Bottom line is ... are these clause pretty standard or is this company making me sign my life away?
Thank you!

What I have bolded above in the first clause is too broad in scope. There is no time limit stated or geographic region given. It is likely unenforceable as written.

What I have bolded above in the second clause would be more problematic if not for the qualifiers that follow - the "Work Made for Hire as defined in 17 U.S.C. §101" and the "in the event [it] does qualify as a Work Made for Hire." But, even with those qualifiers, a work that you do at home on your own time with your own materials would be "during" your employment and, although it might not qualify as a work made for hire under §101 if not done within the scope of your employment duties, you could still find the copyright ownership of such work challenged by your employer in court.

I would not want to sign the contract without some tweaking. I recommend you have the contract in its entirety personally reviewed by an attorney in your area prior to signing.

 

[DaveG8]

What I have bolded above in the first clause is too broad in scope. There is no time limit stated or geographic region given. It is likely unenforceable as written.

What I have bolded above in the second clause would be more problematic if not for the qualifiers that follow - the "Work Made for Hire as defined in 17 U.S.C. §101" and the "in the event [it] does qualify as a Work Made for Hire." But, even with those qualifiers, a work that you do at home on your own time with your own materials would be "during" your employment and, although it might not qualify as a work made for hire under §101 if not done within the scope of your employment duties, you could still find the copyright ownership of such work challenged by your employer in court.

I would not want to sign the contract without some tweaking. I recommend you have the contract in its entirety personally reviewed by an attorney in your area prior to signing.

Thank you so much for providing this great info.
I only had an issue with those 2 paragraphs. So, what line or what words can I change in that contract to protect myself?
My biggest issue was that while I am employed there, I can think of a 50 million dollar business idea (related to this company industry or not) and I don't want the CEO to go after my idea/trademark/patent simply because my idea and company was established while I was employed.

I also feel that it's weird that they are making me sign something that will prevent me from working for any of their competitors for the rest of the life of their business, if I understood correctly. Is this standard and if I ask to have such ability after 3-5 years of ending of my employment there, they'll think that I am nuts?

 

[quincy]

Thank you so much for providing this great info.
I only had an issue with those 2 paragraphs. So, what line or what words can I change in that contract to protect myself?
My biggest issue was that while I am employed there, I can think of a 50 million dollar business idea (related to this company industry or not) and I don't want the CEO to go after my idea/trademark/patent simply because my idea and company was established while I was employed.

I also feel that it's weird that they are making me sign something that will prevent me from working for any of their competitors for the rest of the life of their business, if I understood correctly. Is this standard and if I ask to have such ability after 3-5 years of ending of my employment there, they'll think that I am nuts?

The type of non-compete/non-solicitation agreement you are being asked to sign has been a rather standard agreement in New Jersey. The courts in your state are known to "blue pencil" any unenforceable parts of the agreement and let the rest of the contract stand. But I share your concerns and I personally would not sign any contract with broad, undefined terms.

 

[eerelations]

Thank you so much for providing this great info.
I only had an issue with those 2 paragraphs. So, what line or what words can I change in that contract to protect myself?
My biggest issue was that while I am employed there, I can think of a 50 million dollar business idea (related to this company industry or not) and I don't want the CEO to go after my idea/trademark/patent simply because my idea and company was established while I was employed.

I also feel that it's weird that they are making me sign something that will prevent me from working for any of their competitors for the rest of the life of their business, if I understood correctly. Is this standard and if I ask to have such ability after 3-5 years of ending of my employment there, they'll think that I am nuts?

See my detailed response to these questions over on ExpertLaw. Again, I don't want to have to type everything twice.

 

[latigo]

Does the below seem familiar?

(Your position would be in marketing and you are concerned about proprietorship rights to your "work product"?! )

Anyway what that clause is expressing is simply a statement of law. Meaning that "work for hire" is a statutorily defined term making an exception to the rule that whoever creates the work is the author/owner. By US copyright law if a work is made for hire, the employer, not the employee is deemed the legal author/owner. So, unless you are planning on building a better mouse trap or burying Bill Gates it maybe of no consequence to your decision.
______________________

As far as the "non-solicitation" clause (commonly known as covenants not to compete) generally speaking such covenants must be reasonable in duration and geographical scope and found to protect a legitimate business interest of the employer.

Here the period of restriction seems to be a bit ambiguous where in one instance it says "at any time after" (which would not be enforceable) and another "customers, etc., that have had a business relationship within the preceding 24 months" (which could be considered reasonable in duration and enforceable).

Anyway all courts frown on such covenants as being inherently in restraint of trade. And the broader and more restrictive of the employee's right to earn a living the less likely they will be enforced.

For what its worth I don't see that agreeing not to solicit established customers of the employer for two years following termination of your employment would be considered an unreasonable restriction. Otherwise, if it were to read any persons or businesses or potential customers. The established relationship seems to be the saving language.

 

[quincy]

The US District Court for the District of New Jersey said in Newport Capitol Group, LLC v. Loehwing, 2013 US Dist LEXIS 44479 (D.N.J. March 28, 2013): "Courts will not enforce a restrictive agreement merely to aid the employer in extinguishing competition, albeit from a former employee. Ultimately, the consuming public would suffer from judicial nurturing of such naked restraints on competition."

New Jersey has recently proposed changes to the way non-competes are handled in the state, even considering allowing former employees bound by a non-compete to void the agreement and compete freely if they are unemployed and eligible for unemployment benefits. The purpose would be to eliminate barriers to employment. Not that these are anything but proposals right now, but it shows a shift in the way non-competes are viewed not only in New Jersey but in other states, as well.

That said, the seminal New Jersey case is Solari Industries, Inc. v. Malady, 55 N.J. 571 (1970), which set out what factors a court needs to consider when deciding whether a non-compete agreement is enforceable. It is a weighing of an employer's legitimate business interests against an employee's interest in future and prospective employment and the public's interest in a free and competitive marketplace. Here is a link to Solari: http://law.justia.com/cases/new-jersey/supreme-court/1970/55-n-j-571-0.html

Although New Jersey courts tend to blue-pencil unenforceable clauses so an employee should not necessarily fear a contract with unreasonable time or geographic restraints, the goal should always be to avoid having a court decide a matter. A contract can be drafted (or revised) to meet the needs of an employee and employer - if the employer is willing to allow for changes. It could depend on how valuable the employer believes the employee will be to the company.

Again, though, I would not want to sign any contract without a personal review by an attorney in New Jersey first, when the terms of the contract are as given in the example here.