November 2009

Over the last few weeks I’ve been involved in defending and applying for temporary restraining orders in non-compete/trade secret cases in Houston and Dallas County District Courts.  A few observations on those proceedings:

• It is much easier to get injunctive relief in Texas since after the Texas Supreme Court’s rulings in  Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644, 651 (Tex. 2006) and Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding.  Courts are well aware that the Texas Supreme Court has eliminated many of the technical arguments that were previously used to defeat non-competes on their face.   That being said, you still have to satisfy the statute.
• Companies have become much smarter about drafting non-competes and non-disclosure agreements.  The majority of agreements I see satisfy Texas law.  They generally have a one year duration, have a reasonable geographic limitation, and in most instances are ancillary to a promise to provide some type of trade secret.
• Courts want  to see "blood".  Not literally, but Courts need to see inequitable conduct from the alleged non-compete violator.  Did they take trade secrets out the door with them? Are they calling on former customers within days of leaving?  Are they trying to take employees with them?  A mere suspicion is not enough to support a temporary injunction and the Texas Supreme Court has not recognized inevitable disclosure. 

Depending upon your perspective, the good news is non-competes are easier to enforce from a legal standpoint.  That notwithstanding, a party seeking a temporary injunction to enforce a non-compete needs to have its facts lined up to justify this type of relief.