It’s been over 2 years since the Marsh non-compete opinion was delivered by the Texas Supreme Court clarifying what the phrase “ancillary to an otherwise enforceable agreement” actually means. The real take away from that opinion, which we have discussed extensively, is that the consideration or value provided to the employee as part of the “otherwise enforceable agreement” does not have to give rise to the non-compete.
Based upon this clarification, it was at least my thought that employers would begin to use different types of consideration (stock options, bonuses, and other types of financial incentives) to support non-competes. We have not seen those types of cases proceeding through lower appellate courts, yet.
In review of non-compete cases considered by appellate court since the Marsh opinion, the following types of consideration have been identified:
- access to trade secrets, customers and other confidential data and goodwill;
- confidential proprietary, or trade secret, and goodwill or specialized training to be provided the employees;
- consideration included being granted a license to use plaintiff’s trademark and logo, and receiving the revenues from the advertising defendants sold;
- surgeon preferences or considered confidential information; and
- protection of goodwill in the course and the sell of the business.
Frankly, there has not been that much change in the landscape of non-compete enforcement, at least in terms of appellate court opinions since Marsh. I expect that we will see some additional types of opinions addressing other forms of consideration as predicted several years ago, but it seems to be a slow-moving process. We will continue to monitor the situation.