Today the Texas Supreme Court again made non-compete agreements easier to enforce in the state of Texas. In Marsh USA v. Cook, the Texas Supreme Court ruled that a stock option agreement could serve as the basis for a non-compete:
The stock options are reasonably related to the protection of this business goodwill. Thus, this covenant not to compete is ancillary to an otherwise enforceable agreement. And, in the Legislature’s apparent judgment, reasonable noncompetes encourage greater investment in the development of goodwill and employee training.
More details to follow and analysis of the case. The questions now becomes can other forms of consideration form the basis for non-competes, like a signing bonus? We previously considered this issue, but the answer seems to be yes. The bottom line is that the Texas Supreme Court continues to make non-competes easier to enforce in a trilogy of opinions culminating in Marsh.
