Good News For Innovation: California Confirms That Noncompetes Are Unenforceable

from the phew dept

Last year, I outlined a bunch of research from the past few years that show how damaging noncompete agreements are to innovation. In fact, some of the research suggests that the single biggest factor in explaining why Silicon Valley became such a hub for tech innovation is the fact that noncompetes are unenforceable here. Studies comparing Silicon Valley to Boston and Michigan are quite convincing on the importance of allowing greater job mobility in order to promote more innovation. In fact, there's a vocal group in Massachusetts that has put a lot of effort into (finally) getting that state to ban noncompetes.

Of course, it appeared that some were pushing in the opposite direction in California (at least via lawsuit). But the good news is that California's Supreme Court has now reiterated that noncompetes are unenforceable here. This is a huge victory for innovation in the Valley.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    s, Aug 8th, 2008 @ 1:27pm

    Please oh please...

    ... get the ban turned into law in NJ.

     

    reply to this | link to this | view in thread ]

  2.  
    identicon
    Mass. lawyer, Aug 9th, 2008 @ 5:29am

    I don't think that Massachusetts has banned non-competes, or that the link says so either. The sentence is a little misleading (it's the placement of the "finally" that does it, I think).

     

    reply to this | link to this | view in thread ]

  3.  
    identicon
    Buzz, Aug 10th, 2008 @ 5:31pm

    I hate non-competition agreements.

    I completely understand and agree with non-disclosure agreements. Non-competition, agreements, make no sense whatsoever. These agreements essentially admit that the business in question is so fragile that anyone could create a similar business in his/her basement. It is unethical to simply lock out opposition instead of innovate to stay ahead of the competition.

    My current employer required a non-competition agreement; I signed it because it restricts itself to the current region I live in. Once I finish school, I plan on moving anyway, so, I tolerate it for now.

     

    reply to this | link to this | view in thread ]

  4.  
    icon
    Mike (profile), Aug 11th, 2008 @ 2:01am

    Re:

    I don't think that Massachusetts has banned non-competes, or that the link says so either.

    I wasn't say they had. I was saying that there's an effort underway in Mass to get them banned.

     

    reply to this | link to this | view in thread ]

  5.  
    identicon
    Anonymous Coward, Aug 11th, 2008 @ 8:26am

    Non Competes

    I am not a practicing lawyer but I did attend law school. As I recall the basic use of non compete clauses was really to avoid taxes in corporate sales. Will this dodge still work in California?

     

    reply to this | link to this | view in thread ]


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