Earlier this month, we wrote about the dangers of noncompete agreements
and how they tend to slow innovation and hurt regions compared to those, such as California, that do not enforce noncompetes. Most of the research on noncompetes tends to compare Massachusetts, which enforces noncompetes, to California. And, in an unfortunate demonstration of the dangers of noncompetes, iRobot, a Massachusetts company has just forced a competitor completely out of business
, and our troops may be less safe because of it. Many people know iRobot for the cute little Roomba vacuum cleaner robot, but the company's main line of business has always been selling robots to the military to help them locate and dispose of explosives. A new company sprang up recently, called Robotic FX, founded by a former iRobot employee. Robotic FX had just scored an army contract to make some similar robots. The competition would have been good for everyone. It would have pushed both companies to continue to innovate and make better, more efficient and more cost effective robots. Instead, iRobot sued and has forced Robotic FX completely out of business and banned its founder from working in the industry for five years
. Here's a knowledgeable expert on robotics who can help make useful robots that will help keep our troops safer... and he's not allowed to work in the industry for five years. That doesn't seem like a good outcome for anyone... other than iRobot who can rest on its laurels rather than having to innovate in the face of competition. Update
: Wanted to update this following some comments that suggest my summary was inaccurate. I apologize if it was not clear, so let me clarify here. The guy was accused of patent infringement and trade secret violations in what he was doing. That was the central part of the case. The "noncompete" wasn't specifically an agreement he signed, but it's a result of the lawsuit. I should have been clearer about the accusations of infringement, but I don't believe this changes the point of the post at all. It's still a case where a noncompete (created by the court, rather than as part of an employment agreement) is used to stifle competition. That there may have been patent infringement is somewhat meaningless to me, as should be clear from my other discussions on patents. Competition is competition -- and it would have driven better results, even if based on the same patents.