Monthly Archives: February 2014

Nearly every case Indiana court decision concerning non-compete agreements, or non solicitation agreements, notes that such agreements are disfavored … “covenants not to compete are in restraint of trade and are not favored by the law.”[1] Nevertheless, such agreements are regularly enforced when an employer can demonstrate that the restriction is reasonable. The reasonableness of a restriction is measured in two steps:  1) Whether the employer has a legitimate protectable interest, and 2) whether the covenants are reasonable in scope as to the time, geography and activity restricted. Is the employer protecting a “legitimate interest”? Generally, a business claims that the non-compete is the only way to protect the company’s trade secrets or goodwill, including “names and addresses of customers and the advantage acquired through representative contact.”[2] Indiana law agrees that a business may restrict its former employees from enticing away the employer’s old customers and thereby protect its client relationships and income stream. In JAK Productions, Inc. v. Wiza, 986 F.2d 1080 (7th Cir. 1993), the United States Court of Appeals for the Seventh Circuit held that there is a “presumption under Indiana law that a covenant cannot restrain employees from doing business with their ex-employer’s past customers” and that a covenant which seeks to restrain business with customers that were not customers at the time of the employee’s termination, is overly broad. Is the restriction reasonable in scope? Time Courts have typically found that non-competition agreements of one to two years are reasonable.  In cases where a non-competition agreement is entered into in conjunction with the…