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Total Articles: 11

Texas Court Rejects Effort To Dismiss Non-Compete Lawsuit On Free Speech Grounds

Texas courts are increasingly encountering efforts to challenge restrictive covenant agreements on free speech grounds, where the restricted activity includes business-related communications. A recent Texas appellate court decision indicates that this strategy has its limits.

Watch Your Language: Texas Court Highlights the Importance of Language in Noncompetes

Texas law permits businesses to utilize noncompetition agreements to protect their legitimate business interests in certain circumstances. Companies, attorneys, and the courts generally focus on the consideration that must be exchanged in order for the parties to create a legal, enforceable noncompetition agreement. However, since courts analyze noncompetition agreements under standard contract interpretation principles, the language beyond the exchange of consideration can also be critical to the enforceability of a noncompetition agreement. A recent case from the Court of Appeals of Texas in Texarkana highlights this importance.

Texas Court Reminds Lost Sales Are Not Lost Profits

Proof of damages in restrictive covenant matters can be complicated. In Rhymes v. Filter Resources, Inc., the Ninth Court of Appeals in Beaumont reminded parties that revenue and sales are not the same as lost profits, and expenses must be considered when developing a damage model.

Who Stays in the Courtroom?: the Texas Supreme Court Delivers its First Uniform Trade Secrets Act Opinion

Last Friday (May 20), the Texas Supreme Court delivered its first opinion interpreting the Texas Uniform Trade Secret Act.[i] M-I Swaco, an oilfield services company, alleged that a former employee and his current employer, National Oilwell Varco (NOV), misappropriated M-I Swaco’s trade secrets. At the temporary injunction hearing, before M-I Swaco’s witness testified about the trade secret information, M-I Swaco asked the trial judge to exclude NOV’s corporate representative from the courtroom.

Invocation of "The Rule" During Trade Secret Injunction Hearings

The Texas Supreme Court ruled today that a party accused of stealing trade secrets does not have an absolute right to be present in the courtroom for the entirety of a preliminary injunction hearing when the trade secrets at issue are discussed. In December 2014, MI-SWACO, a subsidiary of oil and gas services company Schlumberger sought a writ of mandamus after a trial court allowed the party alleged to have received or benefitted from misappropriated trade secrets to be in the courtroom during evidentiary proceedings discussing the trade secrets at issue.

Non-compete Restrictions in Texas Severance Agreements

One of the most frequent Texas non-compete questions I am asked is whether an employee and employer can enter an enforceable non-compete agreement at the time of termination.

Fifth Circuit Affirms Rejection of Texas Choice-of-Law as to Oklahoma-Based Employees for Non-Compete Provisions, But Allows Texas Law to Apply to Non-Solicitation Provisions

In a detailed, 26-page published decision in the matter of Cardoni v Prosperity Bank, No. 14-20682 (5th Cir. Oct. 29, 2015) the Fifth Circuit Court of Appeals took a deep look at choice of law provisions in restrictive covenants. The Appellate Court started out by noting that in addition to their well-known disagreements over boundaries and football, Texas and Oklahoma do not see eye to eye on the enforceability of non-compete agreements. Texas generally allows them, Oklahoma does not.

Don't Mess With Noncompetes In Texas

Taking another step toward easier enforceability of noncompete agreements and away from its own decisions interpreting the Texas Covenants Not to Compete Act, the Texas Supreme Court ruled in Marsh USA Inc. v. Cook that a noncompete covenant contained in a stock option purchase plan was enforceable.

New Texas Non-Compete Decision Marks Further Shift Towards Enforceable Non-Compete Agreements

In its latest foray into non-compete jurisprudence, the Texas Supreme Court this week made it easier for employers seeking to restrict key employees from competing post-employment. In Marsh USA Inc. v. Cook, the Court held that a non-compete covenant contained in a stock option purchase plan was enforceable.

Noncompetes Become Even Easier to Enforce in Texas

Continuing to chip away at one of its prior decisions, the Texas Supreme Court just made it a bit easier to enforce restrictive covenants in Texas. In Marsh USA, Inc. v. Rex Cook, the Court rejected prior precedent as it considered whether an employer could enforce a non-compete signed by an employee in exchange for stock options. The answer in Texas is now a clear “Yes.” And there is room to conclude that cash may suffice as consideration to support a non-compete.

Texas Supreme Court Further Relaxes Standards for Covenants Not to Compete

On June 24, the Texas Supreme Court further relaxed the requirements of covenants not to compete in Texas, moving further from the technical questions of contractual enforceability and emphasizing the core question of whether the scope of such covenants are reasonable. In Marsh USA Inc. v. Cook, the court held that an employer may obtain a covenant not to compete in return for an employee’s acceptance of a stock option grant, so long as the covenant is reasonable in time, scope and geography. Marsh USA Inc. v. Cook, No. 09-0558, Texas Supreme Court (June 24, 2011)
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