Famous Non-Compete Agreements: What You Need to Know
Non-compete agreements have become a common practice in many industries, particularly in technology and trade secrets. These agreements are designed to prevent employees from working for a competitor or starting a competing business after leaving their current employer. While these agreements are often controversial, they have been used by many companies to protect their intellectual property. Here are some famous non-compete agreements that have made headlines over the years.
1. Apple vs. Google
In 2009, Google CEO Eric Schmidt resigned from the Apple board of directors due to a conflict of interest. Schmidt had been serving on the board since 2006, but Apple accused Google of stealing its iPhone technology and using it to create the Android operating system. Apple demanded that Schmidt resign from the board as a result. To avoid any further conflict, Schmidt signed a non-compete agreement that prevented him from working for Apple`s competitors for one year.
2. Amazon vs. Walmart
In 2018, Walmart sued its former executive, Marc Lore, for violating a non-compete agreement. Lore had left Walmart in 2016 to start his own e-commerce company, Jet.com, which was later acquired by Walmart. However, Lore had signed a non-compete agreement that prohibited him from working for a competitor for two years after leaving Walmart. Walmart claimed that Lore had violated this agreement when he founded a new e-commerce company, called The Honest Company, which Walmart said was competing with Jet.com.
3. Microsoft vs. Google
In 2005, Google hired former Microsoft executive Kai-Fu Lee to start its research and development operations in China. Microsoft sued Google and Lee, claiming that Lee had violated a non-compete agreement he had signed with Microsoft that prevented him from working for a competitor for one year after leaving the company. Microsoft also sued Google for “tortious interference” with Lee`s contract. In the end, Microsoft and Google settled the case, and Lee was allowed to continue working for Google.
4. Uber vs. Waymo
In 2017, Alphabet`s self-driving car division, Waymo, sued Uber for allegedly stealing its trade secrets. Waymo claimed that one of its former employees, Anthony Levandowski, had taken confidential information with him when he left the company to start his own self-driving truck company, called Otto. Uber later acquired Otto, and Waymo accused Uber of using its trade secrets to develop its own self-driving car technology. As part of the settlement, Levandowski agreed to pay $179 million and signed a non-compete agreement that prevented him from working on any technology related to self-driving cars.
Conclusion
Non-compete agreements are a common practice in many industries, and they are designed to protect companies` intellectual property. While these agreements can be controversial, they have been used by many companies to prevent employees from working for their competitors or starting their own competing businesses. As an employee, it`s important to understand the terms of any non-compete agreement you sign and seek legal advice if necessary. As a company, it`s important to use these agreements judiciously and not to use them to unfairly restrict an employee`s career opportunities.