Intellectual Property Litigation

James A. Johnson, P.C. has vast experience representing employees, inventors, entrepreneurs, and technology start-ups in intellectual property matters. Over the years the firm has developed a reputation for helping individuals determine their rights and obligations under non-disclosure agreements, non-compete agreements, trade secret legislation, employment agreements, and the like. Since Alabama is an employment-at-will state employers and large corporations often have the upper hand in negotiating such one sided agreements and it is important for individuals to be able to obtain quality representation. Mr. Johnson has litigated non-compete and non-disclosure contracts from Alabama to Oregon. Although not a patent and trademark lawyer Mr. Johnson also has experience representing inventors who are interested in protecting their ideas and intellectual property.

Here is a short case summary of the enforceability of non-compete agreements in Alabama.

ENFORCEABILITY OF NON-COMPETE AGREEMENTS IN ALABAMA

1. BURDEN
a. AThe burden is upon the person or entity seeking to enforce a contract which restrains a lawful trade or business to show that it is not void under 8-1-1 Nobles-Hamilton v. Thompson, 2003 Ala. Civ App. Lexis 56 citing Calhoun v. Brendle, Inc., 502 So.2d 689, 693 (Ala. 1996)
b. No basis to enforce noncompete when Ano testimony was offered to prove any of the elements the employer was required to prove in order to have the noncompetition agreement enforced. See Calhoun, Without testimony concerning the employer=s protectable interest, the relation between the restriction and that interest, the reasonableness of the restriction as to time and place, or the lack of undue hardship on the employee, the trial court had no basis on which to enforce the noncompetition agreement. Jones v. Wedgworth Pest Control, 763 So.2d 261, 263 (Ala Civ App. 2000).

2. FOUR CRITERIA- According to Devoe v. Cheatham, 413 So.2d 1141, 1142 (Ala. 1982) AA court will enforce a noncompetition agreement only if:
a. Employer has a PROTECTABLE INTEREST
i. Yes if
(1) Employee [was] in a position to gain confidential information, access to secret lists, or to develop a close relationship with clients. Devoe 1143
(2) Employer=s investment in its employee, in terms of time, resources and responsibility Nationwide, 907 F.2d at 1087-99 citing James S. Kemper & Co., Southeast, Inc. V. Cox & Assoc., Inc., 434 So.2d 1380, 1382
(3) AEmployees who have access to customer lists and who develop close relationships with the customers fo their employers have repeatedly been restrained from entering into competition with their employers because the customer base is a protectible interest. Nobles-Hamilton citing Clark v. Liberty Nat=l Life Ins. Co., 592 So.2d 564, 566 (Ala. 1992)
b. Restriction is REASONABLY RELATED to that interest
i. Birmingham TV Salesman employed 2 months-6 month limitation
Anot reasonably related to Channel 42′s protectible interest and imposes a severe and undue hardship on the defendant who is twenty-five years old and recently married.@ Bham TV Corp v. DeRamus, 502 So.2d 761 (Ala Civ App. 1986)
c. Restriction is Reasonable in TIME and PLACE
i. Time
(1) AMost of the non-competition and non-solicitation agreements upheld by Alabama=s appellate courts have been for two years or less, and some longer prohibitions have been bluelined. Compare Central Bancshares v. Puckett, 584 So.2d 829, 831 (Ala. 1991)(citing additional cases upholding two-year restrictions) with Mason Corp. V. Kennedy, 286 Ala. 639, 244 So.2d 585, 590 (1971) (five-year restriction bluelined to two years, four months). These cases reflect that as time advances, the public interest in upholding partial restraints on trade diminishes while the public interest in competition increases.@ 2000 U.S. Dist. Lexis 30017 (Southern Distr Ala. Judge William H. Steele)
(a) Mason- AWe hold that a court of equity has the power to enforce a contract against competition although the territory or period stipulated may be unreasonable, by granting an injunction restraining the respondent from competing for a reasonable time and within a reasonable area.@ p. 590
(2) In Kemper v. Cox, 434 So. 2d 1380, 1384 the court supports a two year limitation stating Athere can be no doubt that a two-year period for the restriction is reasonable. As this court held in Rush v. Newsom Exterminators Inc., 261 Ala 610, 75 So. 2d 112 (1954): AIt would hardly be contend3ed that the period of two years was unreasonable as to time.@
(3) Length may be geared to length of typical contract in industry in ?
(a) AA development of the facts will be necessary to demonstrate the reasonableness of the one-year [**12] restriction. Since most insurance policies come up for renewal in a [*1089] year’s time, an event which would seem to trigger an opportunity for new business for Nationwide, it may be necessary to make the agreement for a year to prevent the employee from exploiting these opportunities which Nationwide had trained him to develop@ Nationwide v. Cornutt 907 F.2d 1085, 1089-90.
ii. Place
(1) The territory of a covenant not to compete may properly include part of Alabama, all of Alabama or more territory than the state of Alabama, depending on the circumstances. Rush 1385 citing Parker v. Ebsco Industries, Inc. 282 Ala. 98, 209 So.2d 383 (1968).
(2) AAnywhere@-such a broad noncompetition agreement would almost surely be held to be unreasonable . . . [but] the trial court certainly had the power to enforce such an overly broad agreement by limiting the geographical restriction to a more reasonable distance so as to fairly protect the interest of both [plaintiff & defendant]. Nobles 10, 11.
d. Restriction imposes NO UNDUE HARDSHIP
i. Birmingham TV Salesman employed 2 months-6 month limitation
Anot reasonably related to Channel 42′s protectible interest and imposes a severe and undue hardship on the defendant who is twenty-five years old and recently married.@ Bham TV Corp v. DeRamus, 502 So.2d 761 (Ala Civ App. 1986)

3. DAMAGES
a. Breaches = nominal damages even if there was failure of proof regarding actual damages. Williams v. Citizens Bank of Guntersville, 350 So. 2d 1031 (Ala. 1977). When the evidence establishes a breach, even if only technical, there is nothing discretionary about the award of nominal damages. Ellis v. W.L. Casey & Co.., 4 Ala. App. 518, 58 So. 724 (1912). Cited from Kemper p. 1385
b. Measure of damages is the amount of loss suffered by [Plaintiff], caused by the breaches of the Covenant. B& M Homes, Inc. V. Hogan, 376 So. 2d 667 (Ala. 1979); Coastal States Life Insurance CO. V. Gass, 278 Ala. 656, 180 So. 2d 255 (1965).
c. AIn order to collect more than nominal damages, [Plaintiff] must also prove that it actually lost money because of [Defendant=s] breach, that is, that it would have gotten the business that went to [Defendant]. Carson v. Universal Door Systems, Inc, 596 So. 2d 565, 570(1991)
d. AThe jury awarded Buckley $3,388 for Seymour=s breaching the noncompetition provisions [affirmed] Buckley v. Seymour 679 So.2d 220, 223.

4. PROFESSIONAL ?
a. Factors- Friddle v. Raymond, 575 So.2d 1038 (Ala. 1991)
i. Professional training, skill, and experience required to perform certain services
(1) 12 hours continuing education every 2 years
(2) License/Testing
(3) Code Section AProfessional@
(4) # years as real estate agent before broker
ii. Delicate nature of the services offered
(1) Property-serious decisions affect either individual or corporations fiscal future
(2) confidentiality
(3) contractual relationship
(4) services pseudo accountant/lawyer dealing w/ #=s and contracts
iii. Ability and need to make instantaneous decisions
(1) Have to know market and be ready to jump in
b. Alabama Courts have found physicians, veterinarians, and accountants to be professionals Hanger v. Scussel, 937 F. Supp. 1546, 1557(M.D. Ala. 1996).

5. RANDOM CASE
a. Non solicitation agreement still subject 8-1-1 see Sevier Insurance v. Willis Corroon, 711 So. 2d 995, 998 (Ala. 1998).

Non Compete Agreements
Non Disclosure Agreements
Employment Agreements
Theft of Trade Secret Statutes
Employment at Will
Work for Hire