In Pegasystems Inc. v. Appian Corp., Judge Mitchell Kaplan of the Massachusetts Business Litigation Session enjoined a sales employee from working for a competitor for three months. This recent opinion highlights some common issues in Massachusetts non-compete law and illustrates judges’ broad discretion to fashion relief.
Bruce Maxwell was an account executive for Pegasystems, a business software company, and had signed a non-compete prohibiting him from working for any firm that competed with Pegasystems for one year following termination of his employment. He left the company and joined a competitor, Appian, and Pegasystems sought a preliminary injunction to enforce his non-compete.
The court noted what practitioners have seen in recent years: “While the number of cases in which plaintiff employers seek to enforce restrictive covenants against former employees is legion, the number of cases in which an individual defendant is actually enjoined from working for his or her new employer, as opposed to being restricted from contacting former customers or using certain confidential information, is exceedingly small.” In fact, plaintiff Pegasystems apparently had not cited a single case in which a sales employee—rather than a senior executive, scientist, or engineer—was enjoined from working for a competitor altogether, rather than merely restricted from calling on former customers. However, the court was troubled by Maxwell’s behavior, specifically the fact that he had downloaded confidential Pegasystems information in preparation to compete. Weighing the relevant factors, the court modified the non-compete and enjoined Maxwell from working for Appian for a period of three months, deeming this period sufficient to purge Maxwell of the confidential information that he had acquired. The court also ordered Maxwell and Appian to return any confidential information in their possession.
This case serves as a reminder that non-compete cases will always come down to the particular facts at issue, and that judges presiding over requests for a non-compete injunction will examine in particular the specific actions taken by an employee. It also demonstrates that employers may find non-competition agreements more difficult to enforce than non-solicitation agreements—even in the face of misuse of confidential information. Finally, the decision is an example of a court readily engaging in reformation of the contract to fashion relief that it deems fair under the circumstances.
In the rapidly changing business world, protecting a company's human capital and proprietary information is critical to maintaining a competitive edge. On this blog, Nutter's experienced Business Litigation and Labor, Employment & Benefits attorneys offer news and insights on all aspects of restrictive covenants and trade secrets—from analyzing a rapidly evolving body of case law, to summarizing new legislation and legislative efforts, to providing other need-to-know updates and more.