4

My previous company specialized in affiliate marketing and produced a comparison website for a certain market (let's say cars). I left the company 4 months ago and would like to setup my own affiliate comparison site in a related but different market (alloy wheels for instance). I signed an NDA when I started my previous job, which stated I could not create anything that is classed as direct competition within 6 months of leaving the company.

The site I have produced is all my own custom code, and is no way a copy of what my previous employer had.

My previous employee has contacted his solicitor stating that I have breached my NDA, and is going to take legal action. The employer has also stated that they now own the website I have created as it is based on knowledge I gained from working at my previous employment.

Is what I have done really direct competition? Is there anything I can do about it?

  • Hi Patrick, thanks for replying. At the moment my previous employer doesnt sell "Alloy Wheels" but now apparently they are looking into the market, which i think might make things a little awkward? The NDA basically stated the norm, as in anything i produce while working for them they own the rights to, and also i can not compete with them for 6 months after my contract termination. Well i made the site in my own time after the contract was terminated, and i wouldn't really class it as competition as its not the same product. I will see what my previous employers solicitor says first. Thanks! – danyo Sep 24 '15 at 15:06
  • 1
    Do you mean a non-compete, rather than a non-disclosure agreement, which is what an NDA is? Despite having a contract, assuming is the former and not the latter, there are limits on the types of restraints, both temporal and in scope, that an employer can legally impose on an employee upon departure. I also need to know where you are to answer your question. Since you said Solicitor rather than attorney, I'm assuming not in the U.S.. EU? Also, the code has nothing to do with it...unless it's proprietary. These claims are about taking their business. – gracey209 Sep 24 '15 at 15:37
  • Is this question for United Kingdom jurisdiction? – cnst Sep 25 '15 at 8:29
  • Hi yes based in the UK – danyo Sep 25 '15 at 9:33
  • "At the moment my previous employer doesnt sell "Alloy Wheels" but now apparently they are looking into the market". Don't think that's a coincidence, some companies like to explore other markets by suing other companies, that's one way to make those other companies divulge information about their core business. – Stephan Branczyk Oct 30 '15 at 18:21
2

(Based on previous comments. IANAL and IANYL)

Whether or not it is competition depends on who is more convincing in court. Whether or not you violated the NDA depends on the exact terms of the NDA and how they are interpreted in your jurisdiction. Based only on the information you're giving here - that their site is a marketplace for cars, and yours is for car accessories (I assume they aren't also selling wheels, right?); that you wrote the code on your own time and/or after you left the company; and that the best argument they have is that they own the website because you used what you learned while working for them (that would get laughed out of a court room) - I would say yes, you should fight it. Get a lawyer to go over the details, confirm (or reject as dangerous nonsense) what I state above, and then (if the lawyer agrees with us) write a letter rebuffing the company. If they follow through and sue... like I said, I think they don't have a leg to stand on, but IANAL and IANYL and you'll need a real lawyer anyway unless you feel like rolling over and giving them what they want.

Regarding your follow-up comments: I doubt a court would find that an NDA (or non-compete, or some sort of combined agreement) that seeks to prevent you from doing business the company isn't even yet doing would cause problems, unless you had knowledge of their intentions to get into that business and are exploiting your knowledge of their plans for profit. Anything made after the contract is complete is clearly not their IP. This sounds cut and dried to me - but see if a lawyer agrees.

  • 1
    And don't forget Option B: Just wait and see if they're bluffing. I've seen many letters sent on legal letterhead in the hopes that someone will roll over under threat, even though the sender has no intention of actually paying for legal action. – feetwet Sep 24 '15 at 17:52
  • 1
    @feetwet I hear that often - in this case in particular, it doesn't seem like the company would even be collecting much in the way of damages. They might get a ruling that danyo has to take the site down for some time, but I still can't see any law transferring ownership of a site he created on his time to a company he used to work for. – Patrick87 Sep 24 '15 at 17:54
1

Non-compete clauses and provisions are often unenforceable, depending on the jurisdiction.

For example, in California, as per http://www.google.com/search?q=non-compete+california:

https://www.venable.com/enforcing-non-compete-provisions-in-california-01-13-2012/

It is considered a fundamental policy of the State of California that agreements in restraint of competition are to that extent void. The California Supreme Court, in Edwards v. Arthur Andersen LLP, 44 Cal.4th 937, unanimously held that Business & Professions Code Section 16600 invalidated a provision in Edwards' employment agreement that restricted him from servicing customers and competing with Arthur Andersen following the termination of his employment. Notwithstanding the general premise that non-competition agreements are invalid, specific Sections of the B&P Code provide certain exceptions to California's policy against enforcing non-competition covenants which apply in limited circumstances.

In the UK, as per http://en.wikipedia.org/wiki/Non-compete_clause#Europe

In the United Kingdom, CNCs are called Restraint of Trade clauses and may be used only if the employer can prove a legitimate business interest to protect in entering the clause into the contract. Mere competition will not amount to a legitimate business interest.

Moreover, if they've terminated your employment at will, and the field at stake is your only area of expertise, it would also not be reasonable of them to expect that you have to earn no salary (or equivalent) for 6 months (or until you learn a new trade in order to produce comparable income). If they do pay you a special severance package, then that's a different story.

Likewise, if you did a clean room design of your web-site, it would certainly be rather preposterous of them to claim that they own your new web-site as well. (However, if they had some patented know-how, then that's how they could get you.)


Nonetheless, to the contrary of the above, based on the information given in the question, I'm not sure I understand what would be the fundamental difference between an affiliate site that compares cars versus one that compares alloy wheels, they potentially sound to be quite related to be differentiated as separate fields of business.

  • Some very good points! A lot could hinge on whether the "business" is what they're selling or how they're selling it - especially if the company argues it's how and patents are involved. Hadn't considered that. – Patrick87 Sep 25 '15 at 12:04
  • Patents are independent of any agreement. If you infringe on a patent, whether there is a non-compete agreement or not, or actually any knowledge of the patent, is irrelevant. – gnasher729 Sep 27 '15 at 21:23

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.