What qualifies as a Non-Compete Clause

Question

So I'm 17 and for the past few months I've been working on a programming project. My intent is to use the code for profit in the future, and because of that I've been reluctant to recruit others to work on the project. Before vacation my Entrepreneurship teacher told me something about a Non-Compete Clause, a document that if I get someone to sign online offers me legal protection from them stealing my code.

I'm not sure how to set one of these up though, and if I screw this up I could potentially lose months of hard work? Any advice for confused teenager?

Answer 1

A noncompete clause is a section of a contract whereby one party agrees not to compete with another party. These agreements are usually (always) limited as to time, geography, and scope. In other words, if you had a dog-walking business in your neighborhood you might like to hire someone to help walk some dogs. You'd like this person to agree not to compete with you. You charge people $10 per walk and you pay this person $5 per walk so you want to stop them from walking your customers' dogs for $7. In order to get the $5 per walk from you, your employees agree to not go into the dog walking business in your neighborhood for one year. Cat-sitting? Fine. Walking dogs in other neighborhoods? Fine. Walking dogs in your neighborhood 12 months and one day after they stop working for you? Fine.

The reason for the limitations is that judges throw out agreements which are too restrictive. You could not require that a person agree to never walk a dog ever again. You could not stop a person from from walking a dog anywhere in the world. You could not stop a person from working any job for any of your customers. The laws about restrictiveness are unique to each state so that's why people recommend that you talk to a lawyer. Judges honor the work you've done to build a customer base and will allow you to protect it, but they're not going to let you keep your people from ever working in the same business again. The non compete describes the limits of the protection.

You need to make sure that the code that others create for you in your employment is yours. It's always a good idea to get the specifics in writing just in case something wacky happens where it looks like someone other than you might own work created while working on one of your projects. The water gets pretty muddy when people are working on their own time with their own tools, it could be very easy for them to argue that they created a thing for their own use and provided it to you for your limited use but that they otherwise own it. This is not a noncompete. It's an ownership clause, aka an IP clause.

Answer 2

If you pay somebody to write code for you, you can require them to agree that the code belongs to you as "work for hire". If they try to "steal it" you could sue them for copyright infringement and/or theft of trade secrets.

If you do not pay them, then you cannot enforce such a contract because there is no consideration. Even if they signed an agreement, a court will throw it out as an "unequal" contract. You can only demand something from someone when they are getting something concrete in return (called "consideration").

Speaking from experience, if I were you I would worry more about producing something, not trying to protect it. Most people spend way too much energy trying to "defend" their ideas which in most cases are worthless. I remember one guy who announced he was working on a brilliant software project so I asked "How is it going?" He says, "I haven't actually started it yet. I am still working on the disk copy protection scheme." Seriously, you are 17 and you are planning to sue somebody over code that does not even exist? Do you know how much it costs to sue somebody? It costs a $10,000 retainer just to walk into a lawyers office, forget about filing any papers.

Trust me, spend your time writing code, not worrying about people stealing it. Once you have made your first $100,000 and it is IN THE BANK, then maybe think about legal steps.

Answer 3

It would appear that you are actually talking about a "non-disclosure agreement", or "NDA."

If you recruit a collaborator to work with you, you also have to copyright your code, which is essentially as simple as including a copyright comment in every file, and ensure that your new collaborators understand and agree to your concept of ownership in the work...i.e. That this isn't some free github library that's being given away under a GPL.

Answer 4

A non-compete clause is a contract. As a contract it is subject to all of the requirements of any contract, and can be enforced in court where it will be scrutinized for validity, interpreted for meaning, and evaluated for various defenses raised by the adverse party.

Better to spend your money on an attorney to draft you a non-compete who will maximized the chances that your non-compete will be enforceable. Those who do things without counsel generally do not do as well as those who hire an attorney when the need arises.