Covenants Not to Compete and Restraints Against Competition

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County New Jersey Covenant Not to Compete Attorney The Applicable Law and Legal Standard to Obtain an Injunction Over time, the court has crafted a four-part framework for use in determining whether the grant or denial of preliminary injunctive relief is appropriate. Under this formulation, trial courts must consider (1) the likelihood of success on the merits; (2) the potential for irreparable harm if the injunction is denied; (3) the balance of relevant impositions, i.e., the hardship to the non-movant if enjoined as contrasted with the hardship to the movant if no injunction issues; and (4) the effect (if any) of the court’s ruling on the public …

By Fredrick P. Niemann, Esq. of Hanlon Niemann, a Freehold, NJ Restrictive Covenants Law Firm The disclosure of trade secrets and the interference with customer relationships have been considered irreparable harm warranting injunctive relief in both federal and state court. Federal courts faced with requests for injunctive relief ”have shown a willingness to issue injunctions to prevent the disclosure of trade secrets”. This willingness is based upon the theory that the disclosure of confidential information or trade secrets constitutes irreparable harm”. ”The loss of good will, the disclosure of confidential proprietary information, and the interference with customer relationships” form the basis for a finding of irreparable harm in federal court”. A plaintiff must still make a showing that the information …

By Fredrick P. Niemann, Esq. of Hanlon Niemann, a Freehold, NJ Covenant Not to Compete Attorney In New Jersey, restrictive covenants are enforceable but only to the extent that they are reasonable under the circumstances. Generally, the court considers three factors to determine whether a restrictive covenant is reasonable: whether the agreement (1) is necessary to protect the employer’s legitimate interests; 2) does it cause undue hardship on the former employee; and 3) to what extent does it impair the public interest. Courts apply “a balancing test” for the first and second criteria and then weigh the impairment on the public interest in reaching a final decision. In most cases it is the facts of the controversy that weighs heavily …

By Fredrick P. Niemann, Esq., a NJ Covenant not to Compete Attorney The law in NJ on the enforceability of covenants not to compete is highly fact sensitive.  Covenants which are overly broad and/or punitive are not generally enforceable.  Although New Jersey subscribes to the “blue pencil doctrine” which will rewrite a restrictive covenant (with the least restrictive impact to the employee), covenants which are too overreaching are still at risk.  A restrictive covenant can be considered reasonable by the courts in NJ if: a) the employer interest deserves protection, b) the time and geographic area of the restriction does not impose an undue hardship on the employee, and c) the restriction is not injurious to the public.  All four …

By Fredrick P. Niemann, Esq., a NJ Covenant not to Compete Attorney  New Jersey’s Blue Pencil Doctrine The blue pencil doctrine, as adopted by the New Jersey courts, permits a court to limit the scope of a covenant by striking out specific sections of the covenant.  Under this doctrine, a court will effectively, “rewrite” an unenforceable or overly-broad portion of the covenant, if the covenant is physically capable of being limited by striking out text and still leaving a limited restrictive covenant intact.  The blue pencil doctrine requires counsel to closely evaluate all of the facts and competing interests implicated in the language of the covenant. An experienced NJ business law attorney who understands covenants not to compete in NJ …

By Fredrick P. Niemann, Esq. a New Jersey Confidentiality and Covenant not to Compete Attorney Confidential information and non-compete clauses in agreements include all information that is provided by the Seller to the Purchaser that is not common knowledge or already in the public domain. This will NOT include the following: • Information that is already known in the industry; • Information that becomes publicly known through no fault of the Purchaser; • Information rightfully in the possession of the Purchaser before being received from the Seller; • Information created by the Purchaser through the Purchaser’s own independent research. Information obtained in this way must be acquired without the direct or indirect use of confidential information already received from the Seller. This may include …

By Fredrick P. Niemann, Esq. a New Jersey Covenant not to Compete Attorney New Jersey courts will not enforce contracts that it finds violate public policy.  “No contract can be sustained if it is inconsistent with the public interest or detrimental to the common good. However, in an employment context courts have traditionally been reluctant to not enforce a covenant not to compete.  Thus, courts have upheld covenants not to compete where it found that the prohibition was (1) “reasonably necessary for the protection of the business of the employer,” was (2) “not unreasonably restrictive in point of time or territory upon the rights of the employee,” and (3) “not prejudicial to the public interests.”    Additionally, even in a case …