Protectable Interest. Xxxxxx acknowledges and agrees that Company has a legitimate business interest in protecting its relationships with its Customers and the goodwill associated therewith, as well as its Confidential Information and Trade Secrets. Xxxxxx understands and agrees that the relationship between Company and each of its Employees and Independent Contractors constitutes a valuable asset of Company. Xxxxxx further acknowledges and agrees that the covenants contained in this Agreement are reasonable and are designed to protect Company’s legitimate business interests and relationships.
Protectable Interest. Specialized Knowledge Specialized knowledge and training can be a protectable interest. However, in Xxxxxxxx Sec. Services, Inc. x. Xxxxxx,27 the training provided to security officers was found to be only general, not specialized knowledge, and not a protectable interest. In reaching this conclusion, the Court of Appeals noted that “[t]he knowledge they acquired about the personnel of the Mass Transit Authority (“MTA”), the people who frequented it, and the criminal elements present was merely general knowledge acquired through their experience of working at the MTA. There is no evidence that the defendants’ positions allowed them access to confidential information or put them in a position to appropriate any goodwill associated with plaintiff’s business.” The Xxxxxxxx case also raised the novel legal argument that its position as a “middle man” should be a protectable interest and employees should not be permitted to leave its employ and then cut it out of the process. The Court of Appeals disagreed recognizing that “no Michigan court has cited “disintermediation” as a reasonable competitive business interest for limiting competition of former employees.” While the plaintiff was able to cite other jurisdictions where disintermediation was found to be a protectable interest, the Court “conclude[d] that, under the circumstances of this case, where the knowledge acquired by defendants in providing security at the MTA is merely general knowledge accumulated in their day to day positions, recognizing plaintiff’s claim of disintermediation as a reasonable interest would come into conflict with the binding Michigan common law precedent articulated in Xxxxxxx.”
Protectable Interest. Goodwill Michigan Courts have recognized that an employer has a reasonable business interest in protecting its goodwill because an employee who establishes client contacts and relationships as the result of the goodwill of his employer’s business is in a position to unfairly appropriate that goodwill and thus unfairly compete with a former employer upon departure.28 Virginia or West Virginia); see also, Xxxxxx v. A & M Logistix, Inc., 97-CV-74582, 1998 WL 34182467 (ED Mich 1998) (“AML has no reasonable competitive business interest because the identity of customers, suppliers and vendors is readily available in the public domain and is, therefore, not proprietary or secret to AML. Even if AML possessed protectable business information, by its failure to take reasonable steps to assure its secrecy, AML lost the right to claim such information as a reasonable competitive business interest. Therefore, the Agreement is not enforceable against the Plaintiff.”)
Protectable Interest. Customer Lists Customer lists can also be protectable business interest. In Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Inc. v. Ran,30 the Michigan Eastern District Court enforced a restrictive covenant which prohibited the broker-defendants from using client lists and information, despite the fact that the defendants had brought many of their own clients with them when they became employed at Xxxxxxx Xxxxx. The Eastern District Court found that Xxxxxxx Xxxxx still had a protectable reasonable business interest in the client information, even though some of the information came with the employees at the time of hire. The District Court noted that there was no provision in the contracts that treated clients developed after broker-defendant began employment with Xxxxxxx Xxxxx differently than those brought to the firm at the time of hire. The Court reasoned that the defendants were compensated by Xxxxxxx Xxxxx for all of the clients they serviced, including those clients they already had a relationship with before joining the firm and these long-standing client relationships was the very reason some of the defendants were recruited to join Xxxxxxx Xxxxx in the first place. Looking at the restriction in light of the line of business, and recognizing the “reality that the securities brokerage industry is a highly competitive market in which firms vigorously compete for successful brokers, primarily because of the clients they will bring with them or can be expected to develop at a firm,” the Court found the restriction reasonable. The district court explained what the defendants should have done to protect their interests: “had defendants wished to maintain information regarding their pre-existing clients as their own personal property, defendants should have negotiated for this right when they began employment with Xxxxxxx Xxxxx or gone into business for themselves.” It is common for restrictive covenants to contain “carve outs” which identify or list individuals, entities, activities, etc. which will be outside of the restrictive covenant. This is particularly important for employees who are coming to an employment or business relationship with their own book of business, knowledge base or personal competitive advantage. Michigan courts have similarly found restrictions reasonable when the restriction was limited to prohibiting the provision of the exact same services as was provided during employment. For example, in Rooyakker & Sitz, PLLC x. Xxxxxx & Xxxxx, PLLC...
Protectable Interest. Sub Contractor acknowledges that in the course of performing work on projects for the Company or related to the Company’s business as an employee of Elitecore, Sub Contractor will have access to and obtain knowledge of Confidential Information and/or trade secrets of the Company.
Protectable Interest. Provider agrees that Adtran has a protectable interest in its Confidential Information and in its commercial relationships and contacts with Customer(s). Provider further agrees that Adtran has a protectable interest in training related to Adtran products and Configurations, and the provision of Services related to them. To preserve each of Adtran’s protectable interests, Provider shall to limit all commercial dealings involving Adtran’s protectable interests exclusively to Adtran and shall not engage in commercial dealings that would compromise any of Adtran’s protectable interests, individually or in the aggregate. The foregoing restraint shall expire one year after the termination of this Agreement.
