Breach of Non-Competition Agreement Requires Actual Competition
April 8, 2013Gregory Strange worked at HRsmart for over 5 years designing and developing software designed to help companies manage human resources. As part of his employment with HRsmart, Strange signed a non-competition agreement in which he consented not to work for a competing business for one year following his termination of employment. The agreement defined “competing business” as one “which provides the same or substantially similar products and services” as HRsmart. Shortly after he left HRsmart, Strange and another former co-worker developed a new program called ClearVision, which was a human resources program aimed at small businesses with less than 200 employees. In developing this new program, Strange felt that he had not run afoul of his non-competition agreement because, in his view, HRsmart did not aim to serve small businesses. HRsmart, of course, disagreed and sued Strange. The trial court granted HRsmart’s request for a temporary injunction, and, later, HRsmart’s motion for summary judgment. Strange appealed.
On appeal, Strange pointed out all of the differences between the products designed and marketed by HRsmart and what Strange sought to do with ClearVision. First, ClearVision sought to serve a niche market of “micro businesses” with less than 200 employees, whereas HRsmart targeted businesses with more than 500 employees. Second, ClearVision was “less function” and could not be “configured,”but HRsmart’s products were “fully customizable.” Finally, ClearVision is a single product, while HRsmart includes seven interconnected HR modules. On this record, the Court of Appeals concluded that fact questions exist regarding whether HRsmart actually competes with ClearVision, and reversed and remanded the trial court’s decision.
