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Non-Compete Agreement Lawsuit Update: Former Employees’ Actions Can Lead to a Variety of Legal Claims

above-the-bar-logo-no12As a business owner, you work hard to first build and then protect your business. As part of the process, some business owners will ask their key employees to sign non-competition agreements and confidentiality agreements to minimize damage if a former employee joins a competitor or starts a competing start up. But this is not always bullet proof. Depending on the facts, a non-competition agreement may not enforceable. Each case is fact specific – some agreements are written too broadly in scope, seek to protect items that are within the legal boundaries and others are simply cut and pasted from online without regard to the specific issues at hand. In addition, while New York courts will enforce non-compete agreements in certain circumstances, California will not except in limited circumstances. Contact our Award Winning Employment Lawyers to learn about your options whether you are an employee (current or former) or an employer – disputes between former employees and their former employers can be complicated and fraught with legal exposure. If a non-competition agreement is not at play for whatever reason, some businesses try to bring in other claims including a fiduciary duty or theft intellectual property. This blog post will briefly discuss a new battle in such a situation between two large players in the technology space in California.

Cisco, a well established Fortune 100 Company that sells networking equipment, recently sued a new start up called Arista. In short, the complaint alleges that “Arista was founded by former Cisco employees, many of whom are named inventors on Cisco’s networking patents. Among others, Arista’s: 1) founders, 2) President and CEO, 3) Chief Development Officer, 4) Chief Technology Officer, 5) Senior Vice President for Customer Engineering, 6) Vice President of Business Alliances, 7) former Vice President for Global Operations and Marketing, 8) Vice President of Systems Engineering and Technology Marketing, 9) Vice President of Hardware Engineering, 10) Vice President of Software Engineering, and 11) Vice President of Manufacturing and Platform Engineering all were employed by Cisco prior to joining Arista. Moreover, four out of the seven members of Arista’s Board of Directors were previously employed by Cisco.” The Complaint further alleges that the crux of its case is “Arista’s deliberate inclusion in its products of 12 discrete and important Cisco features covered by 14 different U.S. patents. All of these features are being used by Cisco currently and in products we ship to our customers. None of the implementations are incorporated in industry standards. They were patented by individuals who worked for Cisco and are now at Arista, or who at Cisco worked with executives who are now at Arista. These Cisco-created features and implementations are incorporated by Arista in their entirety into Arista’s products.” Further, Cisco alleges that Arista copied its user manual includes the typos.

Arista has denied any wrongdoing and responded by stating that the lawsuit is merely an “attempt by a legacy vendor that is falling behind in the marketplace to use the legal system to try and slow a competitor who is innovating and winning.” Clearly, both sides have different viewpoints on the lawsuit. Cisco may be relaying on the fact that many of these types of lawsuits settle but it will be a battle on both sides and affect both businesses until any resolution in reached in court or otherwise. That is a key factor in these types of cases. Both business operations will have to dedicate resources to focus on this lawsuit instead of just competing in the marketplace. It is important for business owners and former employees to get counsel from experienced attorneys if faced with a similar situation. Call our office at (800) 893-9645 our office for a confidential consultation to learn your rights.

Disclaimer: 

Thank you for visiting our Blog. This blog provides general information and thoughts about various employment law issues primarily in the New York Tri-State area and occasionally in other areas. You are welcome to read the posts. However, do not construe any content on this blog as legal advice or the creation of an attorney-client relationship. Again, we provide the content only for informational purposes. You should not make decisions based information on our blog since the application of the law depends on the facts and each situation may be different. In addition, the law in most jurisdictions is different and changes constantly and we make no representations that any information on our blog has been updated. The Blog should not be used as a substitute for competent legal advice from an experienced employment law attorney in your state or jurisdiction.