Intellectual Property Law

Does Edwards v. Arthur Anderson Bar The Use of Employee Confidentiality Agreements?

By Sheppard Mullin

In Edwards v. Arthur Andersen, the California Supreme Court reaffirmed California's strong public policy against covenants not to compete. The primary issue in Edwards was whether the Ninth Circuit's "narrow restraint" exception was a proper interpretation of California law. Under the narrow restraint exception, employers could enforce noncompetition agreements that did not "entirely preclude" an employee from practicing his or her trade, such as an agreement not to solicit specified customers for a specified period of time after employment. The agreement in Edwards was drafted to fall under this judicially-created exception. The Court rejected the "narrow restraint" exception, expressed a stark disapproval for judicially created exceptions to California Business and Professions Code Section 16600, and held that any time an agreement restricts an employee's "ability to practice his [] profession" in any way not explicitly excepted by the statute, it is void.

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Authored By:

Jennifer G. Redmond
(415) 774-2910
jredmond@sheppardmullin.com

and

Adam Tullman
(415) 774-2976
atullman@sheppardmullin.com

Full post as published by Intellectual Property Law on June 19, 2009 (boomark / email).