In Boston Scientific Corp. v. Duberg, 754 F. Supp. 2d 1033 (D. Minn. 2010), the U.S. District Court for the District of Minnesota analyzed the enforceability of non-compete agreements in the medical device industry.
The defendant, Mary Evelyn Duberg (“Duberg”), was employed by plaintiff Boston Scientific Corporation (“Boston Scientific”) as a sales-representative and signed a non-compete agreement as a condition of her employment. Duberg resigned from Boston Scientific in 2010 to accept a similar position at Medtronic, Inc. (“Medtronic”). Boston Scientific sued Duberg and Medtronic to enforce the non-competition clause, and moved for a temporary restraining order. The district court undertook a detailed analysis of Duberg’s non-compete agreement terms, job duties, specific medical devices she sold at each company, and the customer bases of each company. The court concluded that the plaintiff’s motion for a temporary restraining order should be granted.
First, the district court considered the terms of the non-compete agreement. The duration was one year and the scope was narrowly drawn as applying “only to customers with whom Duberg had sales-related contacts in the year preceding the termination of her employment.” Therefore, the court found the non-compete to be reasonable in both temporal and geographic scope.
The larger dispute in the case was whether Duberg had actually violated the non-compete agreement. According to the non-compete agreement, Duberg was not allowed to “sell, solicit the sale of, support the sale of, support or supervise the sale or implantation or other use of, or otherwise have any involvement whatsoever with the sale, manufacturing, research and development, marketing or other business aspect of any Competitive Product with respect to any Boston Scientific Account.” The covenant defined “Competitive Products” as another company’s products which perform similar functions or are used for the same general purpose. Duberg and Medtronic acknowledged that Duberg was selling Insertable Loop Recorders (“ILR”) to restricted accounts under the non-compete, but they argued that the ILR was not covered by the non-compete agreement.
The court rejected this argument and interpreted the contract language as extending to similar medical devices, including the ILR, that support the sale of and “otherwise have any involvement whatsoever with the sale, marketing or other business aspect” of the identified devices in the contract. Based on the language of the non-compete and Duberg’s continued contact with the same clients, the court found that Boston Scientific established that there was a sufficient threat of irreparable harm absent an injunction, and a likelihood of success on the merits regarding a breach of the non-compete agreement.
Takeaways From the Duberg Decision:
The Duberg decision highlights the value to employers in drafting narrowly tailored non-compete agreements to protect a company’s business interests, confidential information, and trade secrets. Employers should review their current non-compete agreements to ensure that the terms are narrowly tailored and the definitions of customers, products, and competitive activities are clear. The Duberg case is a great example of how powerful a tightly-drafted non-compete agreement can be for employers.
Likewise, Minnesota employees should understand the scope and restrictions of their existing non-compete agreements if they are seeking other employment. Further, if your company is considering hiring an employee that has a non-compete with their former employer, it is important to understand the restrictions prior to making an offer of employment to avoid litigation.
If you need assistance reviewing the scope or enforceability of an existing non-compete agreement, you may contact any of the non-compete law attorneys of Trepanier MacGillis Battina P.A.
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About the Author:
Trepanier MacGillis Battina P.A. is a Minneapolis non-compete law firm. Their non-compete law attorneys can be reached at 612.455.0500.