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How binding is a non-compete provision when it’s signed to an overseas corporation?

I signed a non-compete provision when our startup incorporated in Europe five years ago.  The company isn’t doing well and I want to leave, dead equity and all. I just got recruited by a US company engaged in a similar goal as my old company, but going about it in a different way with a different product. The company I’m pledged to not compete with has a pretty broad description of itself: health. And it’s in Europe and I’m a US citizen.  Should I care?

  • It depends if you’re going to stay in Europe and if the US company also operates in Europe. If not, your old startup may find it not worth it to pursue legal action even if they don’t like what you’re doing.

    Lawsuits are expensive and is not the best strategy to use limited startup cash for, unless the payoff is potentially huge – which unless you’re a nobel laureate, ph.d super genius – I’m assuming they won’t bother.

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  • OP- I’m based in the US. The company is in Europe. I’m not a super genius 😉

    I guess an analogy would be working on a b2c site selling health supplements, signing a non compete, then moving to a company that helps people find Pilates classes and being nervous that there’s a vague non-compete clause you signed saying you can’t work in any other consumer-facing health company anywhere. It seems too broad

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    • The reason why non-compete’s are required are because they don’t want you to work on something that might impact their business. Since its hard to define what their business is and their business might evolve, I’m guessing that’s why they define their field broadly.

      If as you say, as far as you know, there’s absolutely no overlap whatsoever, there’s no reason for them to go after you.

      That said, a lawyer’s opinion might come handy. OR you could make a deal with the startup, saying hey, if we make this exit amicable, I’ll make sure to make the handover smooth. Win-win.

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      • +1 Thanks. That’s what I figured. I have a big chunk of the company’s equity and there are still parties overseas that can keep this thing alive in some form over there. Practically speaking, actually prosecuting me using that non-compete would be very difficult from overseas. But I’d rather avoid the rancor and hoof stomping.

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  • Look its simple. Contracts are only as valuable as ones ability to defend or enforce them…

    Every single contract is only as binding as your willingness to spend to defend or enforce. Make your decision based solely on the expense, time and validity of the defense and forget everything else.

    IP contracts are especially important to weigh as the avg. patent lawsuit takes 10years to litigate and costs millions… is the market/product/ pocket deep enough to handle such large numbers and timeframes? Probably not… SO do what you want and forget about onerous and often times unenforceable agreements.

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  • “Health”? How do you sign a non-compete that is so vague?! If you’d read it (and gotten 1x legal consultation if necessary) once, that would have been enough to ask for revision to be more specific before agreeing to sign. Better clean it up properly now, because if by any chance your new company becomes mega successful, they will come after you, because there’s no motivation like $$ motivation.

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