Good news for the non-compete police!


Non-competes: the day of being worth less than the paper they are printed on is over!  The FDA is cracking down.  This guy, Mike Justice, is pretty entertaining.  He makes medical device type things so exciting, especially with clips from riotously funny cult movies.  Seriously, though non-compete agreements have always boggled my mind. 

Here’s my personal experience: 

At the tender age of 21, I had my very first experience with a non-compete agreement.  I worked for a marketing firm that did all of the marketing for the supplier of the top brands of wine, beer, spirits, loose morals (just kidding!).  One of the brands that we did marketing for had a very specific trademark drink that involved a different type of beer.  I always wondered why this company would have this drink made with another beer that competed against one of their own.  Luckily, my boss was able to fill me in.   The story went something like this: Long long ago, XYZ beer company decided to trademark the drink XYZ drink with this other medium bodied Ale.  Then a little while later, they created their own Ale so there was really no need for this other company to have their beer in the drink, but alas, there was a non-compete agreement in place. 

So this non-compete said “you cannot use any other beer that is the same type of beer or you will be infringing on this agreement, lots of penalties, first born child, blah blah blah.”  So years and years went by, and finally in 2004, the agreement ran out.  XYZ beer company was finally able to use their own ale in this trademark drink as opposed to another company’s ale.  I personally like the Ale made by XYZ better than former competitor.  It’s a bit more flowery and subtle.  It tastes better with the thick heavy Stout, also made by XYZ company.  Moral of the story, sometimes non-compete agreements are really stupid, but they do a job- to protect profit loss in such a highly competitive marketplace.

I used to think these agreements were ridiculous, although I saw the point.  I thought “hey it’s a free market economy, who has the right to tell someone else they cannot increase their own personal gains even if that means partnering with a competitor to get a better deal.”  Harmless, right?

Then I gave it some more thought and said: “Self, what would you do if you ran a very successful beer company and trademarked a drink with another company that was world famous?  What would you then do if that beer company took that drink and started making it with another beer that was similar to yours?”  I’d be mad.  Especially if I lost a ton of money.  Ipso ergo, non-competes are a good thing.  Furthermore, they have time limits too, so I don’t really see this interfering with the Marshall Anti-Trust laws or anything crazy like that.

How do you think non-compete agreements hurt or help your industry?

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Good news for the non-compete police!

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