Life Sciences Companies Can Face Challenges Enforcing Noncompete Agreements

Noncompete agreements are an effective tool to protect intellectual property in the life sciences industry, but even a well-drafted noncompete agreement may run into challenges when an employer tries to enforce it. Under Massachusetts common law — and the law of many other states — a noncompete agreement is generally enforceable if its restrictions are reasonable and designed to protect legitimate business interests like trade secrets or goodwill. A recent decision from the Massachusetts Business Litigation Session demonstrates how those limitations can play out when a life sciences company seeks to enforce a noncompete agreement.

The plaintiff, a Massachusetts biotechnology company focused on developing treatments for far blood disorders, sought an injunction against a former sales employee for allegedly breaching his noncompetition agreement in working for a competing biotech company. The agreement at issue was entered into before October 1, 2018, so it was not subject to the new Massachusetts noncompete law.

The court denied the former employer’s request for a preliminary injunction and found the plaintiff had not shown that the former employee was in possession of or had access to confidential information, or that the plaintiff faced a loss of good will if the court did not issue an injunction.

While the court found the employee’s new employer was a competitor of the plaintiff in the treatment of rare blood disorders, the court noted the former employee was not involved at the plaintiff corporation with the scientific development of the products. To overcome this fact, the plaintiff corporation argued that the employee had substantial knowledge of the market and plaintiff corporation’s position within that market. Nevertheless, the court ruled that type of business knowledge was not “the kind of confidential business information worthy of judicial protection” under the circumstances. The court also noted that the employee had developed his knowledge of the relevant market and technology himself over the course of a long career in the field.

Finally, the court weighed the relative harms to the former employer and the former employee, noting the defendant was the sole breadwinner for his family, and denied the plaintiff’s Motion for Preliminary Injunction.

Genzyme Corp. v. Hanglin, No. SUCV1984-3502-BLS2

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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