North Carolina-based Epic Games filed a lawsuit over the alleged leak of secret information related to Fortnite Chapter 2. The company claims employee Ronald Sykes violated the terms of a non-disclosure agreement by sharing information related to the new game, including new game-play features and a virtual map of the fictional game universe, prior to its public release. The success of Epic Games’ claims will primarily hinge on whether the non-disclosure agreement is enforceable and whether the allegedly leaked information constituted protected trade secrets. Non-Disclosure Agreements A non-disclosure agreement (“NDA”) is a contract, or part of a contract, that prohibits one or more parties from disclosing certain confidential…
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ENFORCING COVENANTS NOT TO COMPETE AGAINST DOCTORS: PUBLIC POLICY CONSIDERATIONS
The North Carolina Court of Appeals decision in Aesthetic Facial & Ocular Plastic Surgery Ctr., P.A. v. Zaldivar highlights the unique impact of public policy considerations when determining the enforceability of a non-compete agreement against a medical doctor. To what extent are such agreements enforceable? At what point does the concern for the health of the general public outweigh the interest in enforcing the specific terms of an employment contract? Elements to Determine the Enforceability of Non-Compete Agreements A non-compete agreement restricts a former employee’s ability to work for a competitor of, or otherwise compete with, the employer. They are frequently contained in employment contracts. North Carolina recognizes…
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EMI DOESN’T LOVE KANYE LIKE KANYE LOVES KANYE
Recording artist Kanye West and music publisher EMI are currently embroiled in dueling lawsuits with each other regarding an alleged breach of West’s co-publishing contract with EMI. West, who filed a complaint against EMI in court in California, asserts that California law should govern the terms of the contract. He also asserts that the contract amounts to a contract for personal services that began in 2003, thus violating a California statute that limits personal services contracts to seven years or less. Conversely, EMI filed a complaint in New York, asserting that New York law governs due to the choice of law provision in the contract. EMI also asserts that West’s…
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North Carolina Business Court Enforces Arbitration Agreement Prohibiting Discovery, Live Testimony, and a Full Hearing
In a January 2016 (unpublished) order, the North Carolina Business Court (NCBC) enforced a contract provision compelling arbitration and prohibiting any discovery prior to the arbitration.[1] In Taggart v. Physicians Pharmacy Alliance, Inc., James Taggart sold his business, Physicians Pharmacy Alliance, Inc. (“PPA”), in a stock purchase agreement. The agreement contains a provision mandating arbitration as to “any claim, controversy, or other matter in question based upon, arising out of, or otherwise in respect of this Agreement.” The agreement further specifies: “[i]t is the desire and intent of the Parties that such arbitration be held without any discovery,…
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North Carolina Business Court Weighs in on Enforceability of Non-Compete and Confidentiality Agreements Post-Merger
It is well-settled law that adequate consideration is required to create binding restrictive covenants such as non-compete agreements. Generally, such agreements are entered at the start of an employment relationship, and the new employment itself constitutes consideration. In North Carolina, continued employment following a merger of two companies does not satisfy the consideration requirement. In a recent decision, the North Carolina Business Court (“NCBC”) confronted the very issue.[1] In January 2012, AmeriGas Propane, Inc., a propane company that services over two million residential and commercial customers nationwide, merged with Shaw L.P. Gas. Ermon Coffey, an employee of Shaw, and…
