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State Representative Will Brownsberger of Massachusetts’ 24th Middlesex district, which includes Belmont, north Cambridge, and east Arlington, says he plans to introduce a bill in the upcoming legislative session that would abolish non-compete agreements in the Bay State.

This is a major milestone. 

But we need your help. Spread the word, get involved and contact your local state representative. Let them know that you support Rep Brownsberger efforts!

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Apple vs IBM and the non-compete clause

I’ve been a critic about employee non-compete clauses.

They are not enforceable in California and as result they generally don’t come up in that state. Entrepreneurs and companies are free to innovate as long as they respect confidentiality agreement and non-solicitation agreements.

I think that is the exact right model. You never hear tech leaders in California moan about this. Instead they worry about more important things like innovation, h1b visa issues, building a great environment to work, etc.

On the hand, non-competes are standard practice in the state of MA. And according to an independent study by UCLA, MA enforces these agreements more heavily compared to other states.

Just last week IBM sued a former employee over this issue. The employee is joining Apple.

Jay Parkhill wrote a great post about the IBM lawsuit and compares it with how Apple is keeping one its stars from going to the competition. Jay’s key point:

“If Fadell worked in Massachusetts, New York or most other US states, Apple could simply tell him he could not go to work for a competitor.  Fadell’s expertise is in developing portable audio/video players, so this might make him choose between not working at all for a period of time and trying to break into an entirely new area.  Since Fadell is in California, Apple can’t do that.  Instead, Apple had to figure out how much it was worth to keep Fadell on the sidelines.  VB reports that value is $300,000 per year through March, 2010 plus stock worth $7.6M at today’s prices.

The point here is that the burden fell on Apple as the employer to protect its competitive advantage without cutting off Fadell’s ability to make a living.  Fadell could probably have survived even without the extra compensation, but others might not be so fortunate and this is why I believe California has the rule right.  If a person is that valuable, the employer should pay to keep him/her on the bench.”

That’s exactly right.

(this post is reblogged from bijansabet.com)

Please join us at the Berkman Center event to discuss Employee Non Competes

Employee Non-Compete Agreements: Protecting Innovation or Stifling It?

A Discussion Hosted by the Berkman Center and Spark Capital; Sponsored by Gunderson Dettmer and Silicon Valley Bank

Thursday, June 19th from 3:00-7:00PM

The use of employee non-compete agreements by Massachusetts companies is routine, with employers mandating that employees steer clear of any business of a competitive nature once they leave their present jobs, typically for a year or more. Many believe these agreements are critical to guarding a company’s hard-earned intellectual property — protecting legitimate business interests, and thus our region’s economy. Others, however, believe that non-competes are nothing more than handcuffs that prevent talented entrepreneurs from bringing new innovations to market and, in some cases, even driving entrepreneurs to leave the region to pursue their innovations elsewhere. In this session, we’ll bring together some of the area’s best known venture capitalists, entrepreneurs and executives to explore the issue of non-competes and weigh the pros and cons of their use here in the Commonwealth.  Are non-competes protecting innovation and economic growth in Massachusetts? Or stifling it?

Panelists will include:

  • Jeremy Allaire, founder & CEO, Brightcove
  • Melanie Haratunian, general counsel, Akamai
  • Paul Maeder, general partner, Highland Capital Partners
  • Lee Fleming, associate professor of business administration, Harvard University
  • Bijan Sabet, general partner, Spark Capital
  • Moderator: John Palfrey, Clinical Professor of Law and Executive Director of the Berkman Center for Internet & Society, Harvard Law School

Join us on Thursday, June 19th from 3-7PM in the Ames Courtroom at Harvard Law School in Cambridge, Mass. The panel will be followed by a cocktail reception.

RSVP required by 6/12: Please email your name, title and company to Amar Ashar at the Berkman Center: ashar@cyber.law.harvard.edu

Ties that Truly Bind

Dr. Garmaise is an Associate Professor at the UCLA Anderson School of Management. He has a working paper titled “Ties that Truly Bind: Non-competition Agreements, Executive Compensation & Firm Investment”.

Paul Maeder from Highland Capital summarized one of the tables from the white paper recently. It shows that the State of MA enforces non-competes significantly higher than other states.

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I highly recommend reading the full paper.

When Did You Become Someone Else’s Intellectual Property?

Read the post on GigaOm today by Bijan Sabet, Spark Capital.

The noncompete conundrum: Holding back Bay State tech, or preserving IP?

Mass High Tech recent article about non-competes and their impact on innovation. I like Nancy Edwards Cronin’s quote from the piece :

Nancy Edwards Cronin, principal of ipCapital Group Inc., a Williston, Vt.-based consulting firm.

“If these companies are focused too heavily on attrition and heavy-handed control of the intellectual capital leaving, they very well may not be properly encouraging innovation” themselves, Cronin said.

Read the full article here.

Yahoo employees lucky that they don’t have non-competes

The exodus at Yahoo has been happening for some time now.

Before Microsoft formally announced their takeover bid, they were actively recruiting Yahoo employees. 

There is still a lot of great talent at Yahoo. Josh at First Round blogs today about his ad campaign targeted at Yahoo folks looking to join a startup.

Big companies often don’t work out for everyone. Sometimes the big company may end up losing itself as well. And you should be able to take your domain experience and move elsewhere without the restriction of a non-compete clause. 

Another recent example: check out this post from VentureBeat about Meebo hiring a senior person from Yahoo’s Messenger. 

I’m sure those folks at Yahoo are happy they don’t have to deal with non-compete agreements like employees here in MA/NY/WA and elsewhere have to deal with.

And VCs should be happy about that too. It’s important to the startup ecosystem and the market as a whole.

Let’s get rid of non-compete clauses everywhere.