In October 2010, in Xplore Technologies Corp. v. Killion, CV10-5013459S, a Connecticut state court examined whether a non-competition clause that had no specified geographic requirement was enforceable. The Court enforced the clause and held that the geographic area was defined by the uniqueness of the product at issue and the limited potential customers for it.
The plaintiff engineers, develops and markets rugged computer tablets intended for work under extreme conditions, such as the military or outdoor work for a company such as AT&T. The plaintiff’s only competitors in the business are Panasonic, Dell and the defendant DRS Technologies, Inc. (“DRS”). A former employee, who was employed by the plaintiff for approximately six years, agreed to join DRS to promote products and services, including the rugged computer, to businesses like AT&T. When the plaintiff sought an injunction to enforce the non-competition clause, DRS argued, among other things, that the clause was unenforceable because it had no geographic limit.
The Court rejected DRS’ defense and concluded that the geographic area was defined by the territory where the three competing companies marketed the rugged computer. The Court stated that with the technical advancements in Internet sales, a set of number of miles from an office is a useless measure in a non-compete agreement because in marketing a new computer product, the world is at your fingertips. The Court held that the geographic area and territory of the rugged computer is restricted only as to the three direct competitors attempting to gain the business from the same client base – Dell, Panasonic and DRS – and that the potential customers for the one product was limited to companies such as AT&T and the military. The Court held that the geographic area is based upon that market area, the unique product and the limited customers. Therefore, that no specific miles are stated in the clause is not a basis to determine that the geographic area element of a non-competition agreement was not satisfied. The Court enjoined DRS from employing Killion in violation of the non-competition clause.