A federal judge in Chicago recently held that when a corporation enters into a contract with another corporation under which it agrees not to engage in certain competitive activities, that agreement not to compete should not be analyzed like an employer/employee non-compete. Owens Trophies, Inc. f/k/a R.S. Owens and Company, Inc. v. Bluestone Designs & Creations, Inc. and Society Awards (N.D. Ill. January 14, 2014). Rather, the Court held that because there is no imbalance of power between the parties in that situation, the enforceability of the contract should be analyzed like any other arms-length transaction, and the employer-employee restrictive covenant framework is inapplicable.

According to the decision, the plaintiff Owens Trophies had entered into a contract with defendant Bluestone, under which Bluestone agreed not to provide the products which it manufactured for Owens Trophies (Emmy Awards) to any other person or entity. Notwithstanding that agreement, Bluestone allegedly produced Emmy Awards for a competitor of Owens Trophies.

After learning about Bluestone’s alleged actions, Owens Trophies sued Bluestone under various theories, including violation of the non-compete. In defense, Bluestone asserted that the non-compete was unenforceable because it was not supported by a legitimate business interest. The Court held that because the employer-employee restrictive covenant framework was inapplicable, Owens Trophies need not show that the restriction was supported by a legitimate business interest. Nevertheless, the Court further held that even if Owens Trophies was in fact required to show a legitimate business interest, it did so because it allegedly provided Bluestone with confidential information that was material to the production of Emmy Awards.

While any restrictive covenant should be drafted with caution, corporation-corporation restrictions such as this one are likely to be reviewed with much greater judicial deference than an employer-employee restriction.

Back to Trade Secrets & Employee Mobility Blog

Search This Blog

Blog Editors


Related Services



Jump to Page


Sign up to receive an email notification when new Trade Secrets & Employee Mobility posts are published:

Privacy Preference Center

When you visit any website, it may store or retrieve information on your browser, mostly in the form of cookies. This information might be about you, your preferences or your device and is mostly used to make the site work as you expect it to. The information does not usually directly identify you, but it can give you a more personalized web experience. Because we respect your right to privacy, you can choose not to allow some types of cookies. Click on the different category headings to find out more and change our default settings. However, blocking some types of cookies may impact your experience of the site and the services we are able to offer.

Strictly Necessary Cookies

These cookies are necessary for the website to function and cannot be switched off in our systems. They are usually only set in response to actions made by you which amount to a request for services, such as setting your privacy preferences, logging in or filling in forms. You can set your browser to block or alert you about these cookies, but some parts of the site will not then work. These cookies do not store any personally identifiable information.

Performance Cookies

These cookies allow us to count visits and traffic sources so we can measure and improve the performance of our site. They help us to know which pages are the most and least popular and see how visitors move around the site. All information these cookies collect is aggregated and therefore anonymous. If you do not allow these cookies we will not know when you have visited our site, and will not be able to monitor its performance.