Friday, March 1, 2013

Non-compete agreements in the chemical industry?

A respected commenter writes in with a set of questions (with a [redaction] by CJ):
[The poaching thread] has me wondering, what do other non-competes look like in the chemical industry, and how many of us are bound by them? Furthermore, has anyone actually been sued because of their non-compete? 
I recently had a conversation with a family member who is [a medical professional]. She pointed a job out to me that was with a company that is essentially a competitor to my current employer. I told her that I was uncomfortable applying for that job, and explained that while I am a good fit for the position, accepting a job at that company would open me up to liability.  
During the conversation, I explained that a non-compete has always been part of the employment paperwork that I sign. Then, I began to realize that it was a little odd that when you start becoming an expert in a (sub)field, you may have to completely abandon it if you want to change jobs, for fear of being sued.
I'll be honest and say that I've never been important enough to merit a non-compete, although I've been bound by a number of non-disclosure agreements. (My favorite part of my last day at the Blue Pill Factory was being handed a copy of the NDA I had signed on my first day. Well played, paperwork folks, well played.)

I suspect that non-competes are rarely enforced, but I assume that threats of lawsuits are quite common. (It seems that employers will play all sorts of tricks to claim legal territory that is not technically theirs. 'Twas ever thus.) Here's a blog dedicated to non-competes (there's a blog for everything!) and an article that argues that they hurt employees (surprise!)

I don't think Big Pharma uses them at any level, but I don't know about the broader chemical industry. Readers? 


  1. Non-competing agreements have to have a reasonable time limit. Mine for example is 1 year. I heard of a court case with a small analytical lab (running common environmental analysis and illicit drug testing- no special high tech ) where the owner was a douche and tried to chain his people with overly broad 3-year noncompete agreement so that they could not get a decent job in the field if they left him. Then he was trying to go after former rank employees in court and he failed.

    1. I think my non-compete is one year. (I should probably go back and take a look) But it explicitly lists pretty much any major company that I, as a polymer guy, could ever want to work at (even those that are not direct competitors), and also limits my involvement worldwide. Is it a bit reaching? Yeah. Do I think they'll go after me as long as I don't go straight to a direct competitor? Probably not.

      In fact, I have a semi-data point for my current employer. One former employee left for one of those listed companies and started work on a competing product. Now, I don't know if there was legal action, but he seems to still be employed at the competitor, working on that project.

  2. The best is being an at-will employee AND forced to sign a NCA.

  3. The Aqueous LayerMarch 1, 2013 at 12:33 PM

    My NDA in pharma is 2 years. Like you, CJ, when I was laid off a few years ago, the first thing you see in your folder was a copy of the NDA.

    To a certain extent they are a scare tactic. Let's face it, if I'm working on Bullshit Receptor Kinase, no other company is going to hire me and put me on their BRK project. It would taint their research and open them up to all kinds of legal action if something they made went to the market.

    Where folks run into trouble is if they take notebook pages/data/slides with them to their new job. It happened here when a person left those things behind after departing. My company was legally compelled to contact that other company to say what was found and to guarantee that none of the information that was found was used to advance any of the current projects here. It wasn't a happy time for anyone, and we got a very stern EMAIL regarding this type of stuff...

  4. To get my current position I had to sign a broad 2-year non-compete... Having been unemployed for a long while before that offer, I decided it was not worth trying to get that changed.

  5. These things generally don't hold up in court. My former employer sued several people who took jobs at direct competitors, but all of the cases were eventually dropped, and it was pretty much an empty threat. The only exception I can think of was a guy who went to a small company and started making an exact copy of one of our products. Simply going to work for a competitor is generally OK; don't let anyone scare you!

  6. I agree with the other folks here. I had to sign a 2-year non-compete, and after getting downsized, went to work for a generally-related company on a generally-related sub-field. However, for a few years, I actively avoided getting to close to projects or specific reactions related my previous work, and was careful to reasonably respect the trade secrets of my former employer. However, one of my ex-colleages went to a more direct competitor, and (alledgedly) pretty much cloned one of the processes we had been working on. It went to court but I don't know how it turned out. For the most part, just don't be stupid and unreasonable, and you will be fine.

  7. Of course, if you are the CEO and leave, the company may offer you 78 million USD for not competing. Just google "vasella novartis non-compete".

  8. My non-compete was for 6 months. However after several years I'm still friends with the CEO, CFO, and VP of Research of my former start-up, so it would be horribly douchy for me to do/say anything that might harm their business. As far as getting another job in the field goes, however, the NDA did not say I can't work anywhere else. It said I can't disclose proprietary information.

    We do have to remind everyone that their notes don't belong to them when they leave. Technically they're not even supposed to go home with them, be scanned, saved on non-company flash drives, etc.

  9. Remember that a non compete is not a NDA (Non disclosure). NDAs are common - you shouldn't be talking about your insider knowledge of a company to anyone outside the company without permission. That applies equally when you leave, voluntarily or not. It is wise to respect this too - any company who "benefits" from your knowledge will also be concerned about what you will do to them afterwards.

    A non compete is different, and pretty much un-enforceable, at least in California and for non C level suite positions. It would never be enforceable for pharma company A to lay off a medchemist and expect them to not work at pharma company B. That is the field you trained in. If company B happens to be working on the same target, which is pretty much a given, then the NDA applies to your non-public knowledge.

  10. I turned down a scientific contract writing job because I thought the non-compete was completely unreasonable. It seemed to me that either I would write one piece and have the employer not like it enough to solicit any more pieces from me, in which case I would have signed away five years of working in an entire industry for only $500, or else I would spend years working in the industry and developing expertise, in which case I would not be allowed to pursue a career in the industry except for this one employer. The recruiter seemed very surprised when I told her I couldn't sign the non-compete: apparently the rest of their contract writers aren't at all bothered by a five-year non-compete for an entry-level contract position.