Intellectual Property Law

Chapter 22 Case Study Answers

Case Study: Fit Forever would like to ensure its senior executives do not leave the
company and go to work for any competitor.

Activities: Discuss the appropriate scope or terms of a noncompete agreement for Fit
Forever.

There are several factors to consider.

• First, one must make sure that noncompete agreements are valid in the
states in which Fit Forever operates. For example, they may not be used
in California.

• Second, the agreement must be tailored or limited to senior executives
who have specialized knowledge or training. It cannot preclude all
employees from working for competitors.

• Third, it must be limited in its geographic area. Thus, Fit Forever could
consider limiting employees from working anywhere within several miles
of any of Fit Forever’s current locations.

• Fourth, it must be limited in its duration. One approach is to have a
period of duration equal to the “lead time” that it would take Fit Forever
to hire, train, etc., equivalent employees. Thus, if it would take Fit
Forever one year to replace a senior employee, a one-year restriction
would be reasonable.

• Fifth, Fit Forever should include a provision in the agreement allowing a
court to revise or “blue pencil” the agreement if any of its terms are
found to be invalid, so that the court can modify the agreement to make it
enforceable.