Enforcing Non-Compete Agreements in Texas: A Temporary Injunction Must Have an End Date

miles-massey_lAs a company, the last thing you want to do is to spend thousands of dollars obtaining a temporary injunction against a former employee who is violating his or her non-compete or non-solicitation obligations, only to have the injunction reversed on appeal because it failed to contain all the necessary terms.

Schlumberger learned this the hard way when the Houston Court of Appeals reversed a temporary injunction issued by the trial court because it did not contain an expiration date. The court specifically stated that “Texas law does not permit a trial court to enter an open-ended injunction against competition.”

In this case, two of Schlumberger’s employees left the company, opened a competing business, and hired 11 Schlumberger employees, which actions, arguably, violated the numerous non-compete and non-solicitation provisions in these employees’ agreements with Schlumberger.  Despite having evidence – including admissions by the defendant employees – that they have been competing with Schlumberger, the company’s efforts to shut down the competing business were thwarted when the court of appeals found the temporary injunction invalid because it failed to state a specific expiration date.

TAKEAWAY FOR COMPANIES:  Having an enforceable non-compete agreement is only half the battle. Knowing how to properly enforce it and how to obtain an injunction that will stick on appeal, is equally as important.

TAKEAWAY FOR EMPLOYEES:  Some companies will use a threat of temporary injunction or a temporary injunction itself to stifle competition, even when such competition is justified or is not contractually prohibited. Knowing how to defend against or fight an improper injunction can make a difference between shutting down the newly fledged business and keeping its doors open.

Leiza litigates non-compete and trade secrets lawsuits on behalf of COMPANIES and EMPLOYEES in a variety of industries, and knows how such disputes typically play out for both parties. If you need assistance with a non-compete dispute, contact Ms. Dolghih for a confidential consultation at Leiza.Dolghih@lewisbrisbois.com or (214) 722-7108.

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