Debating Non-Compete Agreements

We got an interesting note this week from Bijan Sabet, a general partner at Boston’s Spark Capital who’s been on a campaign to get rid of non-compete agreements, the clauses in many employment contracts that prevent people who’ve left their jobs from engaging in similar businesses for a certain period. We interviewed Bijan on the subject back in December, and now he sends word that Spark and the Berkman Center for Internet & Society at Harvard Law School are organizing a debate on non-competes and how they affect the innovation economy in Massachusetts. Bijan’s note follows:

Bijan Sabet, general partner at Spark Capital“My position on non-competes is pretty well-known: I don’t like them. I believe that innovation comes from interaction—and that for Massachusetts to thrive as a hub of innovation, we must follow Silicon Valley’s model where non-competes are not enforceable and entrepreneurs are free to innovate without fear of litigation.

“But I can also admit that the issue is not a simple, cut-and-dried no-brainer. That’s why my firm—Spark Capital—is teaming up with the Harvard Law’s Berkman Center for Internet & Society, for the upcoming panel discussion on the merits and drawbacks of non-competes—the contracts routinely used in Massachusetts (and many other states) by employers that force employees to sign away their rights to engage in any business of a competitive nature when they leave their present jobs.

“The Berkman Center’s Executive Director John Palfrey, a clinical professor of Law at Harvard Law School, will be moderating the discussion, which in addition to myself, will include Brightcove founder and CEO Jeremy Allaire, Akamai general counsel Melanie Haratunian, Harvard University associate professor Lee Fleming, and Highland Capital general partner Paul Maeder. That’s a good mix of opinions which should make for a lively and intelligent conversation.

“It’s an important topic. Ask anyone who isn’t free to accept an ideal job offer because of a non-compete. Or who essentially can’t work in their field of expertise at all for a year or two, since it’s so specialized that every company in the market segment is considered a competitor. Or, who has a great idea for a totally new business, but worries that the non-competes hammer will smash them if they try to make it real. (Those are the ones that we in the VC business come across most frequently.)

“Of course there are arguments for the other side as well: Have you heard about key members of a company’s engineering department leaving en masse to start at a new company? Or a talented employee who created an innovation only to leave his present job to bring that innovation to market? There are legitimate issues of protecting intellectual property and trade secrets at stake.

“If innovation is truly the engine of our ongoing economic growth and well-being—and I believe it is—then we need to take a hard look at this issue, and come with something better than what we have now.

“Here are the full details:

Employee Non-Compete Agreements: Protecting Innovation or Stifling It?

Thursday, June 19th, 3:00-7:00 pm 4:00-8:00 pm

Ames Courtroom, 2nd floor of Austin Hall, Harvard Law School

There will be a panel discussion, followed by a cocktail reception. Anyone is free to attend. You just have to register by June 12 (a week before the event) by emailing your name, title and company to Amar Ashar at the Berkman Center: [email protected]

Wade Roush is a freelance science and technology journalist and the producer and host of the podcast Soonish. Follow @soonishpodcast

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2 responses to “Debating Non-Compete Agreements”

  1. Matt says:

    Also remember that we compete for talent nationally and internationally. One perverse incentive that non-competes give employees in MA is the incentive to start companies in other states where non-competes are not enforceable.