Oracle’s appointment of former HP-CEO Mark Hurd has given rise to litigation by HP. This report in the Wall Street Journal notes that while Hurd entered into a confidentiality agreement with HP, he was not bound by any non-compete obligation:
One sticking point in Mr. Hurd's move could be the terms of his severance package from H-P. That package, which could be worth more than $35 million depending on H-P's stock price, doesn't contain a noncompete clause as those are typically difficult to enforce in California. However, Mr. Hurd did agree to a 24-month confidentiality agreement, which prevents him from disclosing sensitive information related to H-P.The question then is whether the confidentiality clause may be enforced by preventing an employee from working for a competitor such that it would effectively operate as a non-compete. Professor Bainbridge outlines his view of the legal position:
Count me a skeptic. Courts are often reluctant to let trade secret law impose prior restraints on free movement of labor. If HP had wanted to put restraints on Hurd's post-HP employment, it could have done so in the employment agreement. Given that courts construe those agreements narrowly so as to prevent unreasonable restraint of trade, moreover, HP should not get by a legal back door what it did [n]ot bargain for in the first instance. If Hurd reveals trad[e] secrets or other protected information, HP can always sue him ex post.At a broad level, this seems similar to the position under Indian law.