To Use Prospective Customers as Legitimate Business Interests, a Business Should Focus on Resources and Relationships
Generating new customers can be a challenging and expensive endeavor. To identify new prospects, businesses may send their employees to trade shows, conferences or other events to meet potential new customers and prospects.
February 26, 2018 at 10:47 AM
8 minute read
Generating new customers can be a challenging and expensive endeavor. To identify new prospects, businesses may send their employees to trade shows, conferences or other events to meet potential new customers and prospects. After expending significant resources in time and money to locate prospective customers, a business may want to ensure that its employees do not funnel those customers to a competitor. This can be accomplished through an effective noncompetition agreement pursuant to Florida statutes Section 542.335.
Generally, contracts in restraint of trade are void as against public policy, however, Section 542.335 creates an exception if certain requirements are met. To be enforceable, a restrictive covenant (including a noncompetition agreement), must be in writing, signed by the person against whom enforcement is sought, and last for a reasonable time (with certain time periods presumptively established as reasonable by the statute). Additionally, the restrictive covenant must be justified by a legitimate business interest, and must be reasonably necessary to protect that legitimate business interest. “Legitimate business interests” include, among other things, “substantial relationships with specific prospective or existing customers, patients, or clients.” Section 542.335(1)(b)3, Fla. Stat. (2017), the list of legitimate business interests provided in the statute is not exhaustive. Section 542.335(1)(b), Fla. Stat. (2017) (“The term 'legitimate business interest' includes, but is not limited to: …”); White v. Mederi Caretenders Visiting Services of Southeast Florida, 226 So. 3d 774, 781 (Fla. 2017) (“The statute was never designed or intended to be an exhaustive list.”). This article will consider what kind of relationships with prospective customers, patients or clients qualify as a legitimate business interest.
When considering whether prospective customers qualify as a legitimate business interest, it is useful to consider the general principles establish what qualifies as a legitimate business interest. Section 542.335(1)(b), Fla. Stat. (2017), lists a series of interests that qualify as legitimate business interests. The “list reveals only one discernable similarity: preventing unfair competition by protecting crucial business interests,” as in White v. Mederi Caretenders Visiting Services of Southeast Florida, 226 So. 3d 774, 784 (Fla. 2017). A legitimate business interest “'is an identifiable business asset that constitutes or represents an investment by the proponent of the restriction such that, if that asset were misappropriated by a competitor (i.e., taken without compensation), its use in competition against its former owner would be unfair competition,'” (quoting John A. Grant, Jr. & Thomas T. Steele, Restrictive Covenants: Florida Returns to the Original “Unfair Competition” Approach for the 21st Century, Fla. B.J., November 1996, at 53, 54) (emphasis added by Florida Supreme Court). Thus, in considering whether prospective customers are legitimate business interests, the court should consider whether it would create an unfair competitive advantage if the relationships with those specific prospective customers were transferred to a new owner without payment.
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