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The Longest Lasting Non-Compete Case Of All Time?

Non-compete litigation is generally fast and furious, with witness interviews, fact gathering, drafting, requests for injunctive relief, and expedited discovery all happening within a very compressed timetable. Accordingly, a recent decision issued by the Indiana Court of Appeals (Think Tank Software Development Corporation v. Chester, Inc., et al.) in a case filed in April of 2002 is a “head scratcher”: how could any non-compete case take nine years to resolve? The short answer is that after some initial skirmishing over a restraining order, a change of venue, and the dissolution of that restraining order, the case apparently went dormant for two years. Then, after an unsuccessful motion to dismiss the case for want of prosecution in 2004, the case lurched into discovery which lasted until November 30, 2009. The defendants then successfully moved for summary judgment, after which the case moved on to the Court of Appeals, which affirmed in part and reversed in part, sending the case back to the trial court . . . for still further proceedings.

Apart from its Dickensian length, the case is noteworthy for its recitation of Indiana no compete law on many frequently encountered issues, including the following:

• “[a] covenant may not be enforced to preclude a former employee from soliciting a customer that was not a customer during the employee’s employment”;

• “a covenant not to compete may even be enforced absent a territorial limitation where the covenant sufficiently restricts the class of prohibited contacts”;

• “when objectionable and nonobjectionable terms appear in a contract, the contract may be divisible and the reasonable limits may be enforced”;

• “[a] word may be added to the covenant ‘for the simple purposes of making the clause grammatically correct”;

• “[t]he proper measure of damages for breach of a covenant is the plaintiff’s lost net profits”; and

• “[a] damage award ‘does not require any specific degree of certainty, so long as the amount awarded is supported by the evidence and is not based on speculation or conjecture.’”