Patrick Administration Questions the Case for Changing Noncompetes; Community Reacts

7/29/09Follow @wroush

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changes to employment law. “If the perception is—and the perception can become the actuality—that Massachusetts is overly burdensome to individual innovators, and therefore companies don’t come here or stay here, that is a problem for us,” Coakley said.

We’ve received comment on Bialecki’s post from State Representative Will Brownsberger, who called last year for an outright ban on noncompete agreements and has now drafted a compromise bill that would roll them back while preserving some protections for employers. We’ve also heard from Tim Rowe and Bijan Sabet; see their remarks below.

[Update 10:30 a.m. July 29, 2009] Tim Rowe comments by e-mail:

“First of all, I enormously respect Greg’s point of view, and I appreciate his willingness to speak about this, rather than just to step back, which might have been easier for him.

“Greg is absolutely right that it would be much worse to create a situation that is less clear than today, that would invite litigation. The threat of litigation is a terrible thing for innovation—startups can’t afford it, most venture investors won’t back startups that are under a cloud of litigation, and thus it can literally kill them.

“So, if changes are made, they should be made in such a way as to reduce the chance of litigation.

“I don’t agree that the market can address this issue. It is near impossible for job seekers to bring up this issue (‘Excuse me, Mr. Employer, but I wonder if you’d be OK with giving me the right to compete with you in the future…’), and because of the tragedy of the commons nature of this problem, any individual firm that doesn’t use non-competes, on a playing field where others do, will be penalized for their laudable stand. Going back to the ancient example, while it is bad for all when farmers over-graze the town commons, any individual farmer who says he will send fewer cows into the commons simply reaps less of the common wealth.

“I am pleased that Greg and his office are focusing closely on this.

“The sticking point in the entire debate seems to be around lack of sufficient research to justify a policy change. Given the importance that everyone, pro and con, seems to ascribe to this issue, I wonder if one thing Greg’s office could do would be to reach out and work with the appropriate parties to get underway some additional, in-depth research on this topic.”

[Second update, 12:15 p.m., July 29, 2009] Bijan Sabet comments by e-mail:

“We have a real challenge in our state.

“Venture funding is dropping and iconic firms are leaving (i.e. Greylock).

“Venture firms that were started here and invest hundreds of millions of dollars are investing more money outside of MA than inside MA. This used to be the state that created huge tech companies like DEC, Lotus, etc.

“It’s a real issue. I’ve written about it quite a bit on my blog and encouraging others to get involved in this important matter.

“One thing we should fully recognize is that entrepreneurs in other states have the freedom to innovate while at the same time respecting trade secrets, NDA & NSAs by law. Our entrepreneurs are forced to sit on the sidelines because they are … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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  • Pearl Freier

    If there isn’t a bigger lobby in the MA tech community against non-competes, status quo will remain. It sounds like the Patrick administration is hearing only from a small number of people on why non-competes are hurting innovation in Massachusetts. There’s plenty of evidence to support why change is needed- but not enough people are coming forward.

    Look at what happened when word got out that the Zoo may have to close- when Patrick administration announced budget cuts. The public response forced the change in plans.

    Or perhaps a fair compromise would be to have a bill that limits non-competes to 3 to 6 months.

    Otherwise the curse of Rte 128 is going to continue to haunt us, and we can continue to follow Michigan’s example of how well non-competes work for innovation and growth. And not learn from this.

    Status quo if we’re lucky. That’s the best case scenario probably.

    Just my two cents.