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Monday, December 30, 2019

The Court Denies Corporation's Request to Enforce Non-Competition Agreement

          Recent changes in Massachusetts' laws regarding non-competition agreements have started leading to interesting court rulings in Superior Court.  In the matter of Genzyme Corporation and Bioverativ, Inc. v. Keith Hanglin and BioMarin Pharmaceutical, Inc., the Court has recently ruled that Genzyme cannot block a former employee from joining BioMarin Pharmaceutical Inc, where he would help launch a gene therapy treatment for hemophilia that would compete with a drug his ex-employer markets.  This ruling comes dispite the fact that the employee signed a valid non-competition agreement while employed at Genzyme.

            The legal standard that the Court applies to a request for injunctive relief is well established. A party seeking such relief must show that the likelihood of success on the merits of its claim and must further demonstrate that it will suffer irreparable harm without the requested injunctive relief.  In addition this harm must outweigh any harm to the defendant if the injunction issues.

            Suffolk County Superior Court Judge Janet Sanders ruled that Genzyme had failed to show why a preliminary injunction enforcing a non-compete agreement that Mr. Hanglin signed was needed to protect any of its legitimate business interests and therefore could not show a likelihood of success on the merits.  The legitimate interests that support enforcement of a noncompetition agreement typically consists of the employer’s interest in guarding against the use or release of trade secrets or other confidential information and its interest in protecting its goodwill. 

            In the case at hand, Genzyme was not able to show that Mr. Hanglin possessed any confidential information nor was it able to show that it would loss any good will if Mr. Hanglin was allowed to work for BioMarin.  Specifically, Mr. Hanglin had a "back office" position at Genzyme and did not interface directly with customers.  He did not develop personalized relationships that would be lost if he moved to BioMarin.  Quite simply put, since the Court did not feel that Genzyme would be hurt by Mr. Hanglin moving on to a competitor, the Court rejected Genzyme's Motion for a Preliminary Injunction. 

            The Court also took into consideration the relevant and likely harm to both parties. The weaknesses in Genzyme’s case are particularly relevant when the Court analyzed the harms to the parties. If Genzyme successfully prevented Mr. Hanglin from beginning work at BioMarin, even though he could arguably get other employment, his options would be more limited if this Court found that the Genzyme Non-Competition Agreement was enforceable.  Moreover, the delay in finding a different job would put Mr. Hanglin in a difficult position, since he is the primary breadwinner for his family.

            This was an instance where a Non-Competition Agreement, while on its face was valid, was ultimately not enforced by a Court.  This case is still in the early stages and should be followed closely.

            If you have any questions about employment law or non-competition agreements, please feel free to contact the Law Offices of Samuel S. Reidy for a free consultation.

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