Employment – Noncompete agreement – Confidential information

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Where a plaintiff employer has moved for a preliminary injunction to enforce an employment agreement containing non-competition, non-solicitation and confidentiality obligations, that motion should be allowed because the plaintiff has shown that the restrictive covenants at issue are designed to protect confidential information, which constitutes a legitimate business interest.

“Plaintiff Nuance Communications, Inc. (‘Nuance’) has filed this lawsuit against Defendant Kathryn Kovalenko (‘Kovalenko’), a former Nuance employee, for breach of contract arising from Kovalenko’s alleged violation of an employment agreement containing non-competition, non-solicitation and confidentiality obligations to Nuance. …

“On November 3, 2014, as a condition of her employment at Nuance, Kovalenko signed a Confidential Information, Inventions and Noncompetition Agreement (the ‘Agreement’). …

“As a preliminary matter, Kovalenko disputes that Massachusetts law applies here despite the provision in the Agreement stating that it does. … Although Kovalenko argues that she never lived in Massachusetts during her years-long tenure at Nuance, … such is insufficient to show that application of Massachusetts law here would violate public policy of a state with a ‘materially greater interest’ than Massachusetts and which would ‘be the state of the applicable law in the absence of an effective choice of law by the parties,’ as she must to defeat the Agreement’s choice-of-law provision. …

“Under Massachusetts law, ‘a restrictive covenant is only reasonable, and thus enforceable, if it is (1) necessary to protect a legitimate business interest, (2) reasonably limited in time and space, and (3) consonant with the public interest.’ Automile Holdings, LLC v. McGovern, 483 Mass. 797, 808 (2020). …

“In the employment context, legitimate business interests that may be protected by restrictive covenants include trade secrets, confidential information and good will. …

“Kovalenko responds that Nuance has failed to identify any purported trade secret with specificity. … The cases Kovalenko cites in support of this argument, however, involve claims of trade secret misappropriation. … Kovalenko presents no authority to support that where, as here, a plaintiff asserts breach of contract as to a restrictive covenant, as opposed to a trade secret misappropriation claim, it must identify any purported trade secret with specificity. Moreover, Nuance has, at minimum, shown that the restrictive covenants at issue are designed to protect confidential information, which constitutes a legitimate business interest. The Agreement defines ‘Confidential Business Information’ more broadly than trade secrets; i.e., defining it as ‘confidential, trade secret and/or proprietary information of Nuance and/or its current and proposed customers and business partners.’ …

“Accordingly, Nuance has sufficiently shown that the restrictive covenants at issue are necessary to protect a legitimate business interest. …

“A restrictive covenant ‘must be no more restrictive than necessary.’ … As to duration, Massachusetts courts consistently have held that restricted periods of one year are reasonable. … Massachusetts courts have upheld significantly longer time restrictions. … Thus, the Agreement’s Restricted Period of one year … is reasonable in duration.

“… Here, while the Agreement does not specify any geographic limitation, Kovalenko’s responsibilities at Nuance were not geographically limited, … as Nuance conducts business on a wide scale. … Nationwide enforcement of the Agreement is, therefore, reasonable. …

“Kovalenko argues that her employment relationship with Nuance materially changed such that the Agreement did not remain valid and enforceable by the time of her resignation from Nuance in January 2022. …

“Here, although Kovalenko’s duties and compensation changed over her tenure at Nuance, there is no indication that the parties mutually abandoned and rescinded the Agreement due to Kovalenko’s promotions, especially in light of the Agreement’s provision stating that Kovalenko’s obligations thereunder would ‘continue in accordance with its express terms regardless of any changes in [her] title, position, duties, geographic location, salary, compensation or benefits or other terms and conditions of employment.’ … Accordingly, the material change doctrine does not bar enforcement of the Agreement. …

“Nuance claims that Kovalenko has breached the Agreement’s non-compete provision, D. 1-1 section7(a), by accepting her employment at Sirona [Medical]. …

“… Nuance has satisfied its burden — for purposes of showing a reasonable likelihood of a breach of the non-compete provision — to show that Kovalenko’s work with Sirona likely would involve ‘job duties or other business-related activities’ that ‘could put Nuance’s Confidential Business Information at risk.’ …

“Accordingly, Nuance has shown a likelihood of success on the merits on its breach of contract claim as to the non-compete provision. …

“The public interest will be served through preliminary injunctive relief in this case. … Nuance seeks to enforce the Agreement, a valid, binding contract that is reasonable in scope and necessary to prevent irreparable harm to its business.”

Nuance Communications, Inc. v. Kovalenko (Lawyers Weekly No. 02-181-22) (22 pages) (Casper, J.) (Docket No. 22-cv-10656-DJC) (June 29, 2022).

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