Skip to main content

Massachusetts Federal Court Refuses to Transform Non-Disclosure Agreement into a Non-Competition Agreement

Written by Gauri Punjabi

A recent decision from the Massachusetts federal district court serves as a good reminder to Massachusetts employers that courts are unlikely to view the breach of a non-disclosure/confidentiality agreement as justification to impose a non-competition restriction on a former employee where no such express restrictive covenant exists.

In Boston Scientific Corp. v. Lee, Dongchul Lee, a Boston Scientific scientist, had signed an employment agreement promising not to disclose proprietary information. The agreement did not include a non-competition provision. When he left Boston Scientific to work for Nevro, a competitor, he agreed to not disclose any Boston Scientific confidential information. While he returned some confidential documents to the company, he retained many more documents on his personal email and Google Drive account. Boston Scientific moved for injunctive relief prohibiting the defendant not only from not disclosing its confidential information to Nevro, but also from working for Nevro.

While agreeing that Lee had breached his confidentiality obligations and therefore Boston Scientific was entitled to injunctive relief prohibiting him from disclosing its proprietary information and ordering him to return all such information in his possession, the Massachusetts federal district court denied Boston Scientific’s request to prevent Lee from working for Nevro. Recognizing that a preliminary injunction is an “extraordinary and drastic remedy,” the court held that it was “particularly disinclined” to impose a restrictive covenant where Lee had never agreed to one and had already accepted a position at a competing company. Prohibiting Lee from working at Nevro would thus “unfairly deprive [him] of his livelihood.”

The Court also rejected Boston Scientific’s inevitable disclosure argument. Under the inevitable disclosure doctrine, an employer is entitled to protection where it is extremely likely – i.e., inevitable – that the former employee will disclose his knowledge of the employer’s confidential information to his new employer in the performance of his duties. Here, the Court held that it was not inevitable that Lee would disclose his knowledge of Boston Scientific proprietary information in light of the fact that (i) Lee’s non-disclosure of Boston Scientific information was a term of his employment with Nevro, and (ii) Lee was not developing competing products for Nevro but rather researching the underlying science and therefore would likely not be using this information.

Boston Scientific reaffirms that employers seeking to restrict an employee from working for a competitor for legitimate business reasons should have that employee sign an unambiguous employment agreement setting forth that restriction. While a confidentiality or non-disclosure agreement is helpful, in the absence of an express non-competition or non-solicitation provision, a court is unlikely to transform the agreement to prohibit those competitive activities.

Subscribe To Viewpoints