Illinois Judge Questions Legitimate Business Interest Standard

An Illinois appellate court judge has questioned whether the courts should continue to require employers to show a “legitimate business interest” before a non-compete convenant is enforced.

Under current Illinois cases, a covenant not to compete will only be enforced if the restriction protects a legitimate business interest of the employer. In a concurring opinion, Fourth District Court Judge Steigmann wrote that the requirement should be abandoned. Courts “when presented with the issue of whether a restrictive covenant should be enforced, should evaluate only the time and territory restrictions contained therein. If the court determines that they are not unreasonable, then the restrictive covenant should be enforced,” he wrote.

In Illinois, in order to enforce a covenant not to compete, the former employer must show a legitimate business interest that means the employee acquired confidential information through his employment and attempted to use it for his or her own gain.

The case involved a salesman who left one company after 10 years. He signed a contract that prohibited him from competing against his old employer for two years. In his new position, he immediately began competing against his old employer. The old employer sought, and obtained, an injunction that was affirmed on appeal. The employee was not helped by his emails with his new employer where he stated: “Right now I’m just calling on people I already know and converting.” Another email said “It would be very helpful for me to be able to ID these target accounts in case they are budgeting for equipment with competitors.” Finally, he wrote: “Pricing is to keep LifeTec [his old employer] out.”

Lifetec, Inc. v. Peter Edwards et. al, 4th District of Illinois, No. 4-07-0300, issued November 6, 2007.