731 S.E.2d 288
S.C.2012Background
- Morin signed an Associate Agreement with Milliken containing confidentiality and invention-assignment provisions.
- The confidentiality clause broadly defines confidential information and imposes a three-year post-employment restriction on disclosure or use.
- The invention assignment clause covers inventions related to Milliken’s business, developed with Milliken’s resources, or on Milliken time, with a narrow exception for self-made, non-Milliken-related inventions.
- Morin resigned in 2004 to form Innegrity and sought to commercialize a new fiber (Innegra) that resembled Milliken projects.
- Milliken sued for breach of confidentiality and invention assignment portions; a jury found for Milliken on those claims, and appellate review followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are the holdover and invention‑assignment provisions restraints of trade? | Morin argues overbreadth; clauses are restraints of trade needing strict employee‑side construction. | Milliken contends these are not restraints of trade but confidential/inventive protections enforceable under contract law. | Not restraints of trade; enforceable under reasonableness standards. |
| Is the invention‑assignment clause enforceable given its scope and exceptions? | Clause is overbroad, capturing inventions not related to Milliken’s work. | Under the agreement, only inventions relating to Milliken's business and resulting from Milliken work are assigned; exceptions apply. | Enforceable; scope limited by plain language; exceptions keep it reasonable. |
| Is the three‑year holdover period reasonable and enforceable? | Holdover could unduly hinder post‑employment activity. | Three years is a reasonable tail to protect Milliken’s interests without undue harshness. | Reasonable and enforceable. |
| Is the confidentiality clause enforceable and properly bounded by three years? | Confidentiality sweeps too broadly beyond Milliken’s confidential information. | Clause targets only Milliken’s confidential information learned during employment and not general skills. | Facially valid and reasonably bounded; not an undue restraint. |
Key Cases Cited
- Standard Register Co. v. Kerrigan, 238 S.C. 54 (1961) (early standard for restraints and public policy)
- Welcome Wagon, Inc. v. Morris, 224 F.2d 693 (4th Cir.1955) (three-part reasonableness framework for restraint covenants)
- Rental Uniform Serv. of Florence, Inc. v. Dudley, 278 S.C. 674 (1983) (reasonableness and time limitations for restraints in SC)
- Revere Transducers, Inc. v. Deere & Co., 595 N.W.2d 761 (Iowa 1999) (confidentiality agreements receive greater leeway than noncompetes)
- NovelAire Techs., L.L.C. v. Harrison, 50 So.3d 913 (La.Ct.App.2010) (holdover/ownership provisions not per se overbroad; focus on reasonableness)