Plaintiffs, Puritan-Bennett Corp. and Puritan-Bennett Aero Systems Co., brought this action for injunctive relief against their former employee, Robert Richter, seeking enforcement of restrictive covenants in defendant’s employment contract. The trial court held that the contract not to compete was unenforceable for a lack of consideration but issued a permanent injunction premised on common law against disclosure of trade secrets. Plaintiffs appeal the court’s refusal to enforce the contract and the scope of the injunction against disclosure.
Defendant Richter was first offered employment with plaintiffs on October 29,1973. The oral offer was confirmed in writing the following day and subsequently accepted by defendant in a letter dated November 2. In reliance upon the validity of the contract of employment, defendant sold his house and terminated his job in Wisconsin, purchased a residence in the metropolitan Kansas City area, enrolled his son in school, and established residence locally, all prior to December 17, 1973.
On December 17, defendant reported to work and was asked during the day to fill out and sign some routine employment and insurance forms in the personnel office. At that time defendant was also asked to sign a document entitled “Hiring Agreement” which contains the covenants plaintiffs now seek to enforce.
Richter was initially employed as project engineer in a division of plaintiffs’ business principally involved in the development, manufacture and sale of emergency oxygen breathing equipment in aircraft. Defendant’s employment was terminable at will but he remained with the company for over seven years and was quite successful in his work, receiving various promotions and job title changes. At the time of his resignation on March 20, 1981, he was director of engineering. Shortly after resigning, Richter notified plaintiffs that he had accepted a position with Scott Aviation, plaintiffs’ principal competitor in the narrow field of aircraft emergency oxygen equipment. Plaintiffs sought a preliminary injunction to prohibit defendant’s employment by Scott and although that relief was denied, the court did enjoin defendant from disclosing trade secrets of the plaintiffs. After a hearing on the merits of plaintiffs’ request for permanent injunction, the court held that the scope of the anti-competition clauses of the “Hiring Agreement” was reasonable and not inimical to the public policy of this state but that the agreement was not supported by sufficient consideration to be enforceable. The court also held that plaintiffs had a protectable interest at common law in preventing the disclosure of their trade secrets or confidential information but that this interest could not prevent employment of a former employee by a competitor. The court entered an injunction prohibiting defendant from “disclosing or discussing any aspect of [substituted plaintiffs’] business which pertains to plaintiffs’ research, development, production or sales technique of gaseous and chemical aircraft emergency oxygen equipment.”
The provisions of the hiring agreement which plaintiffs sought to enforce stated as follows:
“4. That in addition to my acquaintance with the various aspects of any of the aforesaid items of commercial property of the Company, my activities in its employ may give me information about similar activities of others within the Company as well as with confidential information, data, records, practices and other trade secrets of it, exemplified by, but not restricted to, compositions, details of methods of preparation, varied uses and methods ofapplication, of its products, its customers, their specifications, and uses and methods of application, and formulations made, of products bought from the Company; all of which are hereinafter referred to as its ‘trade secrets’.
“5. Not to disclose to others during my employment or at any time thereafter except as the Company may authorize in writing or a Court order may require, any information concerned with any of the Company’s aforesaid commercial property or trade secrets, or any information connected with any aspect of the Company’s business; and that this restriction against disclosure similarly applies to prevent me from submitting for publication in any scientific, trade, or other journal any such aforesaid information as any part or the whole of any item or article submitted for publication therein, without written approval of one duly authorized by the Company to so approve.
“9. I will not render services directly, or indirectly, to any organization competitive with the conduct of the business of the Company, for a period of one year after termination with the Company.”
Antidisclosure and anticompetition covenants ancillary to a contract of employment freely entered into with full knowledge, are valid and enforceable if the restraint contained therein is reasonable under the facts and circumstances of the particular case.
Eastern Distributing Co., Inc. v. Flynn,
All contracts to be enforceable must be supported by consideration.
Dugan v. First Nat’l Bank in Wichita,
Whether continued employment is adequate consideration to support the imposition of a restrictive covenant not to compete contained in a written contract for an indefinite term of employment when the initial contract contained no restrictive covenant and was terminable at will is a question of considerable disagreement. The authorities are split on the issue (See Annot.,
Defendant has argued that even were we to conclude that the hiring agreement was enforceable, the issue of enforceability is moot because the one-year term of the covenant not to compete has since run. We disagree. An appeal will not be dismissed as moot unless it clearly and convincingly appears the actual controversy has ceased and the only judgment which could be entered would be ineffectual for any purpose and an idle act insofar as rights involved in the action are concerned.
Reeves v. Board of Johnson County Comm’rs,
Further underscoring the need for remand is plaintiffs’ complaint concerning the scope of the injunction entered by the court. Based on the common law interest in trade secrets
(Koch Engineering Co. v. Faulconer,
The judgment of the district court is reversed and the cause remanded for consideration of what, if any, further relief is required consistent with this opinion.
