Courts in Indiana have uniformly held that covenants not to compete or not to solicit, while being in restraint of trade, can nevertheless be enforced if they are found to be “reasonable”. Whenever a loaded term like “reasonable” is used, the meaning of such term is always in the eye of the beholder. The “reasonableness” of the geographic region involved and time period during which the restriction applies have led to significant litigation and legal expenses. However, the one thing that many attorneys overlook when analyzing these cases is that such covenants are only enforceable if there is a legitimate proprietary interest that is deserving of protection. For instance, if the departing employee is going to work for a company which is not a competitor, or is going to perform a task different than what that employee performed for the now offended employer, it is possible to attack the enforceability on the grounds that there really is no proprietary interest worthy of protection. Given the fact that the Indiana Supreme Court has said these types of covenants are “disfavored by the law”, counsel should always analyze first whether or not there is actually any proprietary interest substantiating the protection.
