Georgia Supreme Court Limits Noncompete Injunction
The Georgia Supreme Court recently narrowed the scope of a noncompete injunction prohibiting a former employee of a retina surgery practice from marketing certain software in competition with his ex-employer. Coleman et al. v. Retina Consultants PC et al. (GA S. Ct.).
Prior to his employment by The Retina Eye Center ("TREC"), Coleman -- a software engineer -- wrote and marketed a medical billing program called Clinex. While at TREC, he tailored the program to suit that company's business and developed a separate retinal practice application, Clinex-RE. As the lower court found, it is undisputed that Coleman incorporated TREC's proprietary information and trade secrets in developing Clinex-RE, and that Clinex-RE only operates in conjunction with Clinex. The parties allocated the rights to Clinex and Clinex-RE in a software agreement that also restricted Coleman's ability to distribute the Clinex software or any applications competitive with Clinex-RE to ophthalmologists or optometrists without TREC's consent.
Following his resignation from TREC, Coleman attempted to distribute or license the Clinex and Clinex-RE software to other ophthalmologists; he refused to disclose to TREC necessary passwords to read and revise copies of the software; and he used or attempted to use TREC's proprietary information and trade secrets to compete with a company owned by Coleman and TREC that was formed to market Clinex and Cline-RE.
TREC brought suit for breach of contract and moved for an injunction to enforce the software agreement's noncompete provision, and to enjoin Coleman from retaining and using access codes, source codes, other information, and passwords required to read and revise copies of Clinex and Clinex-RE.
Finding the lower court improperly enforced the noncompete clause at issue as it is unenforceable as a matter of law because of the failure to specify a time limitation, the Supreme Court nonetheless held that the former employee could be prohibited from marketing Clinex and Clinex-RE together because -- as the trial court determined -- Clinex-RE includes proprietary information and trade secrets. Coleman would not, however, be restricted from using and marketing his own version of Clinex as that software is his own property.
Further, the Supreme Court ruled that the injunction preventing Coleman from retaining any and all information and documentation related to Clinex was too broad and went beyond the scope required by the software agreement as it would foreclose him from access to information related to his own software to which he is entitled.