Contractual agreements are essential to the running of most businesses. They can be used to achieve a variety of goals for businesses in New York and beyond, including the restriction of certain behaviors. While most commonly heard in connection with employees not being allowed to work in specific occupations for a prescribed period of time, noncompetition agreements can also be written to keep other businesses from participating in certain behaviors.
A dispute regarding a non-compete agreement is currently being litigated. The agreement, between Shutterfly and Kodak, was reached when Shutterfly purchased Kodak's online photo-sharing service. Shutterfly purchased Kodak Gallery in 2012 for $23.8 million. Shutterfly now alleges however, that Kodak has violated that non-compete agreement in its photo service called My Kodak Moments. This service makes it possible for individuals to use their cellphones to place orders for photo prints and books. Shutterfly contends the behavior is "explicitly prohibited" as a part of the deal the two parties agreed to.
As is the case in virtually any legal matter there are multiple ways in which the issue can be resolved. In some cases the best way to proceed in a breach of non-compete disagreement is to pursue a path outside of the courtroom. In other situations however, going to trial could be the best approach.
Non-compete contract issues arise in businesses of all sizes. They are often put into place as a defensive move to keep businesses afloat. When they are violated a business can be placed in a compromised position. For this reason it is important to work with a business lawyer who understands those constraints and can provide options to resolve the disputes without bankrupting the company.
Source: Bloomberg, "Shutterfly Accuses Kodak of Breaching Gallery Sale Deal," David McLaughlin and Dawn McCarty, March 22, 2013