As described in earlier posts, Conkle, Kremer & Engel represents commissioned sales representatives (“reps”) and manufacturers or distributors (often termed “principals”) who contract with them. Contracts drafted by manufacturers or distributors often include post-termination non-competition clauses, which can be tricky for both parties. California generally disallows non-competition clauses as unlawful restraints of trade, but it is nonetheless possible to have effective trade secret agreements that can substantially restrict a former rep from working with competitors. In addition, reps and principals often work across state lines and many states allow post-termination non-competition terms that are “reasonable” in scope. Principals and reps must be conscious of which state’s law controls their agreement, and the state venue in which any dispute would be determined by a court or arbitrator.
CK&E attorney Eric S. Engel earlier contributed an article to the October 2016 edition of Agency Sales Magazine, published by the Manufacturers’ Agents National Association (MANA) to help reps and principals understand and grapple with the non-competition/restraint of trade issues that they face. In November 2016, the second installment of this article, Trade Secret Protection in Rep Agreements, was published in Agency Sales Magazine to further explain the related issues of trade secret protection in the principal-rep relationship, and how trade secret concerns can limit the ability of a rep to compete with his or her principal during or after termination of the representation.
CK&E is proud to be able to assist reps and principals to negotiate the sometimes difficult legal issues that can help or hinder their effective partnership in serving their customers.