March 2012

Two Recent Noncompete Cases From the Superior Court

March 23, 2012

Noncompete opinions from the Massachusetts Superior Court are few and far between, so the two decisions that have been issued so far this year — one from Judge Peter Lauriat sitting in the Suffolk Business Litigation Section (BLS), the other from Judge Thomas R. Murtagh in Middlesex Cournty — are worth noting.  Both judges are respected judicial veterans, and each decision illustrates a legal principle basic to this controversial and often confusing area of law. The more note-worthy of the two cases is Judge Lauriat’s decision in Grace Hunt IT Soutions v. SIS Software, LLC.   There are relatively few ways to wriggle out of a non-compete, but one that should be near the top of every lawyer’s list is the question whether there has been a “material change” in the employment relationship since the non-compete agreement was signed.  If so, a “pre-change” non-compete may be unenforceable.  In this case the court found that there had been such a change, and therefore it denied a motion for preliminary injunction to enforce the  non-compete  covenant against the defendants.  Of course, what constitutes a “material change” can vary, depending upon the eye of the beholder, which in a preliminary injunction context is the judge.  In this case Judge Lauriat concluded that a 20% cut in salary was enough of a change to satisfy this standard.  Also, the employees had signed the non-compete with…

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Redigi Case Poses A Novel Copyright Question on the Resale of Digital Audio Files – Is “Digital First Sale” Legal?

March 16, 2012

You know all those used music stores you used to love to go to back in the day when you bought music on CDs?  You could browse through used CDs and buy them for less than retail.  Maybe you still do (kudos to Deja Vu Records in Natick, Mass.).  Of course, you can do the same thing online. The founders of Massachsetts-based Redigi figured, why can’t we create a marketplace that will allow people to do the same thing with their digital music files?  Or, as Redigi puts it: ” Sell your old songs legally – The world’s first used digital music marketplace – Buy used music insanely cheap”.  However, in starting this business Redigi may have run smack into the disconnect between the U.S. copyright statute and digital media.  And, it has been forced to defend against a full-on assault by the RIAA  (in the form of its apparent designee, Capitol Records). Redigi’s service launched in October 2011, and by reason of the sheer chutzpah of its business model the copyright industry (the usual ragtag collection of lawyers, industry types, bloggers, reporters and hangers-on) was soon debating the legality or illegality of its service. By early November Redigi was holding a “roll over and die” letter from the RIAA. By early January 2012 Capitol had filed suit against Redigi in the Southern District of New York. Issue was joined quickly when Capitol filed a motion for preliminary injunction seeking, in effect,…

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