Settlement Agreements and Consent Decrees -- 2017



Automated Industrial Machinery, Inc. v. Christofilis   (Ill. App. Ct.)

Illinois courts refuse to enforce restrictive covenants

The NAM filed an amicus brief in an Illinois appellate court in support of manufacturer trade secrets. Automated Industrial Machinery (AIM) brought suit after an employee, who worked for AIM for thirteen years, left AIM five months after signing a non-compete agreement and opened a competing business. An Illinois lower court found the non-compete agreement unenforceable due to lack of adequate consideration since the employee had signed it less than two years before leaving. The NAM’s brief argued that the appellate court should reject a two-year bright line rule in favor of a fact-specific totality of the circumstances analysis to determine whether an employee’s continued employment is adequate consideration to support a non-compete agreement. The appellate court held that the defendant was not subject to the non-compete because the five months of employment at issue in this case was not a “substantial period of time.” This sets a detrimental precedent that Illinois manufacturers should wait two years after employees sign confidentiality agreements before exposing confidential information.


Related Documents:
NAM brief  (March 22, 2017)