Amazon.com Inc.’s former international division CFO, Christopher Zyda, got a lawsuit as a going-away present when he recently took a job as eBay’s vice president for financial planning, analysis, and investor relations. Arguing that the new job violated his 1998 noncompete agreement, Amazon requested, and won, a temporary restraining order from a Washington State federal court to prevent Zyda from starting work.
While the enforceability of noncompetes varies widely from state to state, this battle threatens to be prolonged, since eBay had already filed a preemptive lawsuit in state court in California, where noncompetes are often nullified. “They were smart, since California is much more liberal,” says Eric Sinrod, a partner at Duane Morris in San Francisco. It’s still unclear which state will get the case, he says.
As companies become more aggressive about protecting intellectual property, noncompetes will become a bigger career roadblock than ever, lawyers say. “I’ve seen a very noticeable spike in these types of cases, largely because there’s room for argument on both sides,” says Sinrod.
And with shifting business plans, “competitor” is getting hard to define. “Unless someone’s naming exact companies, which is pretty unusual, your competitors would be defined the day you leave a company, rather than the day you start,” says Carol Silverman, executive compensation specialist at William M. Mercer Inc. Since Zyda signed his noncompete, Amazon has expanded into used-product sales, eBay’s domain.