Michigan Business Law Blog

When an entrepreneur has a good idea, he or she must somehow find a way to bring the idea to the marketplace in order to make a profit. Many times this will require presenting the idea to potential investors as well as directly selling to the public. The University of Michigan understands this need and has taken action to assist young entrepreneurs to showcase their ideas for new business startups.

This is why the school created a new student marketplace which was an idea presented by MPowered, a student organization that focuses on entrepreneurship. The group has taken over an unused office space and transformed it into a hub for startup companies to showcase their products and services. There are a range of types of startup companies being represented at the marketplace, which is called VEX Venture Exposition.

There is certain infrastructure which is required to make a condo development a viable endeavor as well as a profitable investment. Since individuals and families will be living in any proposed residential development or complex, they will need proper roads, lighting and other types of infrastructure needed for everyday living. One city in Michigan recognizes this and has promised to pay for this essential infrastructure in order to help a multimillion dollar condo development project move forward.

The city says it is planning on taking out a $250,000 loan to help with the essential infrastructure to make the residential development a viable enterprise. The planned condo development will be located right next to a local golf club. Thirty-four condominium units are planned to be included in the proposed project, which will be implemented by American Village Builders. The location is currently a foreclosed, partially developed project abandoned by a previous developer.

Scientists are passionate about their work and are tireless in their efforts in making new discoveries and inventions that could potentially benefit all of society. When a scientist makes an important discovery, he or she will probably want to make sure that all of the hard work does not go to waste. This is the case with an important new discovery made at the University of Michigan, which demonstrates that light can reverse oxidation of copper. The university is now looking to move forward with business planning in order to monetize this discovery.

The potential business opportunity came about when a chemical engineering associate professor discovered that shining a white light that is five times more intense than the sun on copper keeps the copper in a metallic state, while reversing oxidation on nanoparticles. The university researchers believe that this could help create an environmentally friendly process for producing propylene oxide. This chemical is required to make a variety of plastic, toiletries, antifreeze, paints and a variety of other household products.

It's not only what your business knows, but also who at your business knows it. Industry leading companies echo that key employees, who typically possess institutional knowledge and trade secrets, are their most valuable assets. Particularly for sales focused organizations, the risk of disloyal key employees taking know-how and relationships can be catastrophic. Protecting your key business assets is vital.

There are ways to protect your organization against risks associated with disloyal employees and raiding competitors. Effective planning and protection mechanisms can deter and effectively prevent disloyal employees from taking your hard earned institutional knowledge and property to work for a more-than-eager competitor, and may effectively deter key employees from leaving in the first place. Lack of effective planning, on the other hand, paves the way for "mutiny" and cannibalizing your business of other employees, information and customers.

How Good is Your Non-Compete?

Employees are often required to sign restrictive covenant, or "non-competes," that may contain prohibitions against competing against the employer, taking the employer's confidential information, and/or soliciting the employer's other employees and customers. Many employers collect boiler-plate non-competes from every employee, without giving further thought to when they are enforceable and what business practices may maximize the enforceability of non-competes. Employers generally expect such agreements to, without much more, protect the employer's ideas, customers and other employees. Although Michigan has a statute governing non-competes, MCL 455.774a, enforcing non-competes isn't as easy as one would expect.

But, That's Not Fair

"Reasonable" agreements that protect an employer's "legitimate business interests" are enforceable in Michigan and in many other states, with some variation. The definition of reasonable varies, however, as does the interpretation of legitimate business interests. To further complicate things, in determining whether to enforce a restrictive covenant, courts apply principles of equity - asking "is it fair...?" As any child can tell you, arguing and proving what is "fair" is easier said than done. While advanced planning and appropriate business practices can help establish "reasonable," "legitimate" and "fair," few employers take the advanced steps necessary to maximize the protections theoretically offered. Without appropriate advanced planning, many employers risk being taught a lesson in non-competes by a skilled litigator after-the-fact.

Don't Wing it, Get Professional Help

As an experienced litigator in the field, I make my living both enforcing and circumventing non-competes and other restrictive covenants. I also help clients assess non-competes and employer practices before it becomes too-late. While I have successfully won such disputes at trial, and could help you on either side of the divide, I counsel my clients that an ounce of prevention is worth a pound of cure.

How confident are you that your key business assets are protected?

Alex Stotland is a business litigation attorney licensed in both Michigan and New York, who is a partner at Hertz Schram, with a significant practice in counseling and representing clients in disputes concerning restrictive covenants, trade secrets, raiding, unfair competition, licensing, and other business and employment issues. Alex can be reached at astotland@hertzschram.com or (248)335-5000.