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A federal court recently held that a five-year non-compete agreement with owners of an acquired copier services company was unreasonable, finding that the contract should terminate in June of this year rather than in 2003. The court also held that a non-compete agreement signed by a former employee who went to work for the defendants was unenforceable ( IKON Office Solutions v. Dale, No. 01-286, D. Minn.) IKON sued Computer Solutions Inc. and principals Robert J. Dale and William J. Dale in February, contending that the Dales had sold their previous business to IKON with an agreement to limit their service business to computer systems for a five-year period. However, IKON alleged that the Dales violated this agreement and competed with IKON by servicing copiers and other office equipment. IKON also complained that CSI employee Terry R. Nissen quit IKON to join CSI in December in violation of his employment agreement with IKON, which precluded him from competing within 75 miles of his old office for a period of one year. The three individual defendants were also guilty of misuse of trade secrets, IKON charged. JUDGE LIMITS NON-COMPETE Judge David S. Doty of the U.S. District Court in Minnesota found the non-compete agreement between the Dales and IKON enforceable, noting that the Dales had accepted $50,000 in consideration. But Judge Doty concluded that the five-year period was too long, and determined that the agreement signed in 1998 should terminate in June 2001. With regard to Nissen’s non-compete agreement, Judge Doty found the agreement unenforceable because the contract prevented Nissen from earning a living and had been imposed on Nissen without consideration by an IKON predecessor. Judge Doty also found no evidence that defendants had misappropriated trade secrets, stating his doubt that IKON could establish “that any of the information that defendants purportedly acquired from IKON is not already generally known or readily ascertainable.” Counsel for IKON: Jeremy D. Sosna of Littler & Mendelson in Minneapolis and Lawrence H. Pockers of Duane Morris & Heckscher in Philadelphia. Counsel for Computer Solutions: Jeffrey P. Anderson and John A. Fabian III of Nichols Kaster & Anderson in Minneapolis.

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