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Washington Journal of Law, Technology & Arts

Authors

Hui Shangguan

Abstract

Non-compete agreements are commonly used in both the United States and China, and are regarded as an important means for employers to prevent employees or rival companies from using valuable trade secrets for competitive purposes. Despite their popularity, however, the enforceability of non-competes in both countries can be difficult to determine. In the U.S., the level to which non-competes are fully enforced varies by jurisdiction. While some state courts apply a “rule of reason,” others, such as California, prohibit non-competes altogether. In contrast, Chinese courts tend to support non-competes. This Article provides a comparative perspective of non-competes in the U.S. and China, highlighting different factors that the two countries consider when deciding enforceability. Specifically, courts in the U.S. focus on the existence of legitimate business interests, while courts in China focus on economic compensation. In order to curb the over-enforcement of non-compete agreements in China and keep the balance between trade secret protection and employee mobility, this Article recommends that China define the protectable business interest by statute and narrowly construe the validity of non-compete agreement.

First Page

405

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