Call it “Clash of the Titan,” emphasis on the singular: a courtroom victory for software giant Microsoft over Matt Miszewski that restrains the former employee from joining CRM rival Salesforce.com.
Miszewski, a Microsoft government services division manager until last December, violated non-compete and confidentiality agreements he “signed upon beginning work with our company” in 2007, David Howard, Microsoft vice president and deputy general counsel for litigation, told CRM Buyer. “Microsoft takes this matter seriously, and this is a first step in our intention to pursue it vigorously.”
“Salesforce.com does not comment on pending litigation,” Salesforce.com Strategic Communications Director Rochelle Garner told CRM Buyer.
Filed in Washington, a state “generally favorable to enforcing non-compete agreements,” according to employment law attorney Bill Nolan, the complaint prompted a judge to issue a temporary restraining order blocking Miszewski from joining Salesforce.com, or otherwise working for any of his old customers.
“A non-compete agreement is the most restrictive kind of a broader category we call ‘restrictive covenants,'” Nolan, a managing partner in the labor and employment law department of Barnes & Thornburg, told CRM Buyer. “They are designed to protect employers’ property, intellectual and otherwise, and are enforced, but only to the extent that they are reasonable.”
Six years ago, Microsoft squared off with Google over former exec Kai-Fu Lee, whom the courts permitted to join the search giant with certain limitations.
Get Offa Their Cloud
Puffy white clouds engraved with names like “Chatter,” “Jigsaw” and “Heroku” greet visitors to the website Salesforce.com CEO Marc Benioff founded over a decade ago. His singular vision Microsoft couldn’t have liked: “The End of Software.” In its place, migration to the cloud.
Well-known for lagging the pack by packing disks, CDs, and manufactured software, the ironically nicknamed “Mr. Softie” has been chasing Benioff for years. As Salesforce.com has received industry-wide accolades as a “most innovative company,” however, Microsoft has struggled to get into the sky.
Benioff, who spent his earlier years at Microsoft enemies Oracle and Apple, is even challenging the not-so-gentle-giant’s founder, Bill Gates, on the philanthropy front. In 2010, Barron’s named Benioff and his wife among their top 25 Most Effective Philanthropists.
It’s no wonder, then, the firms are fighting. Microsoft last week urged Salesforce customers to get off their cloud and fly over to Dynamics CRM Online. Last year, the firms sued each other over patents; this year, Microsoft’s Azure cloud platform was one of several proprietary issues as Miszewski joined Salesforce less than three weeks after leaving Redmond.
With few exceptions, in California, non-compete agreements “are unenforceable,” Travis Gemoets, a labor law and employment partner at Jeffer, Mangels, Butler & Mitchell (JMBM), told CRM Buyer. “In most states, including Washington, they are enforceable,” but only within reason.
Long, broad non-compete agreements are common between businesses — John sells John’s Plumbing to Joe, for instance, and promises not to compete for five years. But between employer and employee, they tend to last only a year, Barnes & Thornburg’s Nolan explained. It’s all part of reasonableness. “There’s a general policy consideration that we don’t want to prevent people from getting jobs,” Nolan said.
Though Microsoft’s agreement was reasonable enough to merit a restraining order, non-competes aren’t always so potent, JMBM’s Gemoets explained. Courts are unlikely to enforce agreements that over-reach or “if the employee was forced to sign in the middle of employment without receiving anything in return,” he said.
Microsoft’s non-compete is also reasonably placed. “Microsoft brought suit in its home state of Washington, ensuring that the matter would be litigated where the law is favorable,” Gemoets said.
With differing laws and precedents, state venues are “a powerful consideration,” Barnes & Thornburg’s Nolan said. “To better assure enforcement, employers are wise to establish venue in states with favorable reception.”
For employees, who often sign non-competes “without even thinking,” JMBM’s Gemoets also has some tips. Negotiate time and geographic limitations. “And require so-called ‘garden leave agreements’ that the former company continue to pay the salary during the period of the non-compete. Nobody wants to sign a non-compete, but they are becoming far more popular, especially in high-tech.”
A giant Where’s Waldo poster greets visitors on Fixing Potholes, Matt Miszewski’s light-hearted take on “transparency, open government,” and his own situation.
“A lot of folks have been asking me where I am going,” Miszewski quips. “Must be good for me to give up a great gig like the one I had at Microsoft.”
Inviting people to “stalk him on Foursquare,” Miszewski created what he calls a “new social media game,” the Waldo-esque Where in the World is Matt Miszewski Going?
“Really, it is an incredible opportunity that I am moving on to, and I can’t wait to tell the world about it,” he writes. “Just hold on one more week. It certainly could be fun.”
Social MediaSee all Social Media