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    Wisconsin Lawyer
    November 05, 2009

    Star Direct and the Practitioner 

    Attorneys who deal with restrictive covenants should take Star Direct into account in the following ways.

    Wisconsin LawyerWisconsin Lawyer
    Vol. 82, No. 11, November 2009

    In Drafting

    • To maximize the prospect of producing divisible restrictive covenants, each restriction should be self-standing, without textual cross-references. Don’t use a separate paragraph that contains the definitions of terms used in multiple restrictive covenants or a single paragraph that details the consequences of breaches of multiple restrictive covenants.
    • Carefully assess a decision to include past customers within a customer nonsolicitation clause if the provision will apply outside the route sales context.
    • Notwithstanding Star Direct, consider explicitly limiting the universe of customers covered by a nonsolicitation covenant to those with whom the employee has had recent contact or about whom the employee recently obtained confidential information.
    • In defining recent contact or acquisition of knowledge, one year is safe; more time is uncertain.
    • Emphasize special knowledge of the employer’s business and customer needs and preferences.

    Evaluating, Challenging, Defending

    • Analyze the divisibility of multiple restrictive covenants by applying the textual cross-reference test.
    • Do not assume that a nonsolicitation clause that includes past customers is unenforceable. But examine the reasonableness of the universe of past customers included within the restriction.
    • Consider the nature of the employee’s job when assessing the reasonableness of a nonsolicitation provision, generally, and as applied to past customers, specifically.
    • Consider the implications of Star Direct on restrictions regarding solicitation of prospective customers.
    • Consider the significance of silent precedent.
    • Consider whether a challenge can be characterized as distorting the right and fair reading of the restrictive covenant.
    • Assume that the ripple effect of Star Direct will make courts far less open to restrictive covenant challenges. 

     


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