Hospitality Law and Contracts in Employment
Non Compete Provisions or Restrictive Covenants in Employment
These refer to agreements made between an employer and employee restricting him from giving out confidential, trade secrets acquired from the company. This is in the event that the employee leaves the company and joins a competitive organization. According to Ripin, they aim at protecting the employer by offering protection to trade secrets and lists of customers in the effort to prevent irreparable harm (2013). They thus dictate the kinds of companies to be joined by ex-employees within a specified period.
In the hospitality industry, they are used especially for those involved in food and beverage production and pricing, sales, marketing, and top managerial positions. Besides the hospitality industry, they are also used in the pharmaceutical, manufacturing, technological, advertising industries as well as consultancy firms.
One case that highlights such provisions or covenants related to employment is PepsiCo Inc v. Redmond. In the case, the issue was whether the lower court made a correct decision by placing a reasonably likely success by PepsiCo. to claim misappropriation of trade secrets and a breach of the confidentiality agreement.
It is applicable when a long serving employee at a vital position joins a competitive company for a similar or related position. This, therefore, puts him in a position to disclose the company’s confidential information giving their competitor an unfair advantage (Epstein, 2006).
In relation to this, the party requesting for an injunction should be capable of proving the existence of a trade secret and the likelihood of its misappropriation. The responsibility taken by Redmond at Quaker Oats would require him to divulge most secrets from PepsiCo. As it would be highly advantageous to Quaker Oats, it is clearly expected from Redmond in the effort to sustain his new job.
The courts decided that the District Court was right in offering success claims for PepsiCo. It was considered that Redmond was likely to rely on secrets acquired from the company to execute his duties. Quaker Oats would thus get an advantage in pricing, distributing and marketing its drinks. The decision was upheld.
The other case is the Allis-Chalmers Manufacturing Co. v. Continental Aviation & Engineering Corp. The issue to be decided was if it was right to offer an injunction relief for an area specifically related to the plaintiff.
It can be applied where an employee in a non-compete agreement with the employer is appointed in a competitive company though in a different position.
As such, change in employment companies does not guarantee the divulgence of trade secrets. Similar positions, such as engineering for the above case but with different operations may be allowed. It prevents the ex-employee from securing a different employment position. However, an injunction is necessary for the employee not to deal with the exact job specification as before.
The judges made a ruling that Mr. Wolff would work in any engineering position at the Continental. This would include the designing and development of all fuel pumps apart from the distributor type pumps (Epstein, 2006).
A trademark is the means through which the source of a product in relation to its producer or manufacturer can be identified. Its standards are that the producers of a product in use should be known to the consumer, so that purchase is done with preference out of confidence in brand identity.
They are used to ensure that the quality of service paid for is received to protect the managers. They also protect consumers from confusing and misleading information. Additionally, the owner is given legal rights to own and use the mark.
Barth and Hayes indicate that it involves labeling the different products used in the hospitality industry. This represents the quality of the product through association with different signs, labels, marks, and wrappers that should not be used by any other producer of similar products (2009).
This is well demonstrated in Wal-Mart Stores v. Samara Brothers where the circumstances under which a product’s trademark are distinctive rendering it protected from actions of infringement under the unregistered trade dress.
This rule is applicable where the infringement of a trade dress shows secondary meaning.
Therefore, a certain brand may be identified using specific marks by the customers. This does not make it distinctive. Secondary meaning is only identified in outfits with specific shapes or designs.
The court made a conclusion that the decision of the lower court be reversed since the color was not distinctive and protectable.
Allis-Chalmers Manufacturing Co. v. Continental Aviation & Engineering Corp., 255 F. Supp. 645 (E.D. Mich. 1966).
Barth, C. Stephen, & Hayes, K. David. (2009). Hospitality law: managing legal issues in the hospitality industry. Hoboken, N.J.: John Wiley & Sons.
Epstein, A. Michael. (2006). Epstein on intellectual property. New York, NY: Aspen Publishers.
PepsiCo Inc v. Redmond, US Ct of Appeals, 7th cir (1995).
Ripin, M. P. (2013). “Keeping What’s Yours: Protecting Trade Secrets Through Non Competition Agreements”. Hotel News Resource. Retrieved 26 February 2013 from http://www.hotelnewsresource.com/article14423Keeping_What_s_Yours__Protectin _Trade_Secrets_Through_Non_Competition_Agreements____By_Peter_M__Ripin Esq_.html.
Wal-Mart Stores v. Samara Brothers 529 U.S. 205 (2000).