Amazon and Former Exec Settle Non-Compete Dispute
Amazon and a former executive have settled their legal dispute, meaning that the executive, Gene Farrell, can work at Smartsheet.
Two weeks ago, Amazon sued Farrell, alleging that he could not perform his new job as senior vice president of product at Smartsheet, a provider of business collaboration software, without disclosing proprietary Amazon Web Services information. At issue was a non-compete agreement Farrell had with his former employer.
Last Friday, a Kings County court administrator in Washington state issued a temporary injunction to prevent Farrell from working at the software company. The lawsuit has now been dismissed, according to a Smartsheet spokesperson.
Smartsheet provided Fortune with the following statement:
The dispute between Gene Farrell and Amazon has been resolved based on temporary restrictions on the scope of Gene’s role at Smartsheet consistent with his agreement with Amazon. We are pleased to have Gene back on the team as we continue to focus on serving our customers and growing our business.
Fortune contacted Amazon (AMZN) for comment. In a statement, furnished to tech news site Geekwire, which broke the news of the lawsuit last week, Amazon said it works to resolve such cases in a way that protects the company and enables employees to take new jobs.
“In this particular instance, we were forced to resolve in court. Once we prevailed in court, we were able to reach an agreement with Smartsheet that placed temporary restrictions on the scope of Gene’s role at Smartsheet consistent with his agreement with Amazon,” according to the statement.
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Non-compete agreements, which many tech companies make new employees sign as a condition of employment, are controversial. Such agreements preclude that employee from working for a direct competitor upon leaving his or her current job. Some states, including Washington, where both companies are based, recognize these agreements while others, like California, make them difficult to enforce.
But even in California, some execs joining tech companies in Silicon Valley have found they cannot work on projects that compete directly with their former employers for a period of time. Such was the case for former EMC executive David Donatelli, who took a job with Hewlett-Packard (HPQ) a few years back. He was not able to work on HP’s storage products—the area where HP competed most directly with EMC—for a year.
These contracts are controversial. Opponents say they restrict a person’s freedom to move around. Proponents say they protect a company’s investment in training employees. Legislators in Washington and Massachusetts, which also recognizes non-compete agreements, have introduced legislation to limit their scope.