A year ago I sold a large, profitable website. I signed a covenant not to compete: "...the seller agrees that for a period of 3 years from date of closing, they will not directly or indirectly own, create, manage, operate, control, consult for or generate any compensation from any website which has a focus on (topic)" What if I chose to create a product on that topic, but sell it using email marketing instead of a website? Am I right in thinking that I would not be breaking my agreement? 2nd question - I own a 2nd website (I'll call it site B). The visitors to site B would be interested in this product that I plan to market. If I gain subscribers from site B by offering a scaled down version of the product for free, will I still be within the terms of my agreement? I'd appreciate any opinions - thanks
IANAL but it seems to me that the non compete me still be in place here. That is sort of a tricky one. Nigel
You would not be literally breaking the agreement, but in the U.S. and other common law states like the UK and Australia you are likely to have what is called breach of the implied covenant of good faith and fair dealing. I think you are asking for a lawsuit and you have a very real chance of losing. I think you have similar problem on your second website. Are there any geographic limitations ? There are often exceptions to geographic limitations, when it tends to create a monopoly, or when it is so broad as to deem it unreasonable.
Legal or not is not quite the issue. When users signed up with you, they may have agreed to give you their details based on your privacy policy that you had in place on your site. They would have been happy to get emails that relate to the site, (and or products and services), and as such have only given permission for the admin of *that* site to contact them. Even if you can legally do so, now that you no longer run the site, IMO, you no longer have the right to contact the users. Realistically, all site files should have been deleted a long time ago. I generally wait 30 days after a site has been sold before I delete all files etc. Part of me thinks that it is questionable for you to still have files / data relating to a site that you have sold over a year ago, even if you waited for 3 years and then re-opened the exact same site, it raises morale questions. As for your second question.... thats a tough one. "...the seller agrees that for a period of 3 years from date of closing, they will not directly or indirectly own, create, manage, operate, control, consult for or generate any compensation from any website which has a focus on (topic)" With the word "consult" there, even you giving advice on a forum (like this) to someone in the same niche, could be seen as a breach. But you wouldnt even be able to even do linkbuilding for a site in that niche without breaching the agreement. While I realise how profitable email marketing is, I think it is better to steer clear of the niche altogether. I am surprised you would sign such a clause, simply as that is very restrictive in more ways then it needs to be, and 3 years is a long time to be out of the niche that is right for you.
A lot also depends on the litigiousness of the buyer. We sold a business with a fairly thorough but reasonable "restraint of trade" that prevented publishing on the "topic". My husband was later interviewed on the "topic" by our national, daily newspaper and that was deemed by the buyer to be "publishing". The lawyers sorted it out but it cost time and money. Your buyer may "roll over and play dead" or s/he may come out fighting. Try to work out which before you do anything you might regret!
Thank you very much for your replies. I think I will put this project on the back-burner until the three years have passed.