for October 30, 2007
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Hot Topic:
Wencor Refutes Recent IFExpress Story
A
recent article we wrote on the digEcor/e.Digital law suit drew the ire of
Wencor’s Brent Wood and he asked IFExpress for rebuttal space – here are his
comments to us.
Nondisclosure Agreement between digEcor and e.Digital
In April of 2002, William J. Boyer and his company APS (now known as digEcor) signed a Nondisclosure Agreement with e.Digital. Among other things, the Nondisclosure Agreement contains a broad non-competition provision that restricts e.Digital from competing with digEcor for a period of seven years after the termination of the Nondisclosure Agreement. At a minimum, the non-competition restriction runs through April of 2009-and potentially longer.
The Nondisclosure Agreement has been included by digEcor as part of the current litigation between digEcor and e.Digital. At a recent hearing, e.Digital argued that the Nondisclosure Agreement was superseded by a subsequent agreement between the parties. Federal Judge Ted Stewart rejected e.Digital's arguments and issued an order on January 19, 2007 stating, as a matter of law, that the Nondisclosure Agreement has not been superseded.
Accordingly, digEcor hereby provides notice that e.Digital has a current Nondisclosure Agreement with digEcor that contains a broad non-competition provision. If you have questions regarding the extent of the restrictions or the propriety of e.Digital's current activities, please contact digEcor." Notice the language "as a matter of law,". The judge is saying that the law is clear on this matter. The April agreement is still in effect and was NOT superseded as e.digital had argued. You article reads exactly the opposite. It is because of that January ruling that DigEcor went back to court requesting that the judge enforce his ruling and stop e.digital from competing.
Since e.Digital lost on its superseding argument, it invented several new arguments to get around the signed agreement. First that even if the agreement is still valid, Bill Boyer did not disclose any new information to them. Second, since the state of California does not always enforce covenants not to compete and Washington and Utah do, when e.digital signed the contract, it believed that it would never have to abide by the NDA. This is a novel theory. "I signed the agreement and the agreement says that I intend to be bound by the agreement, but in the recesses of my mind, I believe that I will not be held to the agreement that I am signing." (This is based upon an affidavit that the signed filed with the court.)
What the court held based upon the October 9, 2007 hearing was that there apparently were factual disputes to be resolved and that the court did not have enough evidence before it yet so the motion for summary judgment was denied "without prejudice" which means that digEcor can come back before the court and re-file its motion with more evidence that might eliminate the factual disputes. The court also stated in open court that it still needed more facts to determine which state law should apply to this issue.
What e.Digital did was create enough doubt in the judge's mind that there were factual disputes and thus it was not time for the judge to make a ruling. The judge punted until the case is more fully developed. The whole hearing came down to the judge saying I don't know what is true and what is not so I need for facts presented to the court. E.digital dodged a legal deadly bullet by creating enough doubt to cause the case to proceed further. They did not win anything else and DigEcor won the right to re-file again since the motion was denied "without prejudice".
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