A Research On “Protectable Interests” In Non-Competition Covenants

Since 2008,Labor Contract Law of the People's Republic of China(hereinafter referred to as “Labor Contract Law”)established “non-competition covenant” for the first time,this legal system has been in operation for ten years.In recent years,with the development of market competition,employee turnover rate is higher and higher.There are more and more non-competition cases in the headlines.It is difficult to unify the standards in judicial practice because the law in our country is not perfect.Based on the Article 23 and 24 of Labor Contract Law,this paper holds that the“protectable interests” should be examined substantially to determine the validity of non-competition covenants.In the first chapter,there is a study of a large number of cases of non-competition disputes in the judicial practice of our country.The biggest problem is that the court has not examined whether the employer has “protectable interests” in the non-competition covenants or not,which is contrary to the “rule of reason”.The reason for this problem is the imperfect regulation of non-competition covenants in Chinese law.The current law does not establish the “protectable interests”,but it binds the duty of confidentiality with the duty of non-competition,which is not right.The second chapter analyzes the differences between the duty of confidentiality and the duty of non-competition.Starting from their theoretical origins and scope of content,this chapter discusses that the duty of confidentiality and the duty ofnon-competition should be separated.They have different legal bases and objectives,and the non-competition covenant has its independent purpose and function.Different from the most domestic papers,this paper finds the precursor of competition law theory of non-competition,that is,“restraint of trade doctrine” under the common law.Through the historical investigation of this doctrine,this paper clarifies that“protectable interests” is indispensable to the non-competition covenants and its leading objective and goal.The third chapter focuses on the specific types of “protectable interests” in non-competition covenants.Due to the lack of discussion on this issue in China,this chapter mainly draw lessons from extraterritorial legislative and judicial experience.The scope of “protectable interests” includes trade secrets,goodwill,commercial connections or customer relations,extraordinary or specialized training,as well as other information that allows employers to maintain their competitive advantage.The court also have to review public interests in cases.The fourth chapter discusses suggestions.It is important to clarify the legislative purpose of non-competition by legislation or judicial interpretation.The “protectable interests” are not limited to trade secrets.In order to correct the position of non-competition and balance the interests of all parties,it is necessary to examine the non-competition covenants substantially in the judicial practice.