BUSINESS BLOGS
BUSINESS BLOGS
category: business
13 May 2008

Editor’s note: this week we commemorate the 2-year anniversary of the lawsuit that almost killed Mojo Supreme back in May 2006. See Part 1, 2, 3, 4, 5, 6, or read on for Part 7, below:

I have a funny tendency: I go to bed thinking I can take over the world, but then when I wake up in the morning, I always wonder how I could have even conjured up such ambitious thoughts. But then at some point, I just snap out of bed and go on to my do what I need to do.

I once woke up at 4:20am on a Wednesday morning and by the next Tuesday had penned a 100-page book on Alexander the Great. Granted, it was something I had been planning for a few weeks beforehand, but once I decided to get cracking, I would only stop once the task was complete. Of course, in between writing the book, I ran sales for Askmen, my former employer. That month (July 2004) I set a record for monthly sales.

Back when I was 19 and completing my studies, I would wake up at 6am to start working at 7:30am. It was cold, it was dark, oftentimes it was raining or snowing, but regardless, I just had to get up. I had a job to do.

This time, I had a job to do, too: to crush my opponents come Monday morning at the Superior Court.

But this was different: I was not in control, or so I thought. My fate was in the hands of some judge and my faith in the legal system was slipping through my fingers as it was becoming clear that I was walking into a double-edged sword.

That Friday night, I ended up leaving the injunction lawyer’s house with mixed feelings: I could win the battle on Monday, but learning about how injunctions went, I would have to fight a long and expensive war. So unlike most nights: I went to bed pretty depressed.

For whatever reason, Saturday morning I woke up and decided to fight back. Maybe it helped that Saturday was a dreary and wet day. Maybe it’s because I just don’t like to lose.

Whatever the reason, I decided to go with my gut and try to go nuclear on Monday when I would step into court trying to defend the motion for a provisional injunction accusing me of violating my non-compete agreement.

Focus on the Debate at Hand

As we’ve stated, the violation of the non-compete was a question we were to answer at the third stage of this harrowing process. Monday morning, at the first stage, the petitioners - led by the President of the Bar Association - were trying to pass four tests in order to shut me down temporarily.

As we examined further in Part 6, those four tests were:

- Urgency: there must be an urgent need to shut me down until the trial.

- Clear Right: At face value, there is an actual matter here which is not frivolous.

- Balance of Inconvenience: Who suffers more from the Judge’s decision if one is granted / not granted.

- Irreparable Harm: The loss to the Petitioners is irreparable and unmeasurable.

At the risk of sounding over-confident in hindsight, the truth is I had very little doubts about shattering their arguments at this level. This was not a “best-of-4 exercise” where they could pass 2 or 3 tests only and walk away victorious; they had to nail all four tests.
If I could defend against urgency, I would live to see the Interlocutory round.

If I could somehow break urgency and one more test, I would give them a disincentive to continue, I naively thought, because the Interlocutory injunction requires that you pass the a) Clear Right, b) Balance of Inconvenience and c) Irreparable Harm tests.

Truth is, the judge could have said that they failed all four and another judge could come to a different conclusion at the next phase. Moreover, my interpretation of the civil code of procedure was limited at best.

When there is no playbook to refer to, the fact that I speak with such conviction and confidence is a plus. In this case, I could go in thinking that the sky was blue, if the big fat book said the sky was red, I would be out of luck.

Keep Your Mind Focused on the Bigger Issue, Too

That Saturday morning and afternoon, I would rotate between covering the more mundane aspects of using the evidence on the face of the record (basically limited myself to their seven affidavits) to defend against the motion to shut me down.

This was a rather mundane and boring exercise where I would have to identify weaknesses in both what they were saying and how they were saying it. This part requires a 1,000-word post in itself, I might one day dive into the actual seven affidavits and highlight what I did. But for the sake of this series, I will just say that this was not the fun part.

The funner part was the strategy around the non-competition matter.

I had to choose between asserting that:

1- the non-competition was not valid

OR

2- the businesses were not competitive.

Frankly, this was a somewhat moot point because I could not introduce new evidence.

More importantly, I think a lawyer would have gone for the first assertion; I decided to plant a seed of doubt around the first item but stress on the second.

I don’t know if this was the wisest move. It was the honest, honorable and right thing to do. I did not care if the non-competition was valid or not, in my head and in my heart, I was not competing with them and felt that if I spend too much time debating the first issue, I’d come across as insincere and a douchebag in the Judge’s eyes.

But I wanted to go nuclear, so not only would I put up an honorable resistance against the four tests, I was going to go ballistic and both:

a) destroy their arguments for an injunction
b) suggest that the non-compete was vague and excessive, but not claim that it was not valid
c) maintain that I wasn’t violating my non-compete, even if it were valid,
d) and plant the seed that I was in fact a victim of constructive dismissal (something we will cover tomorrow).

Technically, on Monday, I would have to focus on the four tests alone. But God willing, I would take every opportunity I was bestowed to open a new front and eat away at their overall case.This was a very risky move; arguably a tactical mistake.

For one, the Judge could have cut me off each time because it would be potentially off-topic, and more importantly, I was technically exposing vulnerabilities in my eventual defense. I don’t think I had any weaknesses, but then again, neither did they.

I’m big on history and one thing I try to avoid is hubris. Yes, I am confident, but I’m not stupid. I talk too much and in legal affairs, loose ships sink lips.

Of course, I was not planning (read: could not afford a sustained defense anyway) to make it to the merits stage anyway: I was going to annihilate their forces on Day 1 to reduce their desire - and arguments - to fight on.

This was in fact borrowing a page from what Israel did in the Six-Day War when its preliminary air attack destroyed the Egyptian Air Force and subsequently gave the Israelis aerial supremacy. That changed everything.

As they say: the best defense is an overwhelming offense.

In fact, I was so naive that I was hoping that their lawyers would be so impressed with my defense that they would counsel their clients into settling the matter amicably… Yeah, right: because lawyers have a tendency to not take clients’ money.

All About Non Competition Agreements

Non-competition agreements outline three variables: 1. Scope of Business, 2. Territory and 3. Term.

1. Scope of Business

Realistically, no employer can forbid you to gain an income. But sometimes a court will uphold a concise, clear, fair and valid non-competition agreement.

The key is that it cannot be so vague that there is room for interpretation and debate. If a court finds one to be unclear, they will not strive to clarify it, they will simply strike it down.But, if you are a key employee who has a reasonable, valid and enforcable non-competition clause, then non-solicitation clauses might indeed be upheld if the courts feel that you can earn an income in a way that does not violate your contract.

2. Territory

In offline settings, territory is usually limited to a city, state or country, even a continent. No one can forbid to work in a competitive business around the world. If you are an employer seeking a global Territory, good luck. Of course, if you operate online, it is reasonable, in all fairness, to ask for a worldwide clause for territory, but then to avoid the courts striking it down, you need to have a very specific Scope of Business or short Duration. If an employer is greedy, the court will decide that they are being unreasonable and strike down the non-compete. This is risky for employers and as such, an employer better not be greedy with regards to one.

3. Term/Duration

The length of time that an employer forbids you to work in a given industry, or for a given competitor needs to be reasonable. You cannot, for example, expect a judge to agree that ”forever” is reasonable. This depends on the industry, sometimes 2 years is valid, sometimes 1 year is not. It is not a black and white matter. In one case affecting Earthlink, a judge decided that even six months was too long due to the rapid changes in the online industry!

A little side note: non-competition agreements are never upheld in California. Where the big F*** You Gods where laughing at me with the one-finger salute was that while IGN was based in California, we were based in Montreal, so they had made the contract respect the laws of… Toronto, Ontario. Damn them. Damn them all.

This was a bonehead move of me, but I was one tiny shareholder so I had no real pull in these details.

Initially, I worried that I’d need not go to Toronto to fight this battle… but Montreal posed a bigger issue. As much as the Province of Quebec is a French-speaking territory, Montreal is a perfectly bilingual city. But, there was a good chance that my speaking English would ruffle some feathers.

I am perfectly bilingual but if I were to unleash hell and rain fire on my adversaries, I’d want to do that in English, not French. I gave this issue some thought and despite the Judge’s French name I decided to go in in English, but more on this this Thursday.

As if it weren’t enough, I was also flying solo without a lawyer and had decided to address both defending the four tests of the injunction and do my best to maintain that the non-competition agreement was not valid.

Rest Time

By supper time I took a break to go out for a bite with my wife. It was a cold and miserable evening. We sat in a Mexican restaurant near our home and wondered why IGN was coming after us, what we would do after the case and whether they would come after me no matter what I did afterwards. We managed to laugh about it… but jovial a mood it was not.

It was bleak. I was hoping that tomorrow was Monday, but I had one more day before my date with destiny.

I had to fall asleep first, and this night would be filled with anxiety once again.

Upcoming posts:

Wednesday: Flashback Part 8 - May 14th 2006: Constructive Dismissal

Thursday: Flashback Part 9 - May 15th 2006: The Trial

Friday: Flashback Part 10 - May 16th 2006: Verdict and Subsequent Turn of Events