Question: MARKET ACCESS INTERNATIONAL, INC. v. KMD MEDIA, LLC, 72 VA. CIR. 355 (2006)
FACTS Plaintiff produces and distributes trade publications on homeland security and information technology security. Plaintiff contracted with Defendant to sell advertising space in its publication Homeland Defense Journal. Under this agreement, Defendant agreed not to compete with Plaintiff by selling or promoting publications that competed with Plaintiff's publication for a period of one year following termination of the agreement. Plaintiff alleged that Defendant conspired to create a competing publication and sued for enforcement of its noncompete agreement. Defendant argued that the lack of a geographic limitation rendered the noncompetition agreement unenforceable as a matter of law. DECISION The court enforced the agreement. The court stated: Under Virginia law, a non-competition agreement may be enforced if the agreement is
(1) narrowly drawn to protect an employer's business interest,
(2) is not unduly burdensome on an employee's ability to earn a living, and
(3) is not against public policy.
Central to the analysis considering the reasonableness of these agreements is whether there are reasonable limits on duration, geographic area and whether the scope of the restrictions is narrowly tailored to protect the employer's interest. In this analysis Virginia courts do not consider geographic limitations alone; instead Virginia courts must consider together the intended function of the agreement and its duration as well as whether it contains a geographic limitation. The court noted that many noncompete agreements contain geographical provisions limiting the area where the employee is not permitted to seek competing work to the area the business can expect to operate. While it is relatively easy to define this scope when a business operates in a regional market: with the advent of the Internet and the nationalization of everything from products to ideas, this has become substantially more difficult.
Homeland Defense Journal holds itself out as a national publication, and indeed homeland security itself is an issue that often lends itself to discussion on the national level. While the agreement at issue lacked a geographic limitation, the agreement had a duration of only one year and limited the prohibited activities to those in direct competition with one journal. Moreover, the agreement explicitly recognized Defendant's continuing relationship with other military publications it represented. Thus, the terms of the noncompete agreement were narrowly tailored to protect Plaintiff's legitimate business interests while not prohibiting Defendant from competing in its chosen field, and so the noncompete agreement was enforceable.