I blogged before on Marsh USA Inc., et al. v. Cook. The Texas Supreme Court heard argument on Sept. 16, 2010, and came out with its decision last Friday. By a five-vote majority, with one well-written, funny concurrence by Justice Don R. Willett, and three justices in dissent, the court wiped away decades of noncompete law in Texas, making such agreements more enforceable. How did the justices make it happen? By changing the consideration needed to support a noncompete. Before, only confidential information given to the employee in exchange for the noncompete constituted valid consideration. In Marsh, Justice Dale Wainwright wrote for the court that stock options given to the employee would suffice, reasoning that the stock options incentivized the employee to work harder, thereby creating goodwill for the employer, which deserves the protection of a noncompete. But as Willett points out in his concurrence, if stock options can be consideration, then "any reward for a job well done — a raise, promotion, bonus or pension — could justify a noncompete on grounds it aligns employer/employee interests and thus bolsters ‘goodwill.’ ” While the employer won this case, many employers will lose in the long run. Noncompetes tie up talent, and it is the movement of talent that creates what the concurrence calls "economic dynamism." What's to be done if a client wants to fight the new regime? The concurrence sets out a game plan: Argue that “it is not enough merely to mutter the word” goodwill to create a valid noncompete and that the "unadorned assertion is insufficient." Rather the employer seeking to enforce the noncompete still must explain why the time, geography and/or scope limitations are reasonable and must show that the restraint does not reach beyond what’s necessary to protect the company's goodwill. Willett says that even after this decision, "You cannot simply buy a covenant not to compete." I am not sure. Let's see how the lower courts sort it out.