Ninth Circuit Affirms Denial of Preliminary Injunction in Smart Phone Gaming Design Dispute

The Ninth Circuit affirmed the denial of a preliminary injunction in the unpublished decision in Richey v. Metaxpert, LLC. The preliminary injunction would have prevented Richey, a former employee of a boutique custom software development consultancy firm, from designing smart phone gaming software for two years following the termination of his employment with the company.

Prior to commencing employment, Richey signed an employment contract that included a noncompetition agreement stating that he would not compete with his former employer in “the computer gaming business” for a two-year period following the termination of his employment.  Computer gaming was undefined in the agreement. MetaXpert argued that a smart phone is a computer and is covered by the restrictive covenant.

The district court concluded that the term “computer gaming business” is ambiguous and that the issue of whether Richey is prohibited from designing smart phone gaming software is “appropriately resolved by the finder of fact upon further hearing at trial.”  The Ninth Circuit agreed that the undefined term “computer gaming business” is capable of being understood as having more than one meaning.  Since smart phones are often seen as distinct devices, even though oftentimes performing the same functions as personal computers, there is ambiguity as to how the term was intended in this agreement.

This case demonstrates the importance of ensuring terms included in all agreements – including noncompetition agreements – are clearly defined in order that they are not capable of having more than one meaning.

About Ashley Kasarjian

Attorney at Snell and Wilmer in Phoenix, Arizona, and publisher of the blog, Employment and the Law.
This entry was posted in Noncompetes, Other Things... and tagged , , , , . Bookmark the permalink.

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