J. C. Matlock, Jr., Thomas Bailey, Laurence B. Compton, and Total Assets Protection, Inc. appealed from a temporary injunction which prohibits their competing with Data Processing Security, Inc. anywhere in the United States. It also prohibits them from maintaining an office in the United States for the conduct of their business anywhere in the world. The court of civil appeals has affirmed the decree. 607 S.W.2d 946. We modify the overbroad parts of the decree for temporary injunction, and as modified, we affirm the temporary injunction.
Data Processing Security is in the business of providing management services and systems for the protection of their customers
The president of Data Processing Security testified that there are more than 110,000 computer centers in the nation and the number is increasing. According to the evidence, Data Processing Security at the time of the hearing had forty customers and also a master list of five hundred clients whom it has served at some time in the past. The proof is that Data Processing Security has done business with less than two percent of the potential market. There was evidence and the trial court found that Matlock, Bailey and Compton were soliciting the customers of Data Processing Security for Total Assets Protection.
Matlock, Bailey and Compton were former key employees of Data Processing Security. Their employment contracts provided no term of employment; so they could be discharged at will. After they began their work, they were each asked to sign, and they did sign, a covenant not to compete. The covenant restricted their competition anywhere in the United States.
The purpose of a temporary injunction is to preserve the statutes quo pending trial on the merits, and the review on appeal is to determine whether the trial court abused its discretion. Brooks v. Expo. Chemical Co., 576 S.W.2d 369, 370 (Tex.1979); Davis v. Huey, 571 S.W.2d 859 (Tex.1978); Transport Co. of Texas v. Robertson Transports,
We presently hold that parts of the order are overbroad or too vague. The first numbered paragraph of the order properly enjoins the former employees from using trade secrets or confidential business information, but the term "or know-how" is too vague. Paragraph 1(b) of the order suggests that the former employees may not use "any ... information pertaining to customers or prospective customers of DPS." That restraint is similarly too vague to be enforced, and it is overbroad.
All of the injunction order except paragraph one is unenforceable because it is overbroad. It prohibits the former employees from competing anywhere and with anybody. A determination of the reasonableness of territorial restraints upon noncompetition contracts requires a balance of the interests of the employer, the employee, and the public while being "mindful of the basic policies of individual liberty, freedom of contract, freedom of trade, protection of business, encouragement of competition and discouragement of monopoly." Fidelity Union Life Ins. Co. v. Protective Life Ins. Co., 356 F.Supp. 1199, 1203 (N.D.Tex.1972), aff'd without opinion, 477 F.2d 594 (5th Cir. 1973); Weatherford Oil Tool Co. v. Campbell, 161 Tex. 310, 340 S.W.2d 950, 952 (Tex. 1960); 14 W. Jaeger, Williston on Contracts § 1643A (3d ed. 1972).
The breadth of territorial restrictions in noncompetition covenants may vary with the nature and extent of the employer's business operations. If the rule were otherwise, the public would be deprived of both the benefits of a service and the competition. It is our opinion that Data Processing Security has no protectable interest in the whole territory of the United States, a market which it does not and cannot reach or serve. Weatherford Oil Tool Co. v. Campbell, supra; Ofsowitz v. Askin Stores, Inc., 306 S.W.2d 923 (Tex.Civ.App.—Eastland 1957, writ ref'd).
The injunction order of the courts below is overbroad and invalid except for the part of the order which is numbered as paragraph one, as modified by this court. That part of paragraph 1(b) which enjoins Total Assets Protection, Inc. from using "any other information pertaining to customers or prospective customers of DPS" is also overbroad.
Due to the exigencies of the present case, no motion for rehearing shall be heard. Tex.R.Civ.Pro. 515. The temporary injunction is affirmed as modified.
1. Using for their own benefit in the United States or disclosing to others in the United States or anywhere else, directly or indirectly, any of the trade secrets and/or confidential business information or know-how of DPS, which includes the following:
2. [Paragraph 2 was deleted by the trial judge.]
3. Engaging in any business, directly or indirectly, in any capacity (whether as owner, partner, shareholder, agent, employee, consultant or otherwise) which is similar to or competitive with the business conducted by DPS anywhere within the United States of America; and
4. Offering, selling or attempting to sell anywhere in the United States any products or services that are competitive with the products or services of DPS.
1. Using for their own benefit in the United States, or disclosing to others in the United States or anywhere else, directly or indirectly, any of the trade secrets and/or confidential business information of DPS, which includes the following: