Dr Boydell was a senior employee at NZP Ltd, which operates in a very niche area of the pharmaceutical industry and is part of a larger group of companies.
Dr Boydell’s contract of employment with NZP included a 12-month non-compete clause which, amongst several other restrictions, prevented him from working for any competing business of NZP or its group companies.
Following Dr Boydell’s resignation from NZP, he stated his intention to join a direct competitor. NZP sought an injunction from the High Court to enforce two sets of restrictive covenants, in particular a non-compete clause. Dr Boydell argued that the non-compete clause was too wide and therefore unenforceable since it was an unfair restraint on trade.
The High Court upheld a revised version of the non-compete clause, removing references to NZP’s group companies. The effect of this was that the non-compete restriction remained but only in relation to NZP’s particular activities, rather than those of the group companies.
Dr Boydell appealed to the Court of Appeal, submitting that the wording of the restriction was still too wide and prevented him from working at any company producing pharmaceutical products.
The Court of Appeal upheld the High Court’s decision. It found that the non-compete sought to protect NZP’s specialist work and so, due to being incredibly niche, it was appropriate in this case to enforce a wide non-compete clause in order to give adequate protection to NZP’s legitimate interests.
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