[gameprogrammer] Re: Non competes

On Fri, 2005-04-29 at 13:20 +0530, Gautam Narain wrote:
> Hey,
> 
> A couple of Game companies in India seem to have non competes and they are 
> pretty well known within the industry. What I mean is they have non competes 
> that states that after you leave them you cannot work in a similar company 
> for a year within the whole country. 

Non-compete clauses are really pretty common. How binding they are
depends on the country you live in. In the US their power varies from
state to state. They are nearly meaningless in, say, California. But,
they can be enforced to a certain extent in Texas. Also, if you are laid
off or fired they become meaningless. A company can't fire you and then
say you can't get another job (at least in the US, I don't know about
India).

The main power of these types of clauses is that it gives the company
the right to sue you if they think you are harming them. The cost of
defending against a suit, at least in the US, is very high. So, just
being sued is more punishment than most people want to deal with.

OTOH, even when non-compete clauses are unenforceable they have the
effect of keeping honest people honest. That is, most people with comply
with the clause because they said they would. Most people, believe it or
not, are honest and honorable and will do what they say they will do,
especially when they have signed a contract.

I have signed several such contracts and never been hurt by them. But,
in my case, they were with companies that were so specialized and so
small that losing a single technical employee to a competitor, could
seriously harm the company. 

> Now this does not exist in the regular 
> software industry which also have equally costly technology to contend with 
> when they train people. Although the company considers that I am a trained 
> professionals they claim that these are terms used to deter people from 
> leaving the company after having learnt their technology. Firstly if I do 
> join a company I wouldn't be planning on leaving it for at least a while, 

It often takes 2 or more years to learn a companies technology. It can
take much longer.

> but I would still be skeptical of wanting to sign such agreements. 

Yep, be skeptical. And, check the law in your country.

> Secondly 
> why would a good company be afraid of an employee leaving ?

No matter how good a company is, it will piss off a certain percentage
of their employees. That is a given. The hiring process is never
perfect. 

OTOH, if you are hiring smart people you will hire a number of people
who will, over time, figure out that they can make a lot more money by
using what they have learned working for them selves or for another
company than they are ever going to make working for their current
company. 


> 
> My question to all of you is - how valid are these points ? What more 
> questions can I pose to such companies which give me such an explanation. 
> Surely the regular software companies are also weary of such issues and they 
> too spends millions on technology, so how come they are able to handle such 
> issues ?

Games and the regular software industry are very different. A regular
software product usually is the end result of thousands of many years of
effort. And, such products have a reputation and an installed base that
is loyal to that product. You can know all about the product and even if
you did leave the company and try to develop a replacement for the
product it will still take you many years, much money, and you still
won't have any customers.

OTOH, games are written over a period of a few years by fairly small
groups of people. They are sold for only a few months or years. And then
they disappear. Most game companies have a small (compared to a major
software product) base of source code that they reuse. A small group of
people who know that software base can replicate enough of its
functionality to start selling games in a short time and start competing
with existing game companies.

One approach to take when negotiating over a non-compete clause is to
require them to put their money where their mouth is. Ask them to
guarantee, in the contract, that if you are fired (for any reason) or
laid off, that they will pay you your full salary for the period of the
non-compete clause to be paid as a lump sum at the time of termination.
And, to extend your benefits for the same period of time. That question
will usually make them stop and think for a minute. It may also keep you
from getting an the job.

                Bob Pendleton

> 
> Thanks
> Gautam Narain
> 
> 
> 
> Gautam Narain
> http://www.geocities.com/gautamn2000

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