Online terms of service restricting competitor access to website were unenforceable

If you are in the habit of reading online terms and conditions, you may have encountered a provision that looks something like this:

You may not use the site to gain competitive intelligence about [Provider] to compete with [Provider] or its affiliates.

A court recently held that a provision containing essentially this language was not enforceable against a competitor accused of accessing and copying website content. The court found the provision to be an overly broad non-compete covenant under applicable state law, and likely against public policy. For this reason (among others), the court denied the plaintiff website owner’s motion for a temporary restraining order against the defendant competitor.

The court observed that the restriction was without any geographic or temporal limit. Nor was the provision saved by the requirement that use of “competitive intelligence” be the subject of restricted use. In this particular case, plaintiff was complaining of defendant’s use of information on the publicly-visible portions of plaintiff’s website. Under Illinois law, in order for a covenant not to compete be enforceable, the covenant must secure some “protectable interest” such as a trade secret. For purposes of denying the motion for a temporary restraining order, the court found that a covenant restricting the use of such widely disseminated, freely available information is likely unenforceable.

TopstepTrader, LLC v. OneUp Trader, LLC, 2017 WL 2798397 (N.D. Ill. June 28, 2017)

Evan_BrownAbout the Author: Evan Brown is a Chicago technology and intellectual property attorney. Call Evan at (630) 362-7237, send email to ebrown [at] internetcases.com, or follow him on Twitter @internetcases. Read Evan’s other blog, UDRP Tracker, for information about domain name disputes.