Amazon sues ex-employee who went to work for Google Cloud

Lawsuits over "non-compete" contracts aren't seen often in the tech sector, even though such agreements are commonplace. In part, that's because such agreements are generally banned in California, where many tech companies are based. The deals are legal in most states, however, so litigation does occur, usually over key employees in hot sectors.

Last week, Amazon sued Zoltan Szabadi, who worked for Amazon Web Services until May, when he moved to a job working at Google Cloud Platform. The lawsuit, first reported by Geekwire, was filed on June 27 in King County Superior Court in Seattle.

Amazon contends that Szabadi is violating the agreement, which calls him to avoid working for any competitors in the "target market" for 18 months after he leaves Amazon. It also bars him from working to hire any Amazon employees for 12 months after leaving.

Szabadi's lawyer told Amazon that his employment with Google does come with restrictions. His contract with Google states that for a period of six months, Szabadi won't be allowed to participate "directly or indirectly" in "sales, marketing, or business development... with or to any customers or strategic partners of your former employer." For the same six-month period, he's barred from assisting with the hiring of any other Amazon employees.

Amazon's lawyers say the new job will invariably require him to try to grab Amazon's "existing or prospective partners and resellers... [and] customers." In any case, the six-month time span is less than the 18 month/12 month deal crafted by Amazon.

This isn't the first time Amazon has sued a former cloud employee. As Geekwire notes, the company sued an Amazon Web Services vice president, Daniel Powers, who moved to Google in 2012.

That lawsuit ended with the judge paring back Amazon's broad contract, ending with an agreement that looks more like Google's restrictions than Amazon's. Amazon wanted Powers to have broad restrictions against competition enforced for 18 months, but a federal judge only allowed Powers to be barred from working directly with his former Amazon customers for a period of nine months.

The early history of Silicon Valley was marked by frequent movement of skilled employees. Some researchers believe that job-hopping was fundamental to building a robust tech sector in the state. The discussion over whether non-competes harm innovation heated up this year, as Massachusetts Governor Deval Patrick urged lawmakers in his state to consider following California's path.

"Supporters of the pending legislation argue that the proliferation of noncompetes is a major reason Silicon Valley has left Route 128 and the Massachusetts high-tech industry in the dust," noted a New York Times article last month on the proliferation of non-competes. A recent article in Harvard Business Review notes that nearly half of engineers nationwide have signed a non-compete clause at some point.

Massachusetts legislators who sought to ban non-competes in their state appear to be losing the battle. The Boston Globe reported yesterday that the state senate voted 32-7 to accept a compromise deal that would limit, but not ban, the agreements.