From march , 13 , 2009 judge WADDOUPS order and memorandum decision

ON SEVEN YEARS AGGREEMENT

In around April 2002, William Boyer of Airline Protective Services (“APS”) approached

Steve Ferguson of e.Digital by telephone. At that time, Mr. Boyer and APS were located in

Washington and Mr. Ferguson was located in California. Mr. Boyer told Mr. Ferguson that he

had an idea for a product, but that Mr. Boyer wanted e.Digital to sign a confidentiality and noncompete

agreement before he revealed the idea. Mr. Ferguson agreed in principle and Mr. Boyer

and others at APS drafted an agreement.

APS’s original draft agreement contained an open-ended promise not to compete with

APS or Mr. Boyer on products relating to the idea. Mr. Ferguson did not accept an unlimited

non-compete period and, after negotiating, he and Mr. Boyer compromised on a term of seven

years. After reaching an agreement on all of the relevant terms, Mr. Boyer and Mr. Ferguson

signed a “Non-Disclosure Agreement” (the “2002 NDA”) on April 2, 2002. The 2002 NDA’s

non-compete clause states as follows:

6. Non-Competition: RECIPIENT agrees not to compete with APS, Inc. directly or

indirectly during the term of this Agreement and for a period of seven (7) years after the

termination of this agreement anywhere in the world by years after termination of this

agreement anywhere in the world by manufacturing and/or selling like or similar

components: (any and all components that APS, Inc. and manufactured, designed, etc.

“While many cases applying section 16600 arise in the context of an

employer-employee relationship, the statute also applies to other contracts, such as manufacture

or distributorship agreements between businesses or individuals.” Jan Marini Skin Research,

Inc. v. Allure Cosmetic USA, Inc., 2007 WL 1508686, *13 n.20 (Cal. App. Ct. May 24, 2007)

(citations omitted) (unpublished opinion).