November 25, 2025
The Court of King’s Bench of Alberta in Occidental Petroleum Corporation v Boguslawski declined to grant an employer’s application for an injunction against a former employee because the non-competition clause the employer relied on was ambiguous and broader than necessary to protect its legitimate proprietary interests.
Facts
The facts in this case were straightforward. The Applicants sought an interim injunction enforcing a non-competition clause found in an employment agreement between Carbon Engineering ULC (“CE”) and Tom Boguslawski (“Mr. Boguslawski”). The non-competition clause read as follows:
5.1 You covenant and agree with the Company that you will not, without the prior written consent of the Company, at any time within the period of twelve (12) months following the termination of your employment for any reason, either individually or in partnership or in conjunction with any person, whether as principal, agent, shareholder, director, officer, employee, investor, or in any other manner whatsoever; directly or indirectly advise, manage, carry-on, be engaged in, own or lend money to; or permit your name or any part thereof to be used or employed by any person managing, carrying-on or engaged in a business which is in direct competition with the Company’s business within North America.
Legal Issue
The issue was whether the requested injunction should be granted. The Applicants had the onus of demonstrating that: (1) there was a serious issue to be tried; (2) irreparable harm would result if the injunction was not granted; and (3) the balance of convenience favoured the injunction.
This case was determined on the first branch of the test. In the employment context, it is “clear” that an applicant must establish a “strong prima facie case” to enforce a restrictive covenant amounting to a restraint of trade (which includes non-compete clauses). A “strong prima facie case” is one in which the restrictive covenant is reasonable and enforceable and has been breached on the facts.
Courts will consider the following questions in deciding whether a restrictive covenant is enforceable in the employment context:
- Do the restrictions protect a proprietary interest that is entitled to protection [and would a non-solicitation covenant suffice]?
- Are the restrictions reasonable in their geographic and temporal scope?
- Is the breadth of the restrictions reasonable?
- Are the restrictions in keeping with public interest?
Courts will also take into account two important principles. The first is the need for heightened scrutiny of restrictive covenants in the employment context. This is because injunctions conflict with public policy in that they limit individual freedom and impede free trade (though there are instances where a restrictive covenant can be found to be reasonable and thus enforceable). The second is that ambiguous and overbroad restrictive covenants are presumed to be unenforceable. Courts will consider the type of business and prohibited activity(ies), the length of time of the prohibition and the scope of geography of the prohibition. They will not assist in narrowing an overbroad clause to make it reasonable. There is an underlying recognition of the imbalance of power between employees and employers with respect to employment agreements.
Decision
With respect to the first question, Justice Burns noted that courts have recognized legitimate proprietary interests to include “trade secrets, confidential information, and trade connections of the employer.” In this case, the Applicants were concerned about confidential and trade secrets regarding new and emerging technology. Justice Burns found a legitimate proprietary interest that was entitled to protection but held that the interest was already protected through confidentiality and non-solicitation clauses in the employment agreement.
Regarding the second question, Justice Burns noted that the 12-month temporal restriction was not objectively unreasonable and considered the nature of the industry in question (which was new and rapidly developing). The geographical restriction to “within North America” was too broad, however, as the Applicants only operated in British Columbia and Texas.
Concerning the breadth of the restrictions, Justice Burns took issue with the lack of clarity as to the type of business that would be in direct competition with CE’s business and the activities that were prohibited. In particular, the restrictions could apply to activities other than Mr. Boguslawski’s employment (such as passive investment in a competitor’s business).
Lastly, Justice Burns noted that an employee’s acknowledgment that the impugned restrictive covenant was reasonable (as was the case here) was a consideration but not a determining factor in assessing whether a restrictive covenant was reasonable.
The Court ultimately held that the non-competition clause was unenforceable because it was ambiguous and went further than reasonably necessary in terms of geography and the activities it covered to protect legitimate proprietary interests. The Applicants thus failed at the first branch of the applicable test for an injunction.
Key Takeaways for Employers
This decision should remind employers that restrictive covenants need to be carefully crafted to ensure that they are reasonable and thus enforceable. Employers should identify the proprietary interests they are seeking to protect and consider the narrowest restrictions necessary to protect those interests as well as ensure the clauses are well-drafted to eliminate ambiguity. That said, this decision also speaks to the reluctance of the courts to interfere with an individual’s search for new employment.
If you have any questions about this decision, or about whether your non-competition or other restrictive covenants are enforceable, please reach out to our employment group.
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