Ingersoll-Rand Co. v. Ciavatta

The opinion of the Court was delivered by

The issue in this appeal is the enforceability of an employee invention “holdover” agreement. Specifically, the issue presented is whether a “holdover” clause requiring an employee to assign a post-termination invention that does not involve an employer’s trade secret or proprietary information is enforceable. The products relevant to this dispute are a new type of friction stabilizer, which defendant invented and patented, and a split-set friction stabilizer, manufactured and distributed by plaintiff. Both devices are used in the mining industry to prevent the fall of rock from the roof and walls of underground mines. The Appellate Division reversed the Chancery Division’s ruling in favor of plaintiff. 216 N.J.Super. 667 (1987). We affirm.

I

Plaintiff Ingersoll-Rand Company is a New Jersey corporation with its corporate headquarters in Woodcliff Lakes, New Jersey. Plaintiff Ingersoll-Rand Research, Inc. is a wholly-owned subsidiary of Ingersoll-Rand and is located in Princeton, New Jersey. For purposes of this opinion, we refer to plaintiffs collectively as Ingersoll-Rand.

Ingersoll-Rand is engaged in the research, development, manufacture, and sale of products for use in various heavy industries. It does business through more than thirty divisions, which are organized into eleven business groups that cover a broad range of technology, including air compressors, construction equipment, mining machinery, oil field products, and tools. Ingersoll-Rand’s sales exceed $2 billion and the company dedi *613 cates approximately 3.5% to 4.0% of its revenues, or $70-80 million, to research and development.

Historically, one of the dangers of underground mining is the potential collapse of a mine’s rock roof. Several methods and devices have been employed to stabilize the strata of rock layers in the roof of a mine. In 1973, Dr. James Scott, a Professor of Mining Engineering at the University of Missouri, conceived of the friction stabilizer roof support system and communicated with Ingersoll-Rand regarding the development of this concept. Ingersoll-Rand, working with Dr. Scott, expended substantial sums on the research and development of the product. 1 On December 2, 1975, the United States Patent Office issued the first patent for Dr. Scott’s friction stabilizer. Dr. Scott subsequently assigned the patent to Ingersoll-Rand. In February 1977 Ingersoll-Rand began marketing its stabilizer under an agreement with Dr. Scott:

The Ingersoll-Rand split-set friction stabilizer consists of a tubular metal element that is larger in diameter than a predrilled hole formed in the roof of a mine. The stabilizer is forcibly inserted in the hole. As the stabilizer is forced into the pre-drilled hole, it undergoes radical deformation, causing the tube to react outwardly against the surface defining the hole. This force provides a frictional grip along the length of the tube, which stabilizes the rock strata of the roof. An example of a simple friction stabilizer would be a nail driven into a piece of wood. Ingersoll-Rand’s friction stabilizer represented a breakthrough in mine roof support equipment.

The development of Ingersoll-Rand’s roof stabilizer was well documented in the industry. Ingersoll-Rand, beginning in the *614 mid-1970s, extensively marketed and promoted the product through advertisements, pamphlets, and technical articles. These publications thoroughly detailed the stabilizer’s configuration, composition, method of operation, test results, performance capabilities, and sales information. The technology employed to manufacture the device is over fifty years old.

The split set stabilizer has been a very successful product for Ingersoll-Rand. It represented over half of all stabilizer units sold in the United States for metal and non-metal mines, with over one million units sold in 1984. Ingersoll-Rand controls over ninety percent of the sub-market for friction stabilizers. Ingersoll-Rand has never reduced the price of the split set below list in response to competition; and prior to 1983, when the defendant’s company, Safeguard Energy Products, Inc., entered the market, only one other competitor was in the submarket: Atlas Copco Corporation. The design of Atlas Copco’s friction stabilizer is identical to a configuration of the Ingersoll-Rand stabilizer sketched by Dr. Walter McGahan of Ingersoll-Rand Research on December 10,1978. Friction stabilizers, however, do compete with other methods of roof stabilization.

Defendant, Armand Ciavatta, is a 57-year-old engineer. He was graduated from the Rhode Island School of Design in 1953 with a Bachelor of Science degree in machine design. Subsequently, he took classes in mining, tunneling, and heavy construction engineering as well as graduate business classes. Since 1950, Ciavatta has held a number of technical engineering positions involving a variety of engineering principles, including: working for a division of General Signal Corporation on instrumentation used in weight and volume measurement; conducting quality control tests for instrumentation used in the first commercial nuclear reactor; as chief project engineer for the Revere Corporation of America where he worked with transducers and other force-measuring devices; and as Vice President of Engineering and Quality Control for Iona Corporation, where he was responsible for engineering development *615 and testing of the company’s line of kitchen and consumer appliances. He was also self-employed for a period of six years when he provided engineering consulting services in a variety of areas, including manufacturing, valve engineering, tooling, public opinion testing, and market research. While employed by Revere Corporation, Mr. Ciavatta invented and obtained a patent for a force transducer using strain gauges. Although he had no agreement with his employer, he nevertheless assigned this patent to Revere.

Ciavatta joined the Millers Falls Division of Ingersoll-Rand as Director of Engineering and Quality Control in 1972. From 1972 to 1974, Ciavatta was responsible for quality control and materials management in the production of hand and electric tools. In the fall of 1974, the company terminated his employment in the Millers Falls Division, at which time he became Program Manager with Ingersoll-Rand Research, Inc. As a condition of his employment with Ingersoll-Rand Research, he executed an “Agreement Relating to Proprietary Matter” (Proprietary Agreement) in which he agreed, in pertinent part:

1. To assign and I hereby do assign, to the COMPANY, its successors and assigns, my entire right, title and interest in and to all inventions, copyrights and/or designs I have made or may hereafter make, conceive, develop or perfect, either solely or jointly with others either

(a) during the period of such employment, if such inventions, copyrights and/or designs are related, directly or indirectly, to the business of, or to the research or development work of the COMPANY or its affiliates, or

(b) with the use of the time, materials or facilities of the COMPANY or any of its affiliates, or

(c) within one year after termination of such employment if conceived as a result of and is attributable to work done during such employment and relates to a method, substance, machine, article of manufacture or improvements therein within the scope of the business of the COMPANY or any of its affiliates.

Additionally, in Paragraph 4 of the Agreement, Ciavatta agreed:

4. Not to divulge, either during my employment or thereafter to any person, agency, firm or corporation, any secret, confidential or other proprietary information of the COMPANY or any of its affiliates which I may obtain through my employment without first obtaining written permission from the COMPANY.

*616 Ciavatta signed this Agreement on October 1, 1974, and at that time he had read and understood its terms.

While employed by Ingersoll-Rand Research as a Program Manager from October 1974 through March 1978, Ciavatta worked on a variety of development projects, other than those relevant to this litigation, including a tunneling device and the development of coal haulage machinery. As a result of his participation in these development projects, Ciavatta became interested in underground mining and read extensively the industry literature on the subject. From 1974 to 1978, Ciavatta never was formally involved in or assigned to research or development relevant to the friction stabilizer. Nevertheless, Dr. McGahan, the Director of Research, encouraged the research staff to be creative, to discuss ideas for projects or potential projects beyond those to which they had been assigned. These ideas were to be submitted on disclosure forms. Through 1975, Ciavatta submitted thirteen patent disclosures to his employer for mining technology and instrumentation. Five of the thirteen proposals were for devices to support or stabilize roofs of underground mines. Four of the five invention disclosures were not friction stabilizers, but one was an improvement to Ingersoll-Rand’s split-set. Ciavatta’s work during this period was his first exposure to mining support equipment. Ingersoll-Rand chose not to pursue any of his concepts. Thereafter, defendant claims, he lost his motivation to invent and did not originate any additional concepts while employed by Ingersoll-Rand.

In March 1978, the company transferred Ciavatta to the Split Set Division of Ingersoll-Rand Equipment Corp. While there, he served as Manufacturing Manager and Quality Control Manager. Ingersoll-Rand does not fabricate the stabilizer in any of its plants. Rather, it contracts with two vendors who manufacture the Split Set roof stabilizers, which Ingersoll-Rand then sells to the mining industry. As manager of manufacturing, it was Ciavatta’s position to administer the manufacturing program. His responsibilities in that post included supervising the *617 manufacture; production, quality control, and distribution of Ingersoll-Rand’s Split Set roof stabilizers. During this period, the company did not employ Ciavatta to design, invent, or modify the basic configuration of its Split Set roof stabilizer, and in fact he did not do so. Ciavatta did, however, have access to Ingersoll-Rand’s manufacturing drawings, materials, and specifications. Ingersoll-Rand considers all of that information confidential, although the information had been published in industry trade publications. At the Ingersoll-Rand Research Center the company maintains a security system in order to ensure the confidentiality of its information. Drawings are stamped proprietary, visitors are escorted while in the Ingersoll-Rand Research Center, vendors must sign proprietary information agreements, and all employees must enter into a Proprietary Master Agreement similar to that at issue in this case.

In the spring of 1979, as a result of certain quality control problems, Ciavatta stopped certain shipments of the stabilizer and recommended that the vendors modify their production process. Ciavatta’s superior countermanded this directive and directed the vendors to make their scheduled shipments. Subsequently, in June of that year, Ingersoll-Rand terminated Ciavatta’s employment. Ciavatta claims that the company did not offer any explanation for his termination; the company claims it terminated his employment because of unsatisfactory performance and his poor relations with fellow employees.

After his termination, Ciavatta circulated more than one hundred resumes seeking employment with other engineering firms. From February to July 1980, he briefly obtained employment as general manager of a bankrupt company located in Michigan.

Ciavatta asserts, and the trial court found, that he first conceived of the invention in dispute in the summer of 1979 while unemployed and off the Ingersoll-Rand payroll. Apparently, he was installing a light fixture in his home when he first *618 conceived of his invention, an elliptical metal tube designed to stabilize the roofs of mines. While searching for employment following his discharge from Ingersoll-Rand, Ciavatta intermittently worked on his design. He completed his first sketch of the stabilizing device on August 25, 1979, approximately two months after Ingersoll-Rand fired him. Ciavatta’s stabilizer differs from Ingersoll-Rand’s in two respects: its tubular portion is closed rather than split, and the tube is elliptical in shape.

As he continued to develop the stabilizing device, Ciavatta consulted a patent attorney to determine his rights with regard to the device. At his attorney’s request, Ciavatta obtained a copy of the Ingersoll-Rand employee Proprietary Agreement he had signed when beginning his employment with IngersollRand Research. He did not inform Ingersoll-Rand of his activities with respect to his roof support system. By letter dated October 24, 1979, his attorney advised Ciavatta that “this invention is yours and Ingersoll has no enforceable claim thereto.”

After his brief employment with the bankrupt company in Michigan, Ciavatta returned to his work on the stabilizing device and began refining the system in a more systematic manner. Although still looking for employment, he “started to go through significantly more calculations,” and obtained sample tubing to run experimental tests. In March 1980, nine months after his termination, Ciavatta filed for a United States patent on the device and was awarded U.S. Patent No. 4,316677 in February 1982. Subsequently, in March 1982, Ciavatta received a second patent, U.S. Patent No. 4322183, which involved an improvement to the roof stabilizer protected by Ciavatta's first patent.

In July 1980, Ciavatta prepared a business plan and solicited venture capital from a number of firms, including Kerr McGee Co. and United Nuclear Corp. These financing efforts failed, however, and Ciavatta used his life savings and borrowed over *619 $125,000 from his brother and a bank to take his invention to the marketplace. Ciavatta exhibited his now-patented invention at a trade show in October 1982, and sales of his product then began. He made his first sale in January 1983. Sales for 1983 totalled approximately $30,000. By the time that the trial of this case commenced in June 1985 his total sales approximated $270,000. Ciavatta’s stabilizer sells for approximately 15% less than Ingersoll-Rand’s stabilizer. The trial court observed “[t]he market place has begun to accept defendant’s product and his device appears to be a competitive threat to plaintiff’s device.” 210 N.J.Super. at 344.

The parties disagree on when Ingersoll-Rand learned of Ciavatta’s invention. The company acknowledges that it had learned of the model for his invention by December 1981 or early 1982. In July 1982, Ciavatta received a letter from Ingersoll-Rand’s patent counsel requesting that he assign his patent to the company. Ciavatta communicated to IngersollRand that his lawyer had advised him that he was not obligated to assign his patent to his former employer. Simultaneously, Ingersoll-Rand employees prepared several internal memoranda analyzing the feasibility of Ciavatta’s product and its potential competitive impact. Ingersoll-Rand, now aware of the challenge posed by Ciavatta’s invention, began to consider competitive responses to the introduction of the invention in the market.

In September 1983, after Ciavatta had sold his product to several Ingersoll-Rand customers, the company decided to lower the price of its split set stabilizer and to commence this lawsuit.

Ingersoll-Rand initiated suit against Ciavatta on April 17, 1984, alleging that the defendant had violated the employment agreement by failing to assign the invention and related patents that he conceived after leaving Ingersoll-Rand. Specifically, Ingersoll-Rand sought assignment of the patent for Ciavatta’s friction stabilizer and an accounting for profits. Ciavatta *620 denied that he had violated the agreement or that he was obligated to make the assignment. He also asserted a number of affirmative defenses including unenforceability of the agreement, estoppel, laches, and unclean hands. The trial court rejected these claims.

Ciavatta was subsequently granted leave to amend his answer to add a counterclaim for alleged libel and unfair competition. Defendant’s counterclaim was severed for the purpose of trial, as was the accounting requested by Ingersoll-Rand.

The issue of Ciavatta’s liability for breach of contract was tried without a jury. Ingersoll-Rand attempted to prove that Ciavatta had stolen his invention and that he had relied on Ingersoll-Rand’s trade secrets or other confidential information in conceiving his product. Ciavatta argued that the “holdover” clause is unenforceable in the absence of a finding that the invention was based on the employer’s trade secrets or other confidential information, relying on our decisions concerning the enforceability of an employee’s covenant not to compete, in Solari Industries Inc. v. Malady, 55 N.J. 571 (1970), and Whitmyer Bros., Inc. v. Doyle, 58 N.J. 25 (1971).

The trial court made detailed factual findings establishing that Ciavatta did not pirate any trade secrets or confidential information in conceiving his invention. Indeed, the trial court found that Ingersoll-Rand’s split set technology “does not involve trade secrets or other confidential information since the specifications, methods of manufacture and operating principles relating to the device are available to the public or are easily discoverable.” 210 N.J.Super. at 355. Ingersoll-Rand’s “manufacturing process has been in existence for over 50 years. Anyone can buy plaintiff’s product, observe it, measure it and analyze its steel content. In short, there does not appear to be anything secret about it or the principles it utilizes.” Id. at 353.

Nevertheless, the trial court enforced the agreement, concluding that the Solari/Whitmyer reasonableness test was *621 inapplicable to holdover agreements. Instead, the court articulated a general reasonableness test and determined that the balance tilted in favor of Ingersoll-Rand because Ciavatta’s “knowledge of the underground mining industry was based entirely on his employment experience with Ingersoll-Rand,” and he had been “enriched” by the company's non-confidential ideas and by his access to Ingersoll-Rand’s “information, experience, expertise and ideas and the creative interaction gleamed from his employment with the company.” The court also determined that Ciavatta’s engineering experience was so diverse that “assignment of this specific invention did not unreasonably preclude realistic employment opportunities in other fields.” 210 N.J.Super. at 353-55. On March 20, 1986, the trial court entered judgment on its decision and certified it as a final judgment, although the issue of damages and defendant’s counterclaim remain to be resolved. The trial court stayed its judgment pending completion of the appellate process. Defendant Ciavatta filed a timely Notice of Appeal on May 2, 1986.

The Appellate Division accepted the trial court’s factual determination but reversed the judgment, reasoning that the principles enunciated in the Solari/Whitmyer decisions should apply. 216 N.J.Super. at 671-72. Applying the Solari/Whitmyer reasonableness test, the Appellate Division concluded that Ingersoll-Rand’s legitimate interests were protected since none of the company’s trade secrets or other confidential information was used by Ciavatta in devising his invention, that enforcement of the agreement would “impose upon the employee a prohibition effective for one-year over an unlimited geographical area, from working on mine supports for any company in the mining industry,” and result in a “lessen[ing] [of] competition and keep[ing] potentially competitive products from the market.” Id. at 672-76.

Accordingly, the Appellate Division reversed the trial court’s judgment and remanded the case to the Chancery Division for the dismissal of the company’s complaint and for trial of the *622 defendant’s counterclaim. We granted Ingersoll-Rand’s petition for certification, 108 N.J. 192 (1987).

II

Paragraph 1(c) of Ciavatta’s Proprietary Agreement with Ingersoll-Rand comprises a one-year so-called “holdover” agreement under which the employee promises to assign his or her “entire right, title and interest” in any invention he or she creates during a one-year period following termination of employment if that invention is “conceived as a result of and is attributable to work done during such employment.” The central question presented in this case is the enforceability of that covenant.

The common law regards an invention as the property of the inventor who conceived, developed, and perfected it. International Pulverizing Corp. v. Kidwell, 7 N.J.Super. 345, 348 (Ch. Div.1950); Blum v. Commissioner of Internal Revenue, 183 F.2d 281 (3rd Cir.1950); New Jersey Zinc Co. v. Singmaster, 71 F.2d 277, 279 (2nd Cir.), cert. denied, 293 U.S. 591, 55 S.Ct. 106, 79 L.Ed. 685 (1934); 56 C.J.S. Master and Servant § 73 (1948); 53 Am.Jur.2d Master and Servant § 111 (1970); 2 L. Altman, Callman’s Unfair Competition, Trademarks and Monopolies § 14.27 (4th ed. 1982). The Supreme Judicial Court of Massachusetts accurately summarized the common-law position in National Development Co. v. Gray, 316 Mass. 240, 246, 55 N.E.2d 783, 786 (1944):

One by merely entering an employment requiring the performance of services of a noninventive nature does not lose his rights to any inventions that he may make during the employment ... and this is true even if the patent is for an improvement upon a device or process used by the employer or is of such great practical value as to supersede the devices or processes with which the employee became familiar during his employment____ The law looks upon an invention as the property of the one who conceived, developed and perfected it, and establishes, protects and enforces the inventor’s rights in his invention unless he has contracted away those rights.

Thus, employment alone does not require an inventor to assign a patent to his employer. Absent a specific agreement, *623 an employed inventor’s rights and duties with respect to an invention or concept arise from the inventor’s employment status when he actually designed the invention. See Note, “Patent Ownership: An Employer’s Right to His Employee’s Invention,” 58 Notre Dame L.Rev. 863, 866 (1983).

Generally, where an employer hires an employee to design a specific invention or solve a specific problem, the employee has a duty to assign the resulting patent. Where the employee is not hired specifically to design or invent, but nevertheless conceives of a device during working hours with the use of the employer’s materials and equipment, the employer is granted an irrevocable but non-exclusive right to use the invention under the “shop right rule.” A shop right is an employer’s royalty or fee, a non-exclusive and non-transferable license to use an employee’s patented invention. See United States v. Dubilier Condenser Corp., 289 U.S. 178, 188, 53 S.Ct. 554, 557, 77 L.Ed. 1114, 1119 (1932); Kinkade v. New York Shipbuilding Corp., 21 N.J. 362, 369-71 (1956); 9 S. Williston, A Treatise On the Law of Contracts § 1016, at 110 (3d ed. Jaeger 1967 & Supp.1987).

Since the common-law doctrines are vague and ambiguous in defining the rights of employers and employees in employees’ inventions, most employers use written contracts to allocate invention rights. Jamesbury Corp. v. Worcester Valve Co., 443 F.2d 205, 214 (1st Cir.1971); Note, “Reform for Rights of Employed Inventors,” 57 S.Cal.L.Rev. 603, 608 (1984) (hereinafter Note, “Reform”); Gullette, “State Legislation Governing Ownership Rights in Inventions Under Employee Invention Agreements,” 62 J.Pat.Off.Socy. 732, 738 (1980). Such contracts requiring an employee to assign to the employer inventions designed or conceived during the period of employment are valid. Misani v. Ortho Pharmaceutical Corp., 44 N.J. 552, appeal dismissed, 382 U.S. 203, 86 S.Ct. 398, 15 L.Ed.2d 270 (1965); Bandag, Inc. v. Morenings, 259 Iowa 998, 146 N.W.2d *624 916 (1966); Cahill v. Regan, 5 N.Y.2d 292, 184 N.Y.S.2d 348, 157 N.E.2d 505 (1959).

The contractual allocation of invention rights between employers and employees is especially critical given the fact that 80% to 90% of all inventions in the United States are made by employed inventors. See Rights of Employed Inventors, 1982: Hearings on H.R. 4732 and H.R. 6635 Before the House Subcomm. on Courts, Civil Liberties, and the Administration of Justice, 97th Cong., 2d Sess. 1 (1982) (remarks of Rep. Kastenmeier) (quoting Patent Office report stating that 84% of the U.S. patents go to corporate assignees); Note, “Reform,” supra, 57 S.Cal.L.Rev. at 604 & n. 12. The United States is not alone in this regard. In West Germany, 60% to 75% of all inventions come from employed inventors; in France the figure is 70% to 75%. In both countries, 90% of all useful inventions are made by employees. Commission of the European Communities, “Comparative Study of Employees’ Inventions Law in the Member States of the European Communities,” 2 Collective Studies, Labour Law Series 9 (1977).

Most large, technologically advanced companies today require their employees by contract to assign their patents to their employers. Note, “Patent Ownership: An Employer’s Rights to His Employee’s Invention,” 58 Notre Dame L.Rev. 863, 864 (1983). Courts, however, will not enforce invention assignment contracts that unreasonably obligate an employee in each and every instance to transfer the ownership of the employee’s invention to the employer. Comment, “Employer’s and Employee’s Rights in Patents Arising from the Employment,” 11 Vill.L.Rev. 823 (1966). Additionally, several states have recently adopted legislation that delimits employer-employee invention assignment agreements. Those statutes restrict the instances in which employers may compel the assignment of employee inventions. See Minn.Stat.Ann. § 181.78 (1980); N.C.Gen.Stat. § 66-57.1 to 57-2 (1981); Wash.Rev.Code Ann. § 49.44.140 (1987); Cal.Lab.Code § 2870 (West 1987). *625 All of these statutes provide that any employee invention assignment agreement that purports to give employers greater rights than they have under the statute is against public policy and, consequently, unenforceable. 2

In the instant case, the contract involves the assignment of future or post-employment inventions. Contractual provisions requiring assignment of post-employment inventions are commonly referred to as “trailer” or “holdover” clauses. The public policy issues involved in the enforceability of these holdover clauses reflect the dichotomy of our views on the rights of an inventor and rights of an employer. Our society has long recognized the intensely personal nature of an invention and the importance of providing stimulation and encouragement to inventors. Some commentators believe that the existing patent system does not present sufficient motivation to an employee-inventor. These commentators allege that the United States is in danger of losing its position as technology leader of the world. They cite for support that America is experiencing a declining patent balance and is less patent-productive than many foreign countries. More and more United States patents *626 are not issued to United States citizens and companies but to foreigners. Note, “Reform,” supra, 57 S.Cal.L.Rev. at 622; Note, “Patent Ownership: An Employer’s Rights to His Employee’s Invention,” supra, 58 Notre Dame L.Rev. at 864. Interestingly, Japan, which began tying employed inventors’ compensation to the market value of the invention in 1959, has witnessed a dramatic increase in the number of inventions generated by employed inventors. Stipp, “Inventors Are Seeking Bigger Share of Gains from Their Successes, Wall St. J, Sept. 9, 1982, at 1, col. 6.

To encourage an inventor’s creativity, courts have held that on terminating his employment, an inventor has the right to use the general skills and knowledge gained through the prior employment. See Boost v. Faunce, 17 N.J.Super. 458, 464 (App.Div.1952); Note, “Patent Ownership,” supra, 58 Notre Dame L.Rev. at 878. Moreover, an employee may compete with his former employer on termination. See Whitmyer Bros., Inc. v. Doyle, supra, 58 N.J. at 33. Nonetheless, it is acknowledged that the inventive process is increasingly being supported and subsidized by corporations and governments. It is becoming a more collective research process, the collective product of corporate and government research laboratories instead of the identifiable work of one or two individuals. Stedman, “Rights and Responsibilities of the Employed Inventor,” 45 Ind.L.J. 254 (1974). Employers, therefore, have the right to protect their trade secrets, confidential information, and customer relations. Whitmyer Bros., Inc. v. Doyle, supra, 58 N.J. at 32-33; Solari Indus., Inc. v. Malady, supra, 55 N.J. at 576. Thus, employees and employers both have significant interests warranting judicial attention.

In view of the competing interests involved in holdover agreements, courts have not held them void per se. Rather, the courts apply a test of reasonableness. See generally Knoth, “Assignment of Future Inventions,” 27 Chi.-Kent L.Rev. 295, 296 (1949) (“As a broad proposition, contracts that are unrea *627 sonable are unenforcible; that is, if the restraints imposed are unlimited as to time, space or subject matter.”). Moreover, courts strictly construe contractual provisions that require assignment of post-employment inventions; they must be fair, reasonable, and just. Gas Tool Patent Corp. v. Mould, 133 F.2d 815 (7th Cir.1943); Deller’s Walker on Patents § 374, at 474 (1966); 6A A. Corbin, Corbin on Contracts § 1934A, at 106 (1962). Generally, a clause is unreasonable if it: (1) extends beyond any apparent protection that the employer reasonably requires; (2) prevents the inventor from seeking other employment; or (3) adversely impacts on the public. See Dorr-Oliver, Inc. v. United States, 432 F.2d 447, 193 Ct.Cl. 187 (1970); GTI Corp. v. Calhoon, 309 F.Supp. 762 (S.D.Ohio 1969); Universal Winding Co. v. Clarke, 108 F.Supp. 329 (D.Conn.1952); Note, “Patent Ownership,” supra, 58 Notre Dame L.Rev. at 879.

New Jersey courts previously have not specifically addressed the enforceability of a “holdover” clause. We have, however, addressed the enforceability of analogous employee noncompetition contracts. We find that our determination of the enforceability of those post-contracts is applicable to our determination in this case of the enforceability of “holdover” clauses. See Whitmyer Bros., Inc. v. Doyle, supra; Solari Indus., Inc. v. Malady, supra.

Solari was an appeal from the denial of an employer’s application for an injunction against a former employee’s breach of a noncompetition provision in his employment contract. After termination of his employment, defendant went out of the country and obtained a franchise to sell a competing firm’s product in the United States. The former employer sued, claiming breach of the noncompetition clause of its former employee’s employment contract. The Chancery Division denied injunctive relief, and the employer appealed. We remanded after concluding that such provisions were enforceable, and held that the plaintiffs are entitled

to that limited measure of relief within the terms of the noncompetitive agreement which is reasonably necessary to protect their legitimate interests, *628 will cause no undue hardship on the defendant, and will not impair the public interest. [Solari Indus., Inc. v. Malady, supra, 55 N.J. at 585.]

In Whitmyer Bros., Inc. v. Doyle, plaintiff brought suit against a former employee to enforce an agreement executed by the employee not to compete after termination of employment. The Chancery Division granted plaintiff a preliminary injunction and this Court reversed. We concluded that defendant was unlikely to injure plaintiffs government contracting business by his formation of a competing firm. Defendant argued, and this Court agreed, that he had not taken any trade secrets or confidential information nor had he interfered with the good will of his former employer’s business. 58 N.J. at 31. Defendant acknowledged that he acquired general knowledge and trade skills from his employment with plaintiff, but contended that he had the “right to use that general knowledge or skill in the only business he kn[ew] in competition with his former employer, and that the restrictive covenant [could] not lawfully or justly be enforced to preclude such use.” Ibid. We denied the employer’s request for a preliminary injunction.

In Solari and Whitmyer, we articulated a three-part test to determine the validity of a noncompetition covenant in an employment contract. Under those cases, a court will find a noncompetition covenant reasonable if it “simply protects the legitimate interests of the employer, imposes no undue hardship on the employee and is not injurious to the public.” Whitmyer Bros., Inc. v. Doyle, supra, 58 N.J. at 32-33. Solari and Whitmyer both recognize as legitimate the employer’s interest in protecting trade secrets, confidential information, and customer relations. See also A. Hollander & Son, Inc. v. Imperial Fur Blending Corp., 2 N.J. 235 (1949) (holding employee noncompetition clauses valid if reasonably necessary for protection of business of employer, not unreasonably restrictive in point of time or territory or rights of employee, and not prejudicial to public); Hudson Foam Latex Prods., Inc. v. Aiken, 82 N.J.Super. 508 (App.Div.1964) (holding contract provision prohibiting employee from working for employer en *629 gaged in similar business unenforceable without geographic limitation). Since adopting the three-part Solari/Whitmyer test, New Jersey courts have addressed similar questions with respect to lawyers, Dwyer v. Jung, 133 N.J.Super. 343 (Ch. Div.), aff'd, 137 N.J.Super. 135 (App.Div.1975) (restrictive covenants among attorneys are per se unreasonable); doctors, Karlin v. Weinberg, 77 N.J. 408 (1978) (rejecting per se rule of unenforceability with respect to physicians); accountants, Mailman, Ross, Toyes, & Shapiro v. Edelson, 183 N.J.Super. 434 (Ch.Div.1982) (accounting firm alleged insufficient encroachments on business interests to warrant enforcement of covenant); and management and consulting firms, A.T. Hudson & Co., Inc. v. Donovan, 216 N.J.Super. 426 (App.Div.1987) (enforcing two-year restriction because employer has legitimate interest in protecting his customer relationships).

In Raven v. A. Klein & Co., Inc., 195 N.J.Super. 209 (1984), the Appellate Division applied the Solari/Whitmyer test in a case involving the enforcement of trade secret protection and noncompetition provisions in an employment agreement. The agreement provided trade secret protection “during or after the course of employment” and further for noncompetition with defendant “for a period of ten years.” Id. at 213. The court began its analysis by stating that the law in New Jersey is that “restrictive covenants will be enforced to the extent that they are reasonable as to time, area and scope of activity, necessary to protect a legitimate interest of the employer, not unduly burdensome upon the employee, and not injurious to the public interest.” Id. (citing Solari Indus., Inc. v. Malady, supra, 55 N.J. at 585). The court observed that it would not enforce restrictive covenants “principally directed at lessening competition.” Raven v. A. Klein & Co., Inc., supra,