(Emphasis added.) This court interpreted similar language in Moore v. Dover Veterinary Hospital, Inc., 116 N.H. 680, 367 A.2d 1044 (1976). In Moore, the defendant had agreed not to compete as a dentist either "directly or indirectly."
[1, 2] An employer seeking to enforce a covenant not to compete must show that the covenant is supported by consideration, see Lang v. Johnson, 24 N.H. 302 (1851), and that it is reasonable with respect to the interests of the employer, the employee, and the public. Moore v. Dover Veterinary Hospital, Inc., 116 N.H. 680, 367 A.2d 1044 (1976). Even if the trial court determines that the covenant is unreasonable the employer nonetheless may be entitled to equitable relief in the form of reformation or partial enforcement of an overly broad covenant upon a showing of his exercise of good faith in the execution of the employment contract.
Under New Hampshire law, covenants not to compete, while "not favorably regarded," Laconia Clinic v. Cullen, 119 N.H. 804, 408 A.2d 412, 414 (N.H. 1979), are nonetheless enforceable in certain situations. The New Hampshire Supreme Court, in Moore v. Dover Veterinary Hospital, Inc., 116 N.H. 680, 367 A.2d 1044 (N.H. 1976), established a three-part test for evaluating the validity of covenants not to compete: This case presents a subtle choice of law problem, which neither party has addressed.
Accordingly, "covenants not to compete are generally narrowly construed and cannot be extended past the fair and natural import of the language used." Gosselin v. Archibald, 121 N.H. 1016, 1022 (1981) (internal quotations omitted) (citingMoore v. Dover Veterinary Hosp., Inc., 116 N.H. 680, 686 (1976) (quoting Bowers v. Whittle, 63 N.H. 147, 148 (1884)); see Centorr-Vacuum Indus., Inc. v. Lavoie, 135 N.H. 651, 654 (1992). However, where a noncompetition covenant is ancillary to the sale of a business, it may be interpreted more liberally.
"A restraint on employment is reasonable only if it is no greater than necessary for the protection of the employer's legitimate interest, does not impose undue hardship on the employee, and is not injurious to the public interest." Moore v. Dover Veterinary Hosp., Inc., 116 N.H. 680, 684, 367 A.2d 1044, 1047 (1976) (per curiam). If the covenant fails one prong, the covenant is unenforceable. Technical Aid Corp., 134 N.H. at 8, 591 A.2d at 266. Our traditional test of reasonableness, outlined in Moore, to determine whether a covenant is enforceable applies to covenants between physicians and their employers.
In New Hampshire, a restrictive covenant is considered reasonable so long as it is "no greater than necessary for the protection of the employer's legitimate interest, does not impose undue hardship on the employee, and is not injurious to the public interest." Moore v. Dover Veterinary Hospital, Inc., 116 N.H. 680, 367 A.2d 1044, 1047 (1976). The district court ruled that the restrictive covenant in Sickles's employment contract was enforceable in all but one respect; the five-year term was found excessive.
Under New Hampshire law, as Chance points out, "a restraint on employment is reasonable only if it is no greater than necessary for the protection of the employer's legitimate interest, does not impose undue hardship on the employee, and is not injurious to the public interest." Moore v. Dover Veterinary Hosp., 116 N.H. 680, 684 (1976) (citing Restatement of Contracts §§ 513-515 (1932)). But the NDA is not "a restraint on employment"--it is a restraint on the commercial activities of a business, Chance.
In New Hampshire, courts uphold reasonable contracts which limit a former employee's ability to work if the restraint is "no greater than necessary for the protection of the employer's legitimate interest, does not impose undue hardship on the employee, and is not injurious to the public interest." Emery, 701 F.2d at 989 (quoting Moore v. Dover Veterinary Hospital, Inc., 116 N.H. 680, 684, 367 A.2d 1044, 1047 (1976). Employers have a legitimate interest in preventing former employees from using training and customer contacts to the employer's detriment.
We caution, however, that contracts not to compete are by their nature in restraint of trade and are not favorably regarded by this court. "[A] restraint on employment is reasonable only if it is no greater than necessary for the protection of the employer's legitimate interest, does not impose undue hardship on the employee and is not injurious to the public interest." Moore v. Dover Veterinary Hospital, Inc., 116 N.H. 680, 684, 367 A.2d 1044, 1047 (1976); Smith, Batchelder Rugg v. Foster al., 119 N.H. 679, 406 A.2d 1310 (1979); see 54 AM. JUR. 2d Monopolies, Restraints of Trade, and Unfair Trade Practices 521 (1971). See generally Annot., 62 A.L.R. 3d 1014 (1975).
" ACAS Acquisitions v. Hobert, 155 N.H. 381, 389 (2007). Moore v. Dover Veterinary Hosp., Inc., 116 N.H. 680, 684 (1976). A covenant's reasonableness is a matter of law.