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U.S. v. Addyston Pipe & Steel (J. Taft, 6th Cir. 1898) – Naked vs. Ancillary Restraints Articulated



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U.S. v. Addyston Pipe & Steel (J. Taft, 6th Cir. 1898) – Naked vs. Ancillary Restraints Articulated


  • Naked restraints are illegal per se (only purpose is to exclude competitors) but ancillary restraints may be legal (provisions that ensure that the contract can be enjoyed)

  • Permissible Ancillary Restraints (common law rules in favor of certain restrictive covenants)

  • a) by the seller of property/business not to compete w/buyer in a way that reduces its value;

  • b) by a retiring partner not to compete w/the firm;

  • c) by a partnership binding a partner not to interfere w/the business of the firm;

  • d) by the buyer of property not to use it in competition w/business retained by the seller; and

  • e) by an assistant, servant, or agent not to compete w/a former employer

  • These covenants must be reasonably necessary to a) the enjoyment by the buyer OR b) to the legitimate end of the existing partnership OR c) to the prevention of injury to the seller from use by the buyer of the thing that was sold OR d) to protect from danger of loss to the employer’s business due to an employee’s use of confidential info  Public Policy Considerations

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