I have a new business idea and am talking to consultants and potential employees. I would like to get these people under non-disclosure / non-competes. However, both the other company and I reside in California, where non-competes are unenforceable. Is there an alternative in California? Will incorporating elsewhere help? Does the enforcability of a non-compete depend on my location, the counterparty's location, or the company's?
Incorporating elsewhere does not avoid California law if your business operations occur in California - you have to foreign register/qualify for business in CA anyways before legally doing business in CA if you incorporate out of state.
Also be wary of certain quirks in cross-state rulings: From http://en.wikipedia.org/wiki/Non-compete_clause
Disclaimer: This post is not legal advice nor does it constitute an attorney-client relationship.
If the counterparty is in CA, CA courts will not enforce non-compete provisions (subject to certain exceptions). Please see Choice-of-Law and Non-Compete Provisions.
What you can include in your NDA, however, are (a) acknowledgement that the confidential information constitutes your trade secret and (b) a provision stating that the counterparty may not use the confidential information for any purpose other than a business relationship with you.
Disclaimer: This information does not constitute legal advice and does not establish an attorney-client relationship.