5th Circuit

When web-hosting company CI Host bought ad space in 1999 on Evander Holyfield's trunks for his much-anticipated heavyweight title bout with Lennox Lewis, it said a lot about the Bedford, Texas-based company. The $100,000 scheme reflected the kinds of fresh ideas--both in technology and in marketing--that have made CI Host into an industry leader in the small- and mid-sized business market. But the ad also conveyed a strong message: Like Holyfield, CI Host is not to be messed with.

A barrage of lawsuits against everyone from former employees to Internet giant America Online is sending a similar signal about the company's legal department. Not surprisingly, a number of the targets of CI Host's lawsuits call the cases nothing more than bullying tactics. But whether this aggressive approach is a good business strategy is a matter of some debate. Some corporate labor and IP lawyers call it a wise way to protect the company; others call it a risky venture.

Rachel Steely, a labor and employment partner with Gardere Wynne Sewell in Houston, says it's a good strategy for companies such as CI Host to enforce their noncompete agreements aggressively.

"Employees know whether they have a paper doll [for an employer]," she says. "With strong enforcement of noncompetes, a company is sending a message to its current employees that it stands by its agreements and that it is going to take seriously any kind of breach of these agreements. It's a good deterrent."

But ultimately, Godfrey says the company cannot afford to ignore threats to its business--whether they be from employees with few resources to defend themselves or large corporations with deep pockets.

"Our strength is the total approach to the needs of the industry we serve and protecting that position," he says. "A complacent company is doomed to failure."

staff Writer

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