BioTE Medical, LLC v. John Carrozzella, MD, JCMD Medical Services, Inc., Dan Deneui, and Terri Deneui
This case addresses whether a contractual "residual benefit" clause, requiring a post-termination fee for using a competing treatment method, constitutes a covenant not to compete under Texas law. Appellant BioTE Medical, LLC, licensed a pellet-based bioidentical hormone replacement therapy (BHRT) method. Appellee JCMD Medical Services, Inc., a former customer, terminated its agreement and began using a competitor's BHRT without paying the residual-benefit fee. BioTE Medical sued JCMD for breach of contract. The trial court granted summary judgment to JCMD, finding the clause unenforceable either as a noncompete or a violation of public policy. The appellate court reversed, holding that the residual-benefit clause is not a covenant not to compete as it does not restrict JCMD from competing with BioTE Medical, but rather from using a competitor's product. The court also declined to invalidate the clause on uncodified public policy grounds, deferring to the Legislature's policy determinations.