Enforcing Your Companys NonCompete Agreements And Protecting Its Trade Secrets

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Enforcing Your Companys Non-Compete Agreements
And Protecting Its Trade Secrets

• Robert M. Linn, Esq.
• B. Ted Licastro, Esq.
• Julie Shymansky, Esq.

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NON-COMPETE AND NON-SOLICITATION AGREEMENTS
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Most Commonly Asked Questions About Non-Compete
and Non-Solicitation Agreements
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Are non-compete agreements legally enforceable?

• Generally yes
• But must be reasonable in time and geographic
  scope

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What is a reasonably drawn non-compete
agreement?

• No bright line test

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Is a broadly drawn non-compete agreement more
enforceable?

• No
• Bigger and broader is not better

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When should non-compete agreements be signed?

• At the inception of employment

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What can employers do to make agreements more
enforceable?

• Treat employees fairly

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Are non-compete agreements enforceable if
subsequently signed?

• Yes
• Provided employer extended additional material
  consideration

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Does an employees signing of non-compete matter
if standards not met?

• Probably not

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Are all employees equally subject to signing
non-compete agreements?

• No
• Access to confidential information is key

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How are non-compete and non-solicitation
agreements different?

• Non-solicitation agreements merely bar
  solicitation activities
• Generally involving former clients and employees

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Do courts view non-solicitation and non-compete
agreements differently?

• Yes
• Courts are more inclined to enforce
  non-solicitation agreements

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Is non-compete law uniform?

• No
• Law varies by state

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Principal exception to enforceability?

• California
• Against public policy

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Are non-compete agreements assignable?

• Yes
• Provided employee consents

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What are litigation options?

• Preliminary Injunction
• Damages

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Principal defenses?

• No competition
• Overly broad agreement
• Improperly formed contract

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Judicial response?

• Achieve equitable result

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PERSPECTIVES FROM A HIGH-TECH EXECUTIVE
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PROTECTING YOUR COMPANYS TRADE SECRETS
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What is a Trade Secret?

• Any formula, pattern, device or compilation of
  information that is
• Used in ones business and
• Gives the business an opportunity to obtain an
  advantage over competitors who do not know or use
  it

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Cokes 130-year-old secret is more secure than
our nuclear weapons research.

• U.S. Senator Frank Murkowski, on allegations that
  a Los Alamos National Laboratory scientist gave
  classified information to the Chinese, in May 1999

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Important Factors in Determining What are Trade
Secrets

• The extent to which the information is known
  outside the owners business
• The extent to which it is known by those involved
  in the owners business
• Measures taken to guard the secrecy of the
  information

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• The value of the information to the owner to
  his/her competitors
• The information and
• The ease or difficulty with which the information
  could be properly acquired or duplicated by
  others.

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Ten Things Companies Can Do to Protect Their
Competitive Intelligence
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Warn employees to maintain company information as
confidential
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Limit access to sensitive information on need
to know basis
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Improve security to prevent unauthorized outside
access
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Limit external communications
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Implement password system for computer information
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Execute non-compete agreements
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Require non-solicitation clauses
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Conduct exit interviews
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Execute acknowledgments
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Contact subsequent employers
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QUESTIONS ANSWERS