Hackers & Crackers

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Published in U.S. 1 Newspaper on April 26, 2000. All rights reserved.

Guarding Company Secrets

E-mail: MelindaSherwood@princetoninfo.com

If there’s a formula or method that’s vital to your

business, protect it through a non-disclosure agreement that binds

employees to secrecy, says Earl Bennett, an attorney at Saul

Ewing who teaches a seminar on intellectual property protection on

Thursday, April 27, at 8 a.m. at the Princeton Hyatt. Planning for

stock options and executive retirement plans will also be discussed.

Cost: $30. Call 609-452-3158 (www.saul.com).

The first step in drafting a non-disclosure agreement to safeguard

intellectual property is making sure you actually have a "trade

secret," says Bennett. By law, a trade secret is a formula, process,

device, or compilation that gives a company an advantage over competitors.

What is not a trade secret is something that is public knowledge within

an industry — a fact that seems obvious, but litigation is often

under way before a company realizes that its intellectual property

isn’t property at all.

An employer is not required to draft a non-disclosure agreement for

employees in order to protect proprietary information — New Jersey

law recognizes that businesses have legitimate needs in protecting

confidential information and will prosecute an employee who leaks

vital information, regardless of whether they signed a non-disclosure.

However, putting it in writing goes a long way in clarifying what

is proprietary, and laying out an employee’s responsibility in relation

to that material. For example, employers can spell out the terms by

which an employee may leave to work for a competitor, should that

situation arise, in a way that protects the company’s best interest.

However, non-disclosure agreements that include sweeping provisions

— barring an employee from ever working for a competitor, for

example — are unlikely to hold up. The courts will always favor

competition, and in doing so, will nullify a covenant that imposes

undue hardship on an employee to pursue his or her ambitions. Non-disclosure

agreements therefore have to be fair — barring an employee from

working for specific competitors for a limited amount of time, and

providing ample compensation when the rules hamper the professional

pursuits of an employee.

On the flip side, says Bennett, who is based at Saul Ewing’s 214 Carnegie

Center office, if you have just hired someone away from a competitor,

and he or she brings with them a whole bunch of good ideas, be wary

— New Jersey law states that a company that misappropriates another

business’ trade secret may lose all the benefits that it unfairly


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Hackers & Crackers

A computer sleuth with a national reputation, Alan

E. Brill, speaks on "Hackers, Crackers, and Cyber Terrorists,"

at the Association of Certified Fraud Examiners meeting on Thursday,

April 27, at 6 p.m. at the Holiday Inn in Carteret. Call 973-631-1066.

An expert featured on CBS News’ "60 Minutes" and on CNN and

CNBC, Brill is senior managing director of Kroll Associates, where

he does security reviews for large corporations, as well as criminal

investigations of computers hackers, and cellular, E-mail and voice-mail

frauds. His articles have appeared in ComputerWorld, and he was recently

featured in U.S. News & World Report in an article entitled "Corporate

Spy Wars" (www.usnews.com).

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