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