Corrections or additions?

These articles were summarized for the January 3,

2001 edition of U.S. 1 Newspaper. All rights reserved.

Guarding Your 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 (U.S. 1, April 26, 2000).

First be sure you actually have a "trade secret," says

Bennett,

an attorney at Saul Ewing’s Carnegie Center office

(www.saul.com).

By law, a trade secret is a formula, process, device, or compilation

that gives a company an advantage over competitors.

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 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, if you hire someone from a competitor,

and he or she brings with them a slew of good ideas, be wary —

New Jersey law states that a company that misappropriates trade

secrets

may lose all benefits that it unfairly reaps.


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