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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