TRADE SECRETS

A non-compete agreement is a written contract where one party agrees to refrain from conducting business or performing professional activities similar to your company for another party in competition with your business for a certain length of time. The non-compete agreement should include the period of time, the geographic area, the conduct that the party should be refrained from doing, the compensation the party received for making the agreement, and the consequences of breaching the agreement. These agreements can be in an employment or independent contractor relationship, partnership, sale of a business, and/or with customers and vendors of your company.

In California, a non-compete agreement is disfavored, because it prohibits fair competition. Whether a non-compete clause can be enforced depends on its limits in time, location and scope. The shorter the period of time, the smaller the territory, the more narrow the description of what not to do, and depending on the consideration given for the promise, the more likely it can be enforced. In California, it is unlikely that a non-compete agreement will be enforced against an employee because it prevents the employee from earning a livelihood, whereas it is routinely enforced against a seller of a business who benefits from the sale. Consult with an attorney for drafting a non-compete clause in a contract, or determining the enforceability of a non-compete clause against you.

A non-solicitation agreement is a written contract where one party agrees to refrain from soliciting (asking) for business or requesting to perform professional activities similar to your company for another party in competition with your business for a certain length of time. The non-solicitation agreement should include the period of time, the geographic area, what the party should be refrained from soliciting, compensation the party received for the promise, and the consequences of breaking the promise. These agreements can be in an employment or independent contractor relationship, partnership, sale of a business, and/or with customers and vendors of your company.

In California, a non-solicitation agreement is more favored than a non-competition agreement. It does not prevent the parties from competing against you but prevents a party from using information they gained from you to unfairly compete. Whether a non-solicitation clause can be enforced depends on its limits in time, geography and scope. The shorter the period of time, the smaller the geographic area (territory), the more narrow the description of what not to request, and depending on the consideration given for the promise, the greater the likelihood it can be enforced. Consult with an attorney for drafting a non-solicitation clause in a contract, or determining the enforceability of a non-solicitation clause against you.

A Non-Disclosure Agreement (NDA) or Confidentiality Agreement is a written contract in which the party (or parties in a mutual agreement) agree(s) to keep certain information received from the other party as confidential. A properly drafted NDA or Confidential Agreement should describe in detail what information is to be kept confidential, who owns that information, what the other party can and cannot do with the information, what happens to the information at the end, and the recourse if the party breaches the agreement. A properly drafted NDA or Confidentiality Agreement can provide trade secret protection from employees, vendors and customers’ misuse. Consult with an attorney to draft an NDA or Confidentiality Agreement to protect your company’s trade secrets.