Duty of Loyalty by 1q981Zt

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									      Duty of Loyalty

• Employees owe duty of
  loyalty to employer -- even if
  no non-compete agreement
• Breaches: competing while
  employed, “seducing” customers
  and employees, referring business
  opportunities, kickbacks or bribes
• Liability for breach:
  injunction, compensatory damages
  (lost profits, costs of replacement),
  forfeit salary and earnings,
  punitive damages
      Trade Secrets

• Employee can’t appropriate
  trade secrets or proprietary
  info even in absence of non-
  compete agreement
• Common law rule -- enforced
  by injunction & damages
• State legislation:
  – Criminal: Cal. Penal Code,
    Mass.
  – Civil Cal. Civil Code
  – Uniform Trade Secrets Act (not
    adopted by NY or Pa.)
 Trade Secret: Factors

• extent known by employees
  and those involved in
  employer’s business
• nature of measures taken to
  guard secrecy of info
• value of info to employer and
  competitors
• money and effort expended to
  develop info
• ease or difficulty for others to
  acquire or duplicate properly
       Confidential
       Information
• Confidential info: needn’t be
  trade secret, patent or
  copyright
• Is info treated as private:
  restricted access, locked up?
• Proprietary info: benefits
  employer or provides
  competitive advantage to
  employer
• If easily obtainable or
  accessible to others, not
  protected
Restrictive Covenants:
    Non-Compete
• Judicial Disfavor -- Changing
• Factors for enforcement: is it
  reasonable -- scope, time,
  geographic area
  – employer’s legitimate interest to
    be protected
  – will enforcement burden public
  – can employee find other
    employment
  – was consideration given
• May enjoin use of trade
  secrets even if no agreement

								
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