PROTECTING YOUR INTELLECTUAL PROPERTY Non-Competition andnb by ces12174

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									   PROTECTING YOUR INTELLECTUAL
            PROPERTY:

              Non-Competition and
           Non-Disclosure Agreements

Michael L. Rosen
Partner
Foley Hoag LLP
September 19, 2003
What is at stake?

 Every Day, Your Intellectual Property Walks Out
  the Door
 It is an “e” World
 Employee Mobility --Competition
Recent Phenomena


 Non-Disclosure (NDAs) and Non-Competition
  Agreements increasingly prevalent
   Upside and Downside
 Substantial Increase in Litigation of Issues
  Involving Enforcement of Restrictive Agents
General Legal Landscape

 At-will Employees Can Change Employers
  Freely
 Can Plan to Compete
 Can Take Active Steps to Do So While
  Employed
  Caveat: not on your dime/time!
Types of Restrictive Agreements

 Nondisclosure/Inventions Agreements
 Noncompetition Agreements
 Nonsolicitation Agreements
  Customers
  Employees
  Suppliers
Uses:

 Employment Agreements
 Consulting Agreements
 Partnership Agreements
 Sale of Business
 Joint Ventures
 Customers Agreements
Enforceability of Non-Competes

 Not Automatic
 Must Be Necessary to Protect Legitimate
  Business Interests and Not to Protect From
  Ordinary Competition
 Reasonable in Time and Geographic Scope
Interests

 Protection of Trade Secrets/Confidential
  Information
 Protection of Customer Good Will, Relationships
What Information is Protectable?

 Customer Information
 Manufacturing Processes and Methods
 Business/Financial Information
  Sales Figures
  Marketing Forecasts
  Future Plans
 Computer Programs and Data Compilations
What is Not Protectable?

 General Knowledge/Skills/Abilities
 Publicly Available Information
 Information Resulting From Reverse Engineering
Tips for Maximizing Protection:

 Develop Comprehensive Program to Protect
  Trade Secrets and Other Information
  Confidentiality Policy
  Educate Employees About Policy
  Restrict access to information
  Label confidential documents (electronic too)
   “Confidential. Do Not Copy, Do Not Distribute”
Tips for Maximizing Protection (continued):

 Manage Employee/Contractor Exits
  Exit interviews
  Redistribute policies/agreements
  Change passwords, remove from system
  Inspect system/computer
Tips for Maximizing Protection (continued):

 Focus Your Agreement on Protecting Your
  Information
  Specify the kinds of information that are confidential
  Specific is better than generic
  Spell out what is “competition”
Tips for Maximizing Protection (continued):

 Common Mistake: The “Naked” Non-Compete
  or “One Size Fits All” Approach
 Swinging for the Fences Often Results in Strike-
  outs: Tailor Your Agreement to Your Interests
 Make sure You Have Consideration
   Inception of employment is best
   If not, tie to other benefits
Tips for Maximizing Protection (continued):

 Consistency, Consistency, Consistency
  Ex. Norton Company v. Hess
Tips for Maximizing Protection (continued):

 Don’t Assume the Agreement is Assignable:
  Ex. Securitas Security Services USA, Inc. v.
   Jenkins (July, 2003)
  Put it in the Agreement
  Secure it before transaction
Tips for Maximizing Protection (continued)

 Act Quickly/Aggressively to Protect Your Rights
   Investigate Employee’s Actions
   Letters to Former Employee, New Employer
   Litigation
Tips for Maximizing Protection (continued)

 Consider State of Employment
  State laws very widely
  The California Problem
  Options
Menu of Litigation Options

 Immediate Request for Injunction
 Expedited Discovery
 Arbitration ?
Avoiding Liability in Hiring Restricted
Employees
 The other side of the coin – risks
 Have practice of inquiring about getting existing
  agreements
 Study the risks
   Agreements
   Trade Secret laws
   Duty of Loyalty
Avoiding Liability . . . Cont.

 Document expectations/restrictions
 Employee warranties

								
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