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Examining ways to protect trade secrets with company employees

Bergen County businesses who own valuable trade secrets may be interested in issues that may exist with their employees. Through the use of employment contracts, these trade secrets can be given legal protection that goes beyond company or social norms.

In many companies, there is a culture of secrecy that prevents disclosure of confidential information from a current or former employee to another company. This confidential information can be an extremely valuable asset, whether it is a secret recipe or the future plans of the company. However, in today’s climate of high job mobility, employees that leave the company can prove to be a large risk to the confidentiality of these trade secrets. Rather than relying on a social contract of secrecy, it is often better to use legal contracts to protect company interests.

There are two main ways that employment contracts can protect trade secrets. The first is through a non-disclosure agreement, which often contains an agreement not to disclose confidential information learned during the employer-employee relationship. The contract defines what information is confidential and outlines legal recourse for when that information is disclosed unlawfully. The other way to protect trade secrets is through noncompete clauses. These prevent an employee from leaving the company to work for a competitor or from doing other work while still employed. However, these clauses may have restrictions under state law that should be addressed.

Understanding the ways to protect trade secrets and avoid employment law issues can be difficult without the assistance and counsel of a business attorney. The attorney may be able to draft the necessary agreements in order to protect these assets. The attorney may also be helpful in representing the company should employment litigation due to a breach of these agreements be necessary.

Source: World Intellectual Property Organization, “Trade Secrets and Employee Loyalty”, December 01, 2014

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