Protecting Company Secrets

Protecting company secrets is a big business these days. Those who sell secrets may be in hot water legally.

“There likely isn’t one business or industry that doesn’t have secrets about how they do business and about their products that they don’t want spread all over the place. After all if you are in business and want to stay a leader, you want to protect your products, methods, techniques and inventions from your competition and the public at large,” outlined Seth Wilburn, of the Gomez Law Group, a Dallas employment lawyer and Dallas business lawyer.

The fact is that many companies go through unbelievable contortions to protect their trade secrets and have been known to take legal action against people who have sold those secrets (on purpose) or accidently gave away critical information about how business is conducted. Stealing trade secrets is definitely classified as unfair competition; a slap in the face of the ‘usual’ way business is to be done in the marketplace.

“It’s generally accepted in the marketplace that businesses competing for the same customers are expected to use fair assessment of the market, their product, and assess the buying trends of customers; not lie, cheat, steal, manipulate and resort to spying to get what they want,” added Wilburn. “In fact, the Uniform Trade Secrets Act was created to offer protection against getting ahold of formulas, devices, methods, product secrets and techniques, and other business assets by improper methods – meaning stealing,” he explained.

The Act outlines several things that are considered to be “improper” and they include, electronic spying, or spying by any other means, breach of duty, misrepresentation, bribery, theft and inducement of a breach of duty. Those definitions are intentionally broad, as stealing company secrets can take place in many, sometimes bizarre ways.

It goes without saying that if the person who sells the “secrets” they stole and makes money from that transaction, then it is definitely unfair competition. Under the Act there is a section on punishment if the benefit the thief derived was actual cash or the potential to make money.

Here is another thing that not too many people realize: infringing on a secret may also have punitive damages assigned, including financial damages, royalties and shared profits. The court may also grant an injunction forcing a firm to stop selling anything they got or created as the result of stolen trade secrets,” Wilburn explained. Additionally, recoverable damages may also include loss of revenue as a result of the theft of secrets and come with penalties for the person being unjustly enriched because they stole something.

“This is an interesting area of the law, and if you have had trade secrets purloined from your company, you may want to find out what your rights are and what can be done to protect your company from the resulting loss,” added Seth Wilburn, of the Gomez Law Group, a Dallas employment lawyer and Dallas business lawyer.

Gomez Law Group is a Dallas employment lawyer and Dallas business lawyer. To learn more, visit http://www.gomezlawyers.com.

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Broad Non-Competition Agreements a Problem

The broader a non-competition agreement is, the more problems there are enforcing it.

“Typically speaking, if you have a really broad non-competition clause in your employment contract with a worker, the less enforceable it is. If however an employee has access to trade secrets, highly confidential company information and gets paid extra money for the non-compete clause, you have a better chance enforcing it in court,” said Seth Wilburn, of the Gomez Law Group, a Dallas employment lawyer and Dallas business lawyer.

In order to be able to actually enforce a non-compete agreement, the employer/company must have a legitimate business interest that needs protecting. This interest needs to be more than just the threat of competition. “It should include proprietary information about the company and/or products, the protection of company trade secrets and insider information on competitive positioning. This insider information may give an employee an unfair advantage,” commented Wilburn.

Having an unfair advantage is about more than just competition and the non-competition agreement. The agreement may come under attack if the worker does not use the actual trade secrets he knows, but just admits to having general knowledge of things he has learned.

The other issue in many non-competition contracts is soliciting customers. Some companies write in a clause in the contract that bans a worker from offering services or contacting customers that are currently with the company. “It’s interesting to note that the courts are more likely to enforce a non-solicitation clause than they are to uphold a no contact or no service clause. The reason for this is that the court regards those two clauses are being anti-trust violations and therefore anti-competitive because it doesn’t give the customer a choice,” Seth Wilburn of the Gomez Law Group, a Dallas employment lawyer and Dallas business lawyer added.

When it comes right down to it, distinguishing between non-solicitation and solicitation is somewhat difficult largely because it is subjective. In some cases it would be obvious if there was solicitation particularly if a phone call or letter were involved. However, advertising in the paper isn’t considered to be solicitation – because it gives consumers a choice.

“If you have questions about a non-competition agreement you signed, specifically if it’s enforceable, talk to a skilled business lawyer to get honest answers,” said Wilburn.

Gomez Law Group is a Dallas employment lawyer and Dallas business lawyer. To learn more, visit http://www.gomezlawyers.com.

Tags: Dallas business attorney, Dallas business lawyer, Dallas employment attorney, Dallas employment lawyer