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EMPLOYEE CONFIDENTIALITY AGREEMENTS
04/16/2012

If you are an Employer undoubtedly you have used or encountered a Confidentiality and Nondisclosure Agreement, which also goes by the name Confidentiality and Intellectual Property Rights Agreement. 

This is an Agreement between an Employer and an Employee that serves to protect the Employer’s trade secrets, intellectual property and proprietary commercial/business information from being improperly disclosed, shared, misappropriated or destroyed by an Employee to the detriment of the Employer.  In many instances these Agreements contain provisions that prohibit the Employee from competing with the Employer’s business while the Employee is employed and for some period time, like 2 years, after employment has ended usually within a specified geographical area.

One of the mainstays of these Agreements is the right given to the Employer to seek injunctive relief if the Employer finds the Employee has violated the Agreement.

In a very recent Nevada Supreme Court decision, the Court addressed the continuation of injunctive relief where the Agreement expressly stated that the prohibition against disclosing or using trade secrets was 2 years.  What broadly constitutes a Trade Secret is governed by Nevada’s Uniform Trade Secrets Act, which provides that the “ctual or threatened misappropriate [of a trade secret] may be enjoined.” But what information actually constitutes a trade secret and when does the information cease to be a trade secret are questions that are answered by an analysis of the facts.

The Court found that whether an injunction regarding the misappropriation of trade secrets will continue or not once the expressed 2 year duration expired will now rest on a subjective analysis as to what would be an “additional reasonable period of time to eliminate commercial or other advantage that otherwise would be derived from the misappropriation” as well as what information needs to be protected.

I would submit that no business or Employer wants its proprietary customer lists, manufacturing techniques, strategies, product designs, processes and pricing available for competitors to take advantage of.  So the takeaway from this is to put a longer time period on the protection against misappropriation of trade secrets and define specifically what information constitutes a trade secret that needs to be protected.   We at our firm can assist you in preparing these provisions to properly protect your business against the misappropriation of your trade secrets and stop the occurrence if detected. 

 

For more information contact us at office@fdlawlv.com.

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