Privacy, Business and Law

A good proprietary information agreement contains a broad definition of proprietary information which is covered by the agreement, including all information about the company’s current and planned products, marketing, forecasts, pricing, customers, and the salaries, duties, qualifications, performance levels, and terms of compensation of other employees.

The agreement should also:

• prohibit the use and disclosure of proprietary information during and after employment;
• assign to the company all inventions developed by the employee that can be legally assigned, and require the employee to identify all inventions not subject to the agreement;
• prohibit solicitation of employees or customers during and for a specific period after employment;
• prohibit an employee from engaging in competitive employment during employment without permission; and
• contain at-will language.

This agreement should be executed before the new employee starts work. If the agreement was not obtained then, or a new form is adopted, then either some form of consideration should be given (e.g., salary increase or promotion), or make execution voluntary and be willing to negotiate modification to the agreement.

If all of these steps fail, there are legal remedies for misappropriation of trade secrets or confidential information: actual or threatened misappropriation may be prohibited by injunction issued by the court; monetary damages may be awarded for the actual loss caused by the misappropriation; the company from whom the information has been taken may be given royalty rights in the competitor’s product; a company may also recover its attorneys’ fees and punitive damages of up to twice the amount of the underlying award for willful or malicious conduct. Finally, in some circumstances, the government may institute criminal prosecution. However, as with all legal matters, the best way to invoke the protection of the law is to take all reasonable steps to prevent the problem from occurring in the first place.