Philadelphia

1524 Locust Street
Philadelphia, PA19102
P: 215-735-3900
F: 215-735-2455

New Jersey

6000 Sagemore Dr
Ste 6301
Marlton, NJ 08053
P: 856-722-9595
F: 856-722-5511

Protecting Trade Secrets with a Noncompete Agreement

There are many factors that play a role in your business’ success, and one of them may be a specific trade secret. A trade secret is defined as a particular aspect of your business that gives you a competitive edge. It can include a technique or methodology, a formula, or even your pricing structure or sales approach. If it is something that you have worked to keep secret, then it qualifies. One of the most challenging aspects of relying on a trade secret involves employees leaving your firm, as when they do so, you face the risk that they will open their own business and use your invaluable information on their own path to success, or that they will go to a competitor and share your information. Some unethical companies may even try to lure your employees away with the promise of higher salaries or better benefits in order to access this essential, hidden information. One of the best ways that you can protect your trade secrets is through noncompete agreements.

A noncompete agreement may also be one as a restrictive covenant or a promise not to compete. It is a contract that involves a company offering the employee some type of benefit in exchange for their promise not to work for a competitor for a certain period of time after departing the company. Sometimes a noncompete will include language precluding the employee from pursuing their employer’s customers or fellow employees away. All the terms of a noncompete agreement provide the employer with the right to file a lawsuit, often against both the employee and their new employer, if its terms are violated.

It is important to understand that a noncompete agreement is only of value to your company if it is enforceable, and for it to be enforceable, it needs to be well-crafted. This starts with having a good faith reason for requesting that employees sign the agreement in the first place: you must actually have trade secrets or a customer base that you are protecting, otherwise it can look as though you are simply trying to punish employees for leaving your organization. It does not make sense to have employees who are not in possession of inside information sign these agreements and doing so will make it less likely that the courts look kindly on your legal position. Similarly, the terms must not preclude departing employees from working at all. Geographic and time limits must make sense and be limited. Finally, there must be a clear benefit provided to the employee in exchange for their signing the agreement.

To ensure that your noncompete agreements stand up in court, contact our office today. We will help you create a strategy to protect your organization and its trade secrets.

PHILADELPHIA
1524 Locust Street
Philadelphia, PA 19102
P: 215-735-3900
F: 215-735-2455

NEW JERSEY
1230 Brace Road
Cherry Hill, NJ 08034
P: 856-722-9595
F: 856-722-5511