Appropriate use of NDAs to protect trade secrets

| Jan 4, 2020 | Trade Secret Litigation |

Many companies in the Bay Area and throughout California lead their respective industries in many ways. This leadership often entails the development of essential intellectual property. Unauthorized disclosure of their intellectual property assets or trade secrets may cause serious damage to their competitive situations and overall business performance. For this reason, many businesses request employees to sign contracts, called nondisclosure agreements or confidentiality agreements, barring them from externally sharing sensitive company information.

The Society for Human Resource Management indicates that the use of NDAs by employers has come under fire in recent years. Opponents assert that in many situations, nondisclosure agreements unfairly hamper an employee’s ability to pursue work within their field or profession once they leave one company. One law passed in California, the California Business and Professions Code, supports employees from not being bound by the provisions of a nondisclosure agreement if the terms are too broad so that they essentially cannot be employed in their given line of work in the future.

Forbes recommends that confidentiality agreements be used judiciously and with employees who truly do have access to the most critical information. In addition, all such contracts should specifically define what information is considered confidential and outline the methods of communication that may be permitted or barred under the agreement. A contract should also clearly stipulate the duration for which it is in effect. Such duration should not be excessive.

Employers should be able to protect their confidential information but should work closely with appropriate legal resources to ensure they accommodate all laws surrounding these agreements.

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