Recently in Confidentiality Agreements Category

April 15, 2014

Proposed Legislation Threatens the Future Enforceability of Non-Compete Agreements

In the past, Massachusetts legislators have proposed legislation that would ban the enforcement of non-competition agreements in Massachusetts, but no such law has yet passed. Last week, Governor Deval Patrick announced that he would propose similar legislation as part of an economic growth bill, in an effort to remove the barriers that non-compete agreements create for workers in high-tech companies who wish to open their own competing business.

As we have previously discussed, Massachusetts law presently views non-competition agreements as valid and enforceable, if they are reasonable in duration, geographic scope, and restricted activities. These agreements have been essential to many Massachusetts employers to prevent employees from leaving the employer and taking with them the employer's valuable business information and trade secrets.

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February 27, 2014

Can A Social Media Post Constitute Solicitation in Violation of a Non-Compete Agreement?

Last fall, the business litigation session of the Massachusetts Superior Court considered whether former employee's LinkedIn profile change constituted a violation of the employee's non-competition agreement. In KNF&T Staffing Inc. v. Muller, KNF&T, a staffing agency in the Boston area, had hired the defendant, Charlotte Muller, in 2005. When Muller was hired, she signed an Employee Confidentiality and Non-Competition Agreement that prohibited her from recruiting or referring potential employees for placement in the "Company's Field of Placement" for one year within 50 miles of any of KNF&T's offices. Muller worked at KNF&T for eight years, and was eventually promoted to Vice President and manager of the plaintiff's Boston office. Muller resigned from KNF&T, and three months later joined Panther Global Group, a staffing firm in Boston and direct competitor of KNF&T in certain areas. Muller posted on her LinkedIn account that she had changed jobs, notifying her 500+ contacts of the change. KNF&T filed a lawsuit to enforce the non-compete agreement Muller had signed in 2005.

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February 13, 2014

No Claim for Misappropriation of Trade Secrets That Are Inadequately Protected

Generally, a company can protect its trade secrets from misappropriation by taking steps to ensure that such information is not easily accessible or otherwise easily disseminated. Requiring employees and others who are exposed to customer lists, business processes, and the like to sign confidentiality agreements is just one way to be vigilant in trade secret protection. However, as highlighted in a recent superior court decision, in the absence of a signed confidentiality agreement, businesses must take other reasonable steps to keep confidential information confidential, or risk that their trade secrets will be stolen - with no legal recourse against the trade secret thief.

In CRTR, Inc. v. Lao, CRTR hired an independent contractor without requiring him to sign a confidentiality agreement. The contractor was the nephew of a CRTR customer who had commenced negotiations with CRTR to purchase the business. When the negotiations failed, the contractor stole a number of trade secrets from the CRTR, and CRTR sued both the contractor and his uncle for misappropriation. When the contractor moved for summary judgment, the court found that CRTR had properly identified the stolen material and had demonstrated that the material would cause damage to the company's interest if the information was shared. Despite that finding, the court granted the contractor's summary judgment motion.

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January 9, 2014

When a Signed Agreement Isn't Enough -- Protecting the Confidentiality of Confidential Information

Maintaining the confidentiality of trade secrets is crucial for business owners who hope to remain competitive and continue earning cash from their investments and novel ideas. Many business owners require that non-disclosure agreements be signed by any persons with whom they deal, in order to limit the proliferation of trade secrets. Recently, two federal courts decisions have made it even more imperative to ensure adherence to such non-disclosure agreements.

The U.S. Court of Federal Claims recently dismissed an inventor's claims against the United States for patent infringement and misappropriation of trade secrets. In Gal-Or v. United States, the federal court heard evidence regarding Mr. Gal-Or's dealings with the federal government. Gal-Or, an Israeli scientist and inventor, created a number of novel devices used by the military's aerospace programs. Gal-Or had an agreement with the federal government that whatever trade secrets of his were disclosed from the parties' dealing would be confidential. While Gal-Or had the agreement with the government, he did not mark all of the documents that he shared as confidential, nor did he always proactively insist on adherence with the non-disclosure agreement. The evidence demonstrating Gal-Or's incomplete protection of his intellectual property persuaded the court to grant the government's motion to dismiss.

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January 17, 2011

Proposed Noncompete Legislation Continues to Loom

Employers dodged a bullet with the recent tabling of legislation that would have significantly restricted an employer's ability to enforce noncompetition agreements in Massachusetts. Nevertheless, employers are not yet completely out of the water.

As have most states, Massachusetts has traditionally taken a dim view of noncompetition agreements. Under current Massachusetts law, noncompetition agreements are considered valid and enforceable, provided that they are reasonable in duration, geographic scope, and restricted activities. Thus, Massachusetts employers have been able to use noncompetes to minimize the potentially harmful effects of an employee leaving the business to work for a competitor, taking with him valuable information and trade secrets that are the essence of the employer's business.

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