Non-Solicit Agreement

Houston Business Journal: 5 things every employer needs to know about noncompete agreements

The Houston Business Journal has tapped Alan Bush as a freelance contributor again.  His latest article, "5 things every employer needs to know about non-compete agreements," hit the journal on July 15 with the list of Houston's largest labor and employment law firms.

Here's what Alan had to say about non-competes:

Hot industries - like the energy sector - have squeezed Houston's experienced workforce to the point that there are more key job openings than folks to fill them.  Many companies are looking to hire experienced workers from competitors.  Noncompetes, a contract in which an employee promises not to touch certain markets or customer accounts for some period of time, can make or break the deal...

Read the full article for 5 business points on non-competes.

Texas Lawyer: Uniform Trade Secrets Act Texas-Style

Image - Major Changes in the Texas Uniform Trade Secrets Act  

 

 

 

 

 

Texas Lawyer has signed up Alan Bush as a freelance contributor.  His latest article, "Major Changes in Texas Uniform Trade Secrets Act," appeared in the newspaper on May 27. 

Here's what Alan had to say about how the Texas Uniform Trade Secrets Act impacts a fairly common scenario for trade secret theft – when a key employee defects to a competitor:

The Texas Legislature adopted the Texas Uniform Trade Secrets Act (TUTSA), effective Sept. 1. The act is, no doubt, a blockbuster. It blows away years of common law civil remedies for trade secret misappropriation; just check out Texas Civil Practice & Remedies Code §134A.007.

 

Let’s take a look at a few places where TUTSA impacts a fairly common scenario for trade-secret theft: when a key employee defects to a competitor.

 

Up for grabs: Texas courts rarely look outside the state’s borders for guidance. But TUTSA §134A.008 demands it. Courts must apply the act with an eye toward creating a “uniform” law among the 48 states that have adopted the act.

 

The trouble is that states sometimes apply parts of the act differently. Issue-by-issue, Texas courts must now pick the camp to join. My bet is that they’ll stick as closely as possible to the current common law with which they’re comfortable. Only time will tell...

Read the full article for more.  In it, Alan lays out some practical ways the Uniform Act affects:

  • The types of information that will qualify for trade secret protection;
  • Hiring from a competitor without getting tangled up in a trade secret enforcement action; and
  • Cease and desist letters when a key employee defects.

Texas Lawyer: Get Smart About Non-Competes

Texas Lawyer: Get Smart About Non-Competes

Texas Lawyer has signed up Alan Bush as a freelance contributor.  His latest article, "Get Smart About Non-Competes," appeared in the In-House Texas pullout on April 1.

Here's what Alan had to say about respecting a competitors' legitimate trade secrets and non-competes:

Tweet Rights as Trade Secrets?

 

Many folks use LinkedIn, Twitter and Facebook for business.  When an employee leaves, what's that social media account worth?  Saying that the account password and business contacts are trade secrets, some companies have launched World War III.

Trade secrets enforcement actions over social media accounts have met mixed results.  Some courts have agreed with the company; others have not.

In Texas, there may be an easier way—solid non-solicit agreements.  You're usually concerned about your company's contacts who are customers, potential customers and vendors.  A non-solicit agreement can call those contacts off limits, regardless of who owns the Twitter account.

We have written about non-solicits covering customers and potential customers here.  And about vendors here.

A reasonable non-solicit, however, will eventually expire.  If you're interested in protecting the right to access the social media account and contacts as a trade secret, you may need to keep the account.

Taking a couple steps may move the ball down the field towards trade secret protection.  Ask your employee to sign a social media agreement before anyone creates the business social media account.  The agreement basically sets out your ownership of the account, password and contacts as your trade secrets.  Then, your company creates the account and keeps a copy of the password.  If the employee leaves, change the password when you cut off the employee's other IT access.

Tread lightly here.  Personal social media use is a sensitive topic.  So think very carefully before you ask for a stake in your employees' social media use.  You've got a far easier sell if you're talking about an account that's business use only.

Texas Lawyer – Provisions That Turbocharge a Non-Compete

Texas Lawyer – Provisions That Turbocharge a Non-Compete

Texas Lawyer has signed up Alan Bush as a freelance contributor.  His first article, “Provisions That Turbocharge a Noncompete,” appeared in the December 12, 2011 issue.

Here’s what Alan had to say about how a smartly drafted non-compete can make trial counsel grin from ear to ear:

Lock Down Your IP From Employee Theft Texas-Style: Non-Competes and Business Secrets

Businesses flock to Texas for many reasons.  One reason: the strong tools available here to protect your intellectual property, or "IP," from employee theft.

Patent and copyright are fundamental, but what about IP that doesn't fit either mold?  Customer data, profit margins and management-level discussions about business strategy all fall into that no-man's land.  You don't want your ex-employees carting your secret playbook off to a new job with your direct competitor.  The info is IP, but the feds can't help you.

Non-compete and non-solicit agreements fill the gap.  For an ex-employee who knows your IP, working in certain jobs or soliciting certain customers is too dicey.  IP theft is all too tempting.  Call those jobs and customers off limits in a non-compete or non-solicit.

A few points from our earlier posts on non-competes and non-solicits:

Even without a paper agreement, Texas law says that an ex-employee cannot take, use or disclose your business secrets.  Here's the scenario—your VP Sales accepts a new job with a competitor, downloads your customer list and order history to a jump drive, then resigns.  Foul ball.

The stolen info is probably trade secrets or confidential information.  So long as you took some basic measures to keep the info secret and an ex-employee took it, you've got him in your crosshairs.

Just keep in mind:

  • You can pursue an injunction against a data thief as you would against an ex-employee who broke a non-compete or non-solicit.
  • When a key employee leaves, a forensic image should be taken immediately of any computer or smart phone issued to the employee.
  • Use discretion when investigating data theft.

You might even make a federal case out of it.  That is, proprietary data theft in violation of your written policies can trigger a federal claim.  The Computer Fraud and Abuse Act, says the Fifth Circuit, can be used to prosecute an ex-employee data thief in a civil suit.  Very helpful when filing in state court would land you in front of a judge who may be unfamiliar with trade secret protections.

We've written a tidbit on the CFAA too.

So there are your tools to protect the soft IP in your secret playbook.  Are your tools sharp?

BBQ and Non-Compete Lawsuits: Better in Your Own Backyard?

What you get depends on who you're asking.  Know that injunction you want against an ex-employee who's breaking his non-compete agreement?  A judge makes the call.  You guessed it—your result may depend on the judge you ask.

Think carefully about what your non-compete says on venue and choice of law.  That's obviously important if you have employees spread across the USA.  Even if you don't, an employee can leave you and go work for a direct competitor across state lines.

You've got a couple options.  Let's say your company is headquartered in Texas.  You might pick Texas law and a judge in your headquarters' backyard.  If you can make Texas venue and law stick, you've got an edge.  Your ex-employee and his new employer must travel to defend themselves.  Shoot, you might even use that leverage to broker a settlement deal.

In The Art of War, Sun Tzu put it this way:

Those skilled in war bring the enemy to the field of battle and are not brought there by him....

He who occupies the field of battle first and awaits his enemy is at ease; he who comes later to the scene and rushes to the fight is weary.

Another option is to pick the courts and laws where your employees work.  The judge doesn't have to think twice about law or venue, so your enforcement action may move faster. 

Just don't pick a state that's not connected to the deal.  A Dallas-based energy company picked New York law for its non-compete signed by a Houston VP.  New York law made the non-compete enforceable; Texas law killed it.  Nothing else connected New York to the VP's employment.  No good, said the Houston appellate court and applied Texas law.  On Valentine's day, the court ruled against the company.  Talk about a shot through the heart...