Preventing Former Employees From Stealing Trade Secrets

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Under Minnesota law, employers have rights when a former employee takes client lists, customer info, computer data, intellectual property, and trade secrets. The Act is Codified in Minn. A Trade Secret is information, including a formula, pattern, compilation, program, device, method, technique, or process that has independent economic value, whether the value is actual or potential, that is not readily ascertainable by proper means by another person who would obtain economic value from the information.

This may include the value received by the business customers on your list give, the potential loss of business if your customer list were in a competitors hands, research findings even if the results were meaningless, in a competitors hands it would save them money. The simple answer is no. Taking, stealing, soliciting, and poaching when in reference to a trade secret are always going to be unlawful.

They may have slightly different actions and results, but they are all unlawful. When the allegation is simply a violation of the Duty of Loyalty the lines blur slightly depending on the facts.

Courts have held that solicitation prior to the end of employment may be okay, but the amount of solicitation is a major factor. If you are an employee it is best to err on the side of caution because the ruling against you may be severe. Generally, this results in harm to the company from which it was taken. Perhaps the most common misappropriation occurs when a former employee takes a customer list and uses the list to bring customers elsewhere.

The Duty of Loyalty prohibits an employee from competing against an employer while employed. However, they have a right to prepare to enter into competition. See Sanitary Farm Dairies, Inc. First, the employee would want to make sure they are not in violation of a contractual agreement or the Minnesota Uniform Trade Secrets Act. Second, they also must make sure they do not violate their Duty of Loyalty. The Duty of Loyalty prohibits an employee from competing against their employer.

A non-compete agreement is a contract between an employee and an employer where the employee agrees not to enter into competition with the employer after termination of employment. Typically a non-compete agreement must be ancillary to the employment contract. It must be reasonable supported by consideration.

Covenant Not To Compete. A non-solicitation agreement is a contract entered into that prohibits the solicitation or communication with former employees and customers. You agree that you will not, without the prior written consent of the Employer, at any time during your employment with the Employer or for a period of 2 years from the termination of your employment however caused whether your employment is terminated by you or the Employer and whether with or without cause or in breach of this Agreementeither individually or through any company controlled by you and either on your own behalf or on behalf of any person competing or endeavouring to compete with the Employer, directly or indirectly solicit, endeavour to solicit or gain the custom of, canvass or interfere with any person who is a client of the Employer as at the date of termination of your employment or use your personal knowledge of or influence over any such client to or for your own benefit or that of any other person competing with the Employer.

You agree that you will not, without the prior written consent of the Employer, at any time during your employment with the Employer or for a period of 2 years from the date of termination of your employment however caused whether your employment is terminated by you or the Employer and whether with or without cause or in breach of this Agreementeither individually or through any company controlled by you and either on your behalf or on behalf of any other person competing or endeavouring to compete with the Employer, directly or indirectly solicit for employment, or endeavour to employ or to retain as an independent contractor or agent, any person who is an employee of the Employer as of the date of termination of your employment or was an employee of the Employer at any time during 2 years prior to the termination of your employment.

These agreements are helpful for a variety of reasons. First, it gives you the benefit of having an added legal remedy in the case of a former employee stealing trade secrets, breach of contract. Third, a breach of contract argument is typically a stronger and easier case to prove then a violation of the Minnesota Uniform Trade Secrets Act. Further, it may give guidance as to what may not be released. It will be hard for an employee to contradict a handbook specifically stating a customer list is confidential and not to be released and that their actions were lawful.

What is a Trade Secret? Put simply, a Trade Secret has three elements: Misappropriation of a trade secret includes: Put simply, misappropriation occurs when a person either: What is Wrongfully Appropriating or Misappropriating? Duty of Loyalty The Duty of Loyalty prohibits an employee from competing against an employer while employed. Yes and no, this answer depends on several factors. What is an Example of a Non-Compete Agreement?

What is a Non-Solicitation Agreement? What is an Example of a Non-Solicitation Agreement? Non-Solicitation of Clients You agree that you will not, without the prior written consent of the Employer, at any time during your employment with the Employer or for a period of 2 years from the termination of your employment however caused whether your employment is terminated by you or the Employer and whether with or without cause or in breach of this Agreementeither individually or through any company controlled by you and either on your own behalf or on behalf of any person competing or endeavouring to compete with the Employer, directly or indirectly solicit, endeavour to solicit or gain the custom of, canvass or interfere with any person who is a client of the Employer as at the date of termination of your employment or use your personal knowledge of or influence over any such client to or for your own benefit or that of any other person competing with the Employer.

Non-Solicitation of Employees You agree that you will not, without the prior written consent of the Employer, at any time during your employment with the Employer or for a period of 2 years from the date of termination of your employment however caused whether your employment is terminated by you or the Employer and whether with or without cause or in breach of this Agreementeither individually or through any company controlled by you and either on your behalf or on behalf of any other person competing or endeavouring to compete with the Employer, directly or indirectly solicit for employment, or endeavour to employ or to retain as an independent contractor or agent, any person who is an employee of the Employer as of the date of termination of your employment or was an employee of the Employer at any time during 2 years prior to the termination of your employment.

Written by Jason Priebe.

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