Restrictions on use and disclosure of trade secrets in nonsolicitation and noncompetition agreements

July 22, 2014

Contract imageRestrictions on the use and disclosure of trade secrets and other confidential information are basic elements of any trade secret protection program and clients should be counseled to include such restriction into nonsolicitation and noncompetition agreements they ask their managers and employees to sign in order to restrict their ability to solicit business from the customers of the client for the benefit of their future employers or to otherwise actively or passively engage in activities that compete with the business of the client.  See Specialty Form at § 77:121.50.

Nonsolicitation agreements are appropriate for employees, such as sales representatives, whose job activities involve extensive interaction with the customers of the employer. A noncompetition agreement may be useful for senior management and other key employees who may logically be inclined to compete with the employer following termination of his or her employment, either directly or as an employee of another company. For further discussion and examples of nonsolicitation and noncompetition agreements, see Employee Noncompetition and Nonsolicitation Agreements (§§ 78:1 et seq.).