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Enforcing a non-compete to protect IP

Mar 20, 2020 | Trade Secrets

Having employees sign non-compete agreements restricting them from actions like working at a competing company can minimize the risk that an employee will disclose protected material to another company.

Unfortunately, not every employee will comply with their contractual agreement. Some violate it intentionally, hoping their non-compete is invalid; others may not realize they are in violation by working certain places or in specific roles. In either case, businesses should be prepared to enforce these agreements.

Be prepared

One of the essential elements of enforcing a non-compete agreement is preparation. Before an employee leaves and the clause goes into effect, employers should make sure the agreement is valid and enforceable in the first place. They can do this by reviewing the contract with an attorney.

Once an employee decides to leave (or is terminated), employers will want to secure sensitive information and collect any devices that may contain confidential information. Changing passwords can also be wise. Finally, upon an employee’s departure, employers should also remind the employee of the agreement during an exit interview. These steps can set the stage for compliance and should happen before the employee even leaves.

Give notice

If you believe your employee is in violation of a non-compete by working for a competitor, you can send a cease and desist letter. This letter notifies the employer and your former employee of the agreement you have. It can also provide a warning that if a person violates that agreement, you will pursue legal action.

Pursue legal action

If the above measures are not sufficient, a remaining option is to pursue legal action. Such action could involve mediation, arbitration or litigation, but ultimately, the goal is to enforce your agreement. Resolutions might include cancellation of the employee’s new position and compensation for you for damages.

These steps are crucial in securing sensitive information, including intellectual property and trade secrets. If you fail to pursue these measures to enforce your agreement adequately, the contract loses its efficacy. In other words, enforcing your non-compete agreements is essential in protecting your business.

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