Protecting Your IP Through Employee Confidentiality Agreements

Employee confidentiality agreements can be a simple and straight forward way of protecting your company’s IP and other private information.  What should your agreement cover?

·   Confidentiality.  In addition to trade secrets, protect the other non-public information such as strategic roadmaps, sales results and forecasts, and employee compensation.  Don’t forget to protect information others entrusted to you (e.g., customers, vendors, consultants, etc.).   

  ·   Employee inventions.  Your team will likely be innovating on the job.  Although background law tends to favor your ownership of employee inventions, your agreement should reinforce your ownership of employee innovations that wouldn’t have been possible without your support. 

 ·   All efforts/side jobs.  With some exceptions, there’s nothing stopping your employees from working a second job or starting a business on the side.  One of those exceptions is if the employee agrees to focus all their work efforts on your business.       

·   Returning your property/releasing control.  Your agreement should set appropriate expectations for employees about returning your physical property (e.g., phones and computer equipment) and giving back your information assets (e.g., account names and passwords, admin control over IT systems, etc.).

·   Prior commitments of incoming employees.  To protect the integrity of your products and services, have employees promise to disclose prior non-compete and confidentiality commitments and to ban those employees from bringing a former employer’s sensitive information to work.   

 ·   Optional: Non-competition.  To prevent former employees from transferring to competitors the skills, knowledge, and relationships developed with your support and investment, many employee confidentiality agreements include provisions restricting employees’ freedom to work for a competitor. 

 ·   Other things to think about.  Although not always necessary for a standard employee agreement, it’s not uncommon for these agreements to include a temporary ban on hiring away your employees (i.e., a “no-hire” provision), a non-disparagement provision, and agreements to arbitrate disputes.

What do you do next?  If you are already using an employee confidentiality agreement, bring it in for a diagnostic and tune up.  If you are starting from scratch, I can create a basic one-pager agreement for you to put into production right away or a customized version to fit your specific situation.  Call or email anytime (tripp@trippstroud.com, (608) 469-3427). 

Tripp Stroud