It’s no secret that entrepreneurs tirelessly strive to perfect their ideas and to outperform competition in the marketplace. In doing so, many successful businesses spend significant investment cultivating a model that’s unique to their marketplace, which often results in the compilation of valuable data that must remain a secret to competitors. A “competitor” is not always a person outside the company payroll, yet disclosure to employees is often inevitable in order for the business to properly function. This is especially true for smaller companies given that they usually expose to employees the day-to-day operations when relying on their employees to carry out duties. So to prevent this information from sneaking out the front door (and turning into a copy business overnight), this article discusses one way companies protect their intellectual property from unfair business competition.
Florida business law recognizes the struggles between preserving confidential business information and disclosing such information to employees. Under Section 542.335, Florida Statutes, companies may require employee to sign confidentiality or non-competition contracts as a condition of employment to protect the company’s confidential information. As their names imply, a business confidentiality contract generally seeks to prevent a person from disclosing certain information, often learned through his or her employment. On the other hand, a non-compete contract looks to prevent an employee from competing in the same market as the employer for a specific duration of time.
These contracts have quickly become useful in a vast majority of business sectors. This is because whether one’s business competes in the tech-driven mobile application realm, or the next trendy tattoo parlor, today’s digital age inevitably produces sensitive information worth protecting. For this reason, these contracts are not a one size fits all. A sloppy and loose contract, not tailored to the specific business, runs the risk that a cunning individual could simply circumvent the contract; or even worse, the contract may simply be found to be unenforceable. At the same time, even if a business already relies on these contracts, a rapidly expanding business may have outgrown its contractual terms. Therefore, companies should periodically revisit their contracts to ensure that they comfortably fit the company’s business (metaphorically speaking).
Understanding the type of information one’s business creates is often an initial step in properly tailoring your contract. For example, technology’s ability to data mine and compile large amounts of customer and market data analysis is a detail that should not go overlooked within the contract’s language. Also realizing your current market reach and geographic regions where business has expanded into is vital to ensuring the business has a properly tailored contract. The following is a non-exhaustive list to help you determine whether your business information could rise to level of proprietary information:
- Vendor and contractor identities not generally known to the public
- Client contact information and profile lists and compilations
- Pricing and promotional structures
- Specialized employee training
- Marketing and advertising information and strategies
- Information deriving economic value from not being generally known with efforts to maintain its secrecy (i.e., trade secrets)
In conclusion, ignoring the value in your intellectual property could leave your business at risk of being cloned by a competitor from within. Among many important tools to help businesses protect their intellectual property, a strong non-compete and confidentiality agreement can often become the first line of defense. Each state differs, but in states that have a history of decisions similar to Florida, courts favor enforcing these reasonable contracts when the business shows the contract is supported by a legitimate business interest. For questions regarding your confidentiality or non-compete contracts, the attorneys at Pollack, Pollack & Kogan LLC may further assist your concerns. This article is for informational purposes only and not intended as legal advice.
Author: Justin Maya, Esq. – Florida licensed attorney at Pollack, Pollack & Kogan, LLC, a business, commercial litigation, and probate litigation law firm.