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Subject:
Trade secret contract
Category: Business and Money > Small Businesses Asked by: billrosa-ga List Price: $20.00 |
Posted:
16 Aug 2005 19:26 PDT
Expires: 18 Aug 2005 07:28 PDT Question ID: 556612 |
I left my previous job two years ago and started my own business (in California) in the same industry as my previous employer (supplying corporate housing). My previous employer had me sign a contract stating that I will not pursue any of their customers to try and get their business. Because there is no time limit stated in the contract, does that mean I may never seek out any of their customers for ever and ever or is there a reasonable time limit to this type of contract. And, how enforceable is a contract of this type. |
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There is no answer at this time. |
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Subject:
Re: Trade secret contract
From: ipfan-ga on 17 Aug 2005 09:09 PDT |
The general rule regarding clauses of this type is that they must be reasonable in temporal and geographic scope. California law may be different, but I doubt it. So, for example, such a non-compete clause, as they are called, might try to preclude competitive conduct by a former employee for one year in the county in which the former employer is located. That clause would likely be held enforceable since those are reasonable temporal (one year) and geographic (the county) limitations. Conversely, if such a clause stated that the former employee could not compete for eternity in the whole world--well, you see my point. If your clause has no duration, is there a geographic limitation stated? Does it just say any customers wherever located? The rationale behind the limitations on such clauses is that it is unconscionable to prevent a man from earning a livelihood for too long in too broad an area. Note that even if your clause is found to be unenforceable as being overly broad in temporal or geographic scope, that does not mean that you can violate trade secrets laws by sharing your former employers trade secrets with the customers if in fact you do contact them. Does your former employer consider his customer list to be a trade secret? If so, that would preclude you from actually taking a copy of the list with you when you left, but that does not preclude you from using residual memory of the clients and contacting them based solely on your residual memory of the list and not the physical, actual list itself. |
Subject:
Re: Trade secret contract
From: ipfan-ga on 17 Aug 2005 10:36 PDT |
Need to clarify: if your employer considers his customer list a trade secret and if it IS a trade secret under relevant state law, then you could not take a copy of the list OR |
Subject:
Re: Trade secret contract
From: ipfan-ga on 17 Aug 2005 10:40 PDT |
I am having a hard time today. Need to clarify: if your employer considers his customer list a trade secret and if it IS a trade secret under relevant state law, then you could not take a copy of the list OR use the list contents, even if you did not have a noncompete clause. But that does not mean that if you contact one or two former customers (assuming such conduct does not otherwise violate the noncompete clause) who you know to be customers due to your residual memory of the list, that that would be a trade secrets violation. |
Subject:
Re: Trade secret contract
From: khephri-ga on 17 Aug 2005 13:03 PDT |
California law *is* very different from many other states as far non-compete agreements are concerned. California law is among the least favorable toward non-compete agreements, although there are situations under which non-compete agreements are enforceable, even in California. Your agreement does not seem reasonable in duration, since no duration is specified. The trade secret issue is another issue. But, it really doesn't matter what advice you get here. You really need to talk to a lawyer who is licensed in California. Before a legal problem occurs is when you should talk to a lawyer, not after the problem has already occurred and everyone is mad. If you want to deal with some of the same clients as your former employer, spend a little money now on legal consultation, and get genuine legal advice. A little money now, and you can greatly reduce the odds of needing to spend the cost of a house fighting a 10 year lawsuit that ends up accomplishing very little for you or the other side. |
Subject:
Re: Trade secret contract
From: billrosa-ga on 17 Aug 2005 14:37 PDT |
Thanks to all who commented! Excellent feedback. I'm going to cancel the request for an answer because I feel I have enough to make my decision. By the way, there wass no confidential list of clients/customers, my former employer did business with anyone/everyone so it seems only fair I should be able to do the same. Thanks again. |
Subject:
Re: Trade secret contract
From: myoarin-ga on 17 Aug 2005 16:36 PDT |
ANother point: I don't know if your former employer has a continuing relationship with his customers or if the latter get served and the relationship is then ended. Obviously - says the layman! - the contract you signed could only apply for customers that were such at the time you left. If that employer now has a new customer, and you also happen to approach that customer, it would not seem that this could be a breach of the contract. BUT - ... only a lawyer can tell you for sure. |
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