One way that businesses used to protect their intellectual property and trade secrets was through noncompete agreements. Employees who signed these agreements were prohibited from leaving the company to start their own business or join a direct competitor. This way, an employee couldn’t take a job, learn valuable trade secrets and then simply take those to the competition.
However, the Federal Trade Commission banned noncompete agreements last year. In the vast majority of cases, they can no longer be used, and this legal tactic is effectively dead. The FTC says that this should help increase workers’ wages and could even help them start new businesses. But what are existing businesses supposed to do to protect their trade secrets now that they can’t control where their employees go after leaving their positions?
Using nondisclosure agreements
One potential tactic is to have employees sign nondisclosure agreements (NDAs). This way, the employee can still be given access to the sensitive information they need to do their job. They are free to leave their position and work for the competition, but they’re barred from discussing certain subjects or giving those trade secrets to competitors. There can be severe legal repercussions if they are found to be violating such an agreement.
It’s also important for business owners to consider other elements they can use to protect their intellectual property rights. For instance, certain designs, processes, inventions or other important information can be protected through copyrights, patents, trademarks and other legal tools. It’s crucial to have the right framework in place so that intellectual property remains exclusively within a specific business.
For business owners, it’s important to be aware of the way that laws are changing. Owners also need to know what legal steps they can take to set their business up for future success, protect their rights and much more.
