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Can a non-disclosure agreement help protect trade secrets?

On Behalf of | Sep 23, 2022 | Intellectual Property

Your trade secrets may be the results of years of painstaking personal research, or they could be your most valuable inheritance. Whether you have a secret family recipe, a proprietary chemical process or a perfectly curated vendor list, your trade secrets help your company operate profitably. 

Protecting those secrets can be a top priority, especially if you know that your competitors have an interest in them. There are some businesses that would engage in underhanded tactics (such as hiring your former workers) just to gain access to information that you would prefer to remain private. 

Your trade secrets might be the only thing that set you apart from the competition, and you may feel compelled to protect them from any likely threat. Any worker that you add to your staff roster could potentially gain access to and misuse your trade secrets. Can you use non-disclosure agreements to protect trade secrets? 

California restricts non-disclosure agreements

California has numerous laws limiting the use of restrictive covenants in employment contracts. Recently, lawmakers passed a bill creating new rules that apply to non-disclosure agreements. When a non-disclosure agreement violates certain rules, it may not be enforceable in court. 

Thankfully, neither of these rules will impact a business using a non-disclosure agreement for the specific protection of trade secrets. Provided that companies offer something of valuable consideration in trade for the employee signing the agreement and that it applies specifically to protected trade secrets, the business may be able to enforce the agreement if the worker later shares those trade secrets with someone else. 

Learning about the unique California laws that apply to employers and trade secrets can help businesses hoping to protect their competitive advantage, possibly through litigation to enforce a contract.