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Ask a Lawyer -- Contract Law
Contract Law Question 27
Question:
Section 16600 protects CA employees from continued unemployment if a non-compete agreement has been signed. I signed such an agreement upon obtaining position I was just relieved of. The exception to that states a "trade secret Protection for the employer". My previous employer would certainly consider knowledge I had gained from my 8+ years a trade secret. Am I not allowed to gain employment from a similar company due to this exclusion?
Thanks much for you insights.
Marcella
Response: Please see my prior response on this topic. The three enumerated exceptions to California Business Code Section 16600 are where the noncompete is executed as part of (a) the sale of a business, (b) partnership dissolution, and (c) disassociation of a partner. Your situation is not one of those listed so my take on the situation (based on limited facts) is that the noncompete you signed cannot prevent you from working for another company. Bear in mind, however, that any confidentiality agreement you signed that may be coupled with a noncompete is still enforceable. Your prior employer could prevent you from disclosing or using confidential information but cannot bar you from employment with a competitor.
But if you go to work for a competitor will your prior employer automatically be able to sue alleging the inevitability of use of its trade secrets by the former employee? I think not (at least in California).Quite often, employees will depart and work for a direct competitor in the same type of field, and work in the same or similar type of project. Under those circumstances, it could be argued that the former employee will inevitably disclose the former employer's trade secrets. California, however, has flatly rejected the so-called inevitable disclosure doctrine and requires that some evidence of use or disclosure be presented. See Whyte v. Schlage Lock Co., 101 Cal. App. 4th 1443, 1459-60 (2002). Thus, the former employer must have actual evidence of the use or disclosure of trade secret information prior to bringing a lawsuit. Link. If you plan to work for a direct competitor of your former employer, the prudent course would be to sit down with a local attorney experienced in business law and discuss what precautions you should take to avoid violating any confidentiality agreement contained in your prior employment contract.
Submitted: 04/02/2008; marcella, california
Response: 04/02/2008; JJR
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