Trade Secrets and Confidentiality Archives

“Injunctive Relief” Clauses in Contracts – What Do They Mean?

Published on December 13th, 2016 by Alan L. Sklover

 
“Perhaps all pleasure is only relief.”

– William S. Burroughs

ACTUAL CASE HISTORY: Most employment contracts have a section in them, usually toward the end of the contract, labeled “Injunctive Relief,” or a phrase containing similar sounding words. It is inserted into employment contracts by employers’ legal counsel.

Contrary to many of my blog posts on clauses in employment contracts, it is a welcome change of pace to share with readers that this clause, in particular, is not very dangerous, risky or frightening. Those who commonly handle cases in which “injunctive relief” is requested will likely admit these clauses are of limited utility.

This is what an “Injunctive Relief” clause generally looks like:

“The Employee and Employer agree that, if the Employee breaches or threatens to breach his or her obligations not to compete, or not to violate confidentiality, it would cause irreparable injury, and the amount of money damages would be difficult to establish. For this reason Employee and Employer agree that, in such event, the Employer is entitled to Injunctive Relief to prevent or restrain any such breach.”

Even though they do not pose any danger or risk, employees should understand what these clauses mean, why they are inserted into employment contracts, and the few points employees might raise in response.

LESSON TO LEARN: Even though “injunctive relief” clauses are not usually harmful to employees, understanding what they mean can only help. To understand “Injunctive Relief” contract clauses, let’s start with some basics:

A Brief History –

Many years ago, we used to have two kinds of Courts, one kind called “Law Courts,” in which people or companies sued each other for money, and the other kind called “Equity Courts,” in which people or companies sued each other for “equity,” which is another word for “fairness.” Suing for “fairness?” “Fairness” lawsuits generally seek a Court to Order someone to do something or stop doing it. Perhaps injunctive relief can be best illustrated by this example:

Suppose two farms sat next to each other for 200 years. Many years ago, property deeds would often describe property boundaries as “from the oak tree to the edge of the pond,” or “the boundary line is the stream.” Using the “stream-boundary” example, suppose one day a big storm deposits so much rain that the stream overflows, and makes a new path, which now cuts one of the farms in half.

Did the original farmers intend the boundaries of the two farms to be changed whenever a big storm came around? Or was it their intention to use the stream path only as a convenience, and later disregard the effects of droughts, storms and even beavers? Did the deed say “wherever the stream might meander?” If two farmers could not agree on who owns how many acres, and one started to till the soil on the disputed land, the other could go to Court asking the Judge to Order him to stop, and declare whose land it is.

Granting “Injunctive Relief” is entirely within a Judge’s Discretion. –

Years ago, the two kinds of Courts were combined into today’s Courts, but we can still seek either “money damages” or “equitable relief.” In today’s employment law, “injunctive relief” is commonly sought by employers seeking a Court Order to (a) stop a current or former employee from sharing or using “trade secrets” or (b) stop a former employee from violating a non-competition agreement.

When employees seek Injunctive Relief (which is not very common) it is most often to seek a Court Order demanding a former employer stop interfering with the employee’s new employment, or disparaging the former employee.

Whether or not to grant such Injunctive Relief is entirely up to the Judge, who must decide if it is necessary and if it will impose an undue burden on the freedom of a person to work and earn a living. The Judge looks at many different things to decide what is fair, and two Judges could easily differ on that conclusion. He or she actually “weighs” the effect on both parties, in what is actually called a “balancing of the equities.” It literally is “the scales of justice” in action.

Such Provisions are usually “toothless tigers,” but any kind of “tiger” can seem scary. –

The important point here is that Courts hardly ever give much credence to what the employer and employee agreed in a contract months or years earlier regarding what the Court should do. It is the facts, events and circumstances at the time that a Court is concerned with.

So, you may ask, “Why does an employer insert an Injunctive Relief clause into an employment contract, and why would an employee care?” In my experience, Injunctive Relief clauses are instruments of fear, nothing less and nothing more.

They are inserted into employment contracts to create the illusion that even a “possible,” “potential” or “threatened” violation of an employment contract will result in a Court Order against the employee, like the Wizard of Oz behind the curtain who really had no power. It is a kind of legal bullying, intended to send an employee the implicit message, “Don’t even THINK of not honoring these obligations!” But, to continue the analogy, you can never be sure a tiger is truly “toothless” unless you get so close to the tiger that you can actually see into its mouth.

No matter what, you should carefully read “Injunctive Relief” clauses, not so much because of what they say, but sometimes other things – potentially risky or expensive to you – that may be woven into the otherwise “toothless” language.

WHAT YOU CAN DO: When looking over an employment agreement, read every section and every word, even if it seems to make you sleepy to do so. Don’t be fearful of Injunctive Relief clauses, because they do not represent any real risk to you, but do beware of other items that might be inserted into them:
Read the rest of this blog post »

Confidentiality and Non-Disclosure Duties – The Four “Situational Exceptions”

Published on February 9th, 2016 by Alan L. Sklover

“Due to the highly confidential nature of my position
even I don’t know what I do all day.”

– Unknown

ACTUAL “CASE HISTORY”: Bart was a highly respected Business Development Officer for a major antiquities dealer headquartered in London. His interests, education and experience all overlapped one another. In fact, he had been fascinated with the antiquities trade – the sale, purchase and barter of ancient artifacts and treasures – as long as he could remember, and remained so to this day.

As part of an expansion of his firm, Bart had been designated to open a new Chicago office because Chicago has a large, vibrant and growing antiquities market. Chicago’s client base, comprised of art institutes, museums and wealthy individuals, was judged to be quite under-served, and so this assignment was posed a significant opportunity for Bart.

Just before relocating with his family to Chicago, Bart was asked to meet with the firm’s Head of Human Resources. Upon arrival, Bart was led to a conference room and asked by the firm’s lawyers about emails he had exchanged six months earlier with an antiquities collector in Rome, who was interested in a particular item of antique jewelry soon to be sold at auction. In his email, the Rome collector asked Bart what he thought would be the minimum acceptable auction bid. Bart’s email response to the Rome collector was that he thought it would be no more than one hundred thousand dollars.

Bart’s estimate of the minimum price was on target, with good reason: it had been decided upon by the firm’s auction department just days earlier, although it had not yet been made public. It now seemed as if Bart was being accused of disclosing confidential information – a very serious policy offense in the antiquities business, which highly prizes secrecy and integrity. Sure enough, Bart was immediately suspended without pay, pending completion of a full investigation by the attorneys. And, too, his relocation to Chicago was placed on hold.

Fortunately for Bart, he had been prudent in preserving emails of others who oversee his work. His review of emails to and from the Rome collector revealed to him that the request was originally sent from the Rome collector to the firm’s Executive Director, who had, in turn, directed it to him, with a note directing Bart to provide that requested estimate. When the Executive Director was asked, and then shown his email to Bart, he then recalled what took place, and for this reason Bart was cleared of the allegation of gross misconduct.

LESSON TO LEARN: Issues of confidentiality of business secrets, confidential information, and proprietary knowledge, are critical career issues. “Loose lips” not only “sink ships,” but they can also “torpedo careers,” as well.

These disputes are definitely on the rise, likely due to three factors: (i) increasingly competitive business conditions, (ii) a growing sensitivity to issues of confidentiality, and (ii) the greater ease and ability of employers’ closing monitoring and surveilling their employees’ communications.

As you may know, there are many companies that sell software that constantly look out for certain words, phrases and numbers in employee emails, texts and other digital communications.

The lessons to learn?

(1) take the time to understand what constitutes “confidential information” at your job;

(2) always keep in the back of your mind the four “situational exceptions” to confidentiality and non-disclosure obligations, explained below; and

(3) take certain simple steps to protect yourself from allegations of improper disclosure.

These three categories of “suggested confidentiality precautions” and – most importantly, the four “situational exceptions” to confidentiality and non-disclosure obligations – are what this newsletter issue is all about.

WHAT YOU CAN DO: To avoid confidentiality issues and pitfalls, keep these questions and answers in mind:
Read the rest of this blog post »

“Employer Ask You to Sign an Agreement? Ask Your Employer to Pay Your Legal Cost”

Published on September 9th, 2015 by Alan L. Sklover

“I busted a mirror and got seven years bad luck, but my lawyer thinks he can get me five.”

– Steven Wright

ACTUAL “CASE HISTORY: Charlene, a furniture designer, had been with her employer for seven years. She was happy in her job, was well-liked, and quite productive. Her job was a short commute from home, and her manager was family-friendly. All was good.

One morning she received an email from the Human Resources Director, addressed to all of the company’s 150 employees, advising them that the company was updating all of its employment practices, and for this reason all employees were required to sign an updated “Confidentiality and Inventions Agreement” to safeguard the company’s trade secrets and proprietary information. (Rumor had it that a private equity firm might be interested in buying Charlene’s employer, and it was for this reason that a new, revised Confidentiality and Inventions Agreement was being required.)

The agreement was six pages long and contained a lot of complicated legal language. Charlene thought she understood it, but there was a lot “legalese” in it. She considered having our firm review it with her, but knew it would cost her a consultation fee of hundreds of dollars. When she called, she mentioned the unfairness of her employer requiring her to pay to review a document that they needed, not her.

We suggested she simply ask for the cost to be reimbursed. Sure enough, she did. After a few emails back and forth, her employer agreed to treat it just like any other business-related expense. Charlene was pleased. We were pleased, and now we suggest all employees in this situation do so. You never know. Sure is worth a shot.

LESSON TO LEARN: If you don’t ask, you won’t get. So long as any workplace request has the “Three R’s,” that is, it is (i) Respectfully presented, (ii) Reasonable in what is sought, and (iii) is based on a sound and logical Rationale, there really is no downside to making it.

The logic is simple: When someone wants something from you, and even moreso when they need it, there is nothing wrong with asking for something in return, especially the amount of money it will cost you to provide it for them.

Who knows? You might just get what you want. In this context, your chances are pretty good. Why not give it a try?

WHAT YOU CAN DO: In most – but not all – workplace instances of your employer asking you to sign an agreement, consider asking, in return, before you sign the agreement, that your employer agree to reimburse you the cost of an attorney’s review and consultation. Here are some tips in doing so:
Read the rest of this blog post »

Public Domain – Key Words & Phrases

Published on July 15th, 2015 by Alan L. Sklover

Key Words

What is the meaning of:

PUBLIC DOMAIN?

“Public Domain” generally means “owned by the public,” or contrariwise, “not owned or own-able by any person.” It has specific meaning in the fields of real estate and copyrights. In the employment context, “public domain” relates primarily to the what is, and what is not, employer-owned and legally protectable “confidential” information.

The importance of understanding what is in the “public domain” arises when employees are asked by their prospective employers, their new employers, or their former employers, to sign Confidentiality Agreements, or confidentiality provisions inside Employment Agreements, Severance Agreements, and the like. Such agreements are always very broadly written so as to give the employer maximum protection, and to convey the impression that “everything under the sun” is and must remain “confidential.”

Information is “public domain” information, and thus not “confidential” information, if it is known by, or available to, the general public. So, how much each partner in a company was paid last year might be confidential, but it loses its confidentiality and becomes “public domain” if that information is published in newspapers, or in Court files as part of a lawsuit.

Since the advent of the internet in our lives, the issue of what is, and what is not, “public domain” has been become a delicate problem. So, if documents are “stolen” and then posted on the internet, have they lost their confidentiality? Are they now “public domain,” and thus capable of being shared with others without risk to the person doing the sharing? These questions abound, and are not all easily answerable.

In the employment context, confidentiality is the “default,” meaning that it is to be presumed unless there exists a good reason not to hold that view. For most purposes, it will suffice for you to presume that all information at work, including personal information, business information, and client information, is “confidential,” and, thus, cannot legally be used or disclosed.

For more information, insight and inspiration regarding issues of workplace confidentiality, proprietary information, trade secrets and the like at work, just [ click here. ]

© 2015 Alan L. Sklover. All Rights Reserved. Commercial Use Strictly Prohibited

“What is NOT Confidential Information –
10 Guidelines for Resumes, Interviewing and Online Chatter”

Published on February 10th, 2015 by Alan L. Sklover

“Due to strict confidentiality rules, all I can tell you is
that I have no idea what I am doing.”

– Saying on a Coffee Mug

ACTUAL “CASE HISTORIES: On your resume, in your interviews, and during online chatter, you will no doubt want to portray yourself in the best light possible, including great education, great experience, and thus great value. Might what you write and say violate your duty of confidentiality to your employer?

Almost every employment agreement, almost every bonus agreement, almost every stock option agreement and almost every severance agreement, has a seemingly all-encompassing confidentiality clause. This is an example of a common version:

“I promise to maintain strict confidentiality as to all of the Company’s “Confidential information,” which includes, without limitation, any information that I may receive or have access to, in any form, including electronic media, that relates to the Company (including without limitation its officers, directors, shareholders, employees and contractors), or its customers (including without limitation, customer identities and information), advertisers, content providers, subscribers, licensors, licensees, vendors, partners), trade secrets, confidential knowledge, know-how, non-public intellectual property, including without limitation inventions, patent applications, and related patent rights, business plans, financial information, marketing plans and strategies, business opportunities, past, present and future products, pricing and pricing strategies, software, research, development, or other technical data, administrative, employee training and evaluation, management, financial, marketing, member information or manufacturing activities.”

Wow! Is there anything related to your work that is NOT confidential? It seems that anything you say, and anything you write, might be a breach of confidentiality.

LESSON TO LEARN: Navigating today’s employment landscape seems to require that you obey a million rules, regulations and restrictions, and perhaps most importantly those related to confidentiality. The repercussions of being reprimanded or fired for “breach of confidentiality” can be terribly damaging and very long lasting. If you are going to err in this regard, you would be wise to err on the side of caution. But knowing the most important rules, regulations and restrictions can only help you stay out of trouble.

WHAT YOU CAN SAY AND WRITE: Here are 10 general guidelines to what is NOT confidential information at work:
Read the rest of this blog post »


Alan L. Sklover

Alan L. Sklover

Employment Attorney
and Career Strategist
for over 35 years

Job Security and Career Success now depend on knowing how to navigate and negotiate to gain the most for your skills, time and efforts. Learn the trade secrets and 'uncommon common sense' of Attorney Alan L. Sklover, the leading authority on "Negotiating for Yourself at Work™".

Receive All Our Posts - It's Free!

Monthly Newsletter, Discounts, Events