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How restrictive covenants can protect your intellectual property

How restrictive covenants can protect your intellectual property

On Behalf of | Dec 12, 2022 | Intellectual Property |

Businesses define their obligations to their workers and protect themselves from expensive claims in part with thorough employment contracts. The arrangements you have with members of your staff determine what responsibilities they have while they work for your company and what obligations the business must fulfill for them.

The terms included in your employment contract can also help protect your company from liability and make it easier for you to take action after suffering some serious form of employee misconduct. Restrictive covenants prohibit employees from engaging in specific behaviors even after leaving their job at your company.

The right restrictive covenants could protect your business from misconduct involving intellectual property, such as trade secrets.

How restrictive covenants help

When a worker has a contract with a business specifically prohibiting certain behavior that would have a negative effect on the company later, the business will have an easier time taking legal action against that worker if there are issues in the future.

For example, a non-disclosure agreement prevents an employee from sharing company information with competitors or members of the public. A non-solicitation agreement would prevent a worker from using client lists or employee rosters that they had access to while working for your company as a means of poaching your clients or tempting your existing staff away from the business.

Non-compete agreements can prevent employees from taking information they learned at your company and using it to start their own business or benefit one of your direct competitors. A combination of two or more different restrictive covenants will offer more thorough protection for your business based on the work an employee does for your company and the information to which they have access.

How do you enforce a restrictive covenant?

When you realize that one of your former engineers just opened their own firm or that someone from your sales team has started soliciting your clients for another company, you can document those issues and go to court.

Asking a judge to enforce your restrictive covenants might result in the courts ordering the former employee to cease certain economic or professional activities. Sometimes, the courts can also award damages, especially if your employment contract imposed financial penalties for violations of the agreement.

Any new hire with access to your company’s intellectual property or trade secrets could potentially abuse their position and cause your organization financial harm. Proactively protecting your company’s intellectual property often requires attention to detail when drafting employment contracts.

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