Tag: Confidential Information

8 Key Components to a Solid Non Disclosure Agreement

Greg HarrisLeave a comment

Generally a prospective business partner will not share confidential information with you until both parties sign a Confidentiality Agreement or Non-Disclosure Agreement (“NDA”), and neither should you. A client recently asked me to provide it with the main points to consider when reviewing and NDA or Confidentiality Agreement. Here is a quick overview of the key provisions to watch out for.

  1. Err on the Side of Mutuality – In the event you receive a “One-Way” Non-disclosure agreement, always insist on it being made into a “Mutual” NDA. Always protect your confidential information and trade secrets with Mutual NDA’s.
  2. Distribution of Confidential Information – Always consider who will be reviewing confidential information. Consider whether it is prudent to include representatives such as brokers, accountants and attorneys, and financing sources like banks.
  3. Excluded from Definition of Confidential Information – A listing of Exceptions to “confidential information” should be included such as generally accepted information or information that has already been disclosed. Consider whether you want to name this partner or client as a partner or client in marketing materials.
  4. Standard of Care – You should never agree to keep the other party’s confidential information “strictly confidential” or “in trust”. This raises the level of protection you are required to provide.
  5. License of or Restrictions on Use of Your Intellectual Property or Trade Secrets. You should never agree to any restrictions on your use of your own intellectual property or licenses to use your IP or trade secrets for evaluation.
  6. Employee Solicitation – Certain parties will broaden the reach of their NDA’s by including non-competition and non-solicitation clauses. Never agree to these restrictions.
  7. Termination – A provision of termination should always be included, and it should state that the agreement shall end somewhere between 1 and 5 years from the date.
  8. Governing Law – Always have governing law be in your state. Delaware is also acceptable. Caution should be exercised if another state is chosen; particularly if that jurisdiction does not have a connection to your proposed transaction.

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Those are the Top 8 terms typical to an NDA Agreement. If you are specific, thorough and forward thinking when devising your NDA, or working with your attorney to do so, then you will have a worthwhile and binding contract that will help you protect your business exponentially. Lack of proper terminology or omission of crucial elements could lead to the demise of your business, so take caution and enlist legal advice.

Non-Competition Agreements Finally Demystified

Greg HarrisLeave a comment

On October 1, 2018 a new law was enacted that will have extensive legal as well as every-day consequences for all companies with employees and contractors in Massachusetts. This new law governing non-competition agreements puts employers in a complex place, forcing them to examine the way their non-compete agreements are now executed, and potentially needing to revamp their older ones to make sure they are compliant.

person holding magnifying glass

Simply put, a non-competition agreement is an agreement between two parties under which one of the parties agrees that he or it will not engage in certain specified activities competitive with the other party.  Non-competition arrangements may typically be found when two parties enter into a supply agreement, an acquisition, or in the employer-employee context, which is the focus of the new law.  With this new Act, employers are much more limited in what and when they can impose on their Massachusetts workers and independent contractors, and the cost to them.

For a non-competition agreement to be effective, the non-compete must now protect a legitimate business interest, not exceed one year, and be reasonable in geographic scope and prohibited activities.  Some exceptions still exist, such as non-compete agreements stemming from the sale of a business; non-compete agreements stemming from

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separation of employment (provided the employee is given seven business days to rescind acceptance); employee non-solicitation covenants; customer/client/vendor non-solicitation covenants; and non-disclosure of confidential information agreements.

 

The new law also differentiates between non-compete agreements entered into prior to the start of employment versus those that are drawn up during the course of employment.  Prior to the commencement of employment, the agreement terms must:

  • be in writing;
  • be signed by both the employer and employee;
  • expressly affirm the employee’s right to consult with counsel prior to signing; and
  • be provided to the employee before a formal offer is made

Alternatively, if a non-compete agreement is produced during the course of employment, though not related to the employee’s separation from the company, the agreement must

  • be supported by fair and reasonable consideration;
  • be provided at least 10 days prior to the effective date;
  • be in writing;
  • be signed by both the employer and employee; and
  • state that employee has the right to consult with counsel before signing.

If a non-compete is found to be in violation of this new law, courts will either reform an overly broad agreement or otherwise void the provision altogether.

As a result of the enactment of the new non-competition law, all employers who maintain non-competes for Massachusetts employees should consult with qualified employment counsel to determine if their current contracts are still operable, and also to draft comprehensive boilerplates for new agreements.  Contact us to find out more on this important subject as this is just a sampling of the requirements of the new laws.