Foundations of IP Strategy

Scenario 3: New Employee Hire

You are hiring a new employee whose sister owns a competitive business. This employee is especially skilled for the work you need done, and you want to hire him even though you know that he will have access to significant confidential information/trade secrets, will manage a large team of your most valued employees and will have interactions with your key customers.

Select each of the items below to learn more about some of the things that you should consider in relation to this employee and to your office practices in general.

1. Enter into a non-disclosure agreement with the employee

   Non-disclosure agreements are useful to spell out an employee’s obligations with respect to confidential information/trade secrets. These agreements should form part of the standard employment arrangement with every employee.

2. Enter into non-compete and non-solicitation agreements with the employee

   Agreements that reasonably limit an employee’s ability to work for a competitor or to solicit people to leave an organization help to preserve your confidential information/trade secrets. This is because one of the most common ways that legal protection is lost is through unauthorized disclosure to a competitor who has every interest in capitalizing on the information. However, significant care must be taken in drafting these agreements because if the restrictions are overly broad in terms of scope or duration of applicability, they are likely to be viewed as unenforceable by the courts.

3. Limit the information to which the new employee has access

   You should avoid unnecessarily revealing sensitive information outside of the scope of information that he reasonably needs to fulfill his duties. In fact, generally disclosing the information only to those who have a need to know is an important way to protect the secrecy of the information. This practice limits the number of people who can put the protected commercial information at risk.

4. Implement strong employment policies for the office

   Incorporate employment policies within an organization as another protective measure for safeguarding confidential information/trade secrets. Written employment policies should remind employees of the fact that certain information, equipment, machinery, processes or projects are protected as confidential information/trade secrets.