When it comes to “Determining what Constitutes Confidential Information,” the first essential element that should feature in every non-disclosure agreement/confidentiality agreement, the confidential information requiring protection must always be stated explicitly in every non-disclosure agreement. While the secrets are not actually disclosed, the subject matter of the disclosure is established through a list of categories and types of confidential information.
To continue with this discussion, this blog post focuses on “Determining the Obligations of the Receiving Party,” which is another critical step and element of every confidential agreement between an employee and an employer.
Determining the Obligations of the Receiving Party
In our blog post “The Inevitable Disclosure Doctrine in Seeking Injunctive Relief,” we mentioned that, depending on factors such as their positions and roles in a company, employees are exposed to or receive confidential information from their employers in the course of employment. Based on such factors, the employer may find it necessary to prevent employees from using competitively valuable information even if they did not “misappropriate” it while departing, such as by way of sending it to their email accounts and/or downloading documents or files into an external hard drive or USB. One way of doing this is by way of asking them to sign a non-disclosure agreement.
Generally, a non-disclosure covenant requires any party that receives confidential information to confidentially maintain and hold such information and restrict its use only for the employer’s benefit and not for any other project/entity or the employee as an individual. In most states, the obligation of the parties receiving such information is not to use improper means to induce others to acquire the information, not to induce others to breach it, or not to breach the confidential relationship.
However, in many jurisdictions, upon fearing that an employee may disclose confidential information (despite the lack of proof that the employee ever “took” it) after separation, employers are permitted to seek injunctive relief against such former employees by asserting the inevitable disclosure doctrine. To expand this protection and as a best practice, the language used in a confidentiality agreement should obligate the receiving parties not to conspire with another or attempt to violate their obligations (as opposed to penalizing only a successful disclosure or use) and prohibit them from engaging in unauthorized use (not merely unauthorized disclosure).
Importantly, it is advisable for the employer to require the receiving party to provide permission for the employer to send a copy to any new employer it might be aware of, as well as mandate the individual to send a copy of the confidentiality agreement to their subsequent employers (within the agreement’s time limit). From a legal perspective, doing this would serve as a defense to any claim that, by sending a copy of the agreement to a new employer, the employer engaged in tortious interference and provide a presumption that the new employer is aware of the agreement.
Stay on the lookout for Part IV of the series, in which we will hammer on “Determining if there is an Obligation for Company Materials to be Returned,” which is another critical step and element of every confidential agreement between an employee and an employer.
In the meantime, stay tuned for more legal guidance, training, and education in other series in progress. In the interim, if there are any questions or comments, please let us know at the Contact Us page!
Always rising above the bar,
Isaac T.,
Legal Writer & Author.