Can I Use Ex-Employer's Customer List?

Dear Rich: Simple question: Can my ex-employer stop me from using the customer list I developed when I worked for him? Sorry, but it's not that simple. You should check out this article to determine whether your customer list qualifies as a trade secret.  If it doesn't, it's unlikely that it can be protected by state trade secret law or an NDA you may have signed. On the other hand, state laws vary and most states honor noncompete agreements (not California) which may affect your ability to compete against your ex-employer by soliciting his clients. So, if you signed paperwork with your ex-boss, now's the time time to review it (or have an attorney review it).

How Long Can Ex-Employer Chase Ex-Employee?

Dear Rich: I stopped working for a small California tech company in 2008 and now I'm working for a competitor. My ex-employer recently found out about my job and is threatening to sue because he says I still have trade secrets and that I will disclose them at my new job. Can he still bring a lawsuit after all this time. Isn't there a time limit? There is a time limit for bringing trade secret claims in California. It's three years from the date the trade secret theft was discovered (or should have been discovered with reasonable diligence). So, depending on when you began working and other factors, your ex-employer can probably still bring the suit. That time limit also may depend on whether the ex-employer and you had a written agreement (which may establish its own time limits on secrecy).
Time limits may not be the main issue. According to your letter, your ex-employer is concerned about a prospective disclosure of secrets, not an actual disclosure. If that's the case, that's probably not going to fly in a California court. California law doesn't support claims based on "inevitable disclosures" by former employees (although an ex-employer may be able to get an injunction for a "threatened disclosure"). Here's more on California trade secret law.

Am I Bound by NDA with Foreign Company?

Dear Rich: I'm in the U.S. and I'm working with a foreign company and we were talking about me possibly helping them with their marketing. I signed an NDA. We both have agreed that I will not do the marketing for them. Now we are talking about me private labeling their product and selling it here in the states. We're in the negotiating stage on price. They are 50% higher than another source for a similar product. I'm happy to give this company 15% to 20% higher payment for their supplement but not 50% higher then their competitor. Because I signed a NDA does this prevent me from going to another vendor? Again, under the NDA it was to discuss marketing consulting. Now we're talking private label/wholesale. So far the negotiating on price is going okay but I want leverage so I'm not handcuffed to buying from him 50% higher them competitive market place. Plus I don't want to sign an exclusive source deal. As far as I know I don't know of any trade secrets that they gave me, just common knowledge that can be found on the web. The Dear Rich Staff is sorry we're not giving you our full attention but we're trying to figure out why our most recent weekly Google Analytics report shows zero visitors since October 1. Oh we see why! Somebody snatched our tracking code. Was it the Chinese bots? Pardon us while we reinsert our code. Ahh ...  that feels better!
Right, you had a question. We're guessing that your primary concern is whether you can ditch the foreign company and go with somebody else without violating the NDA. That shouldn't be a problem, assuming that (1) the document you signed is strictly an NDA, and (2), you don't violate the NDA by giving up any confidential information provided by the foreign company.
Strictly an NDA? Probably you signed a typical NDA that prohibits disclosure of secrets. But be aware that some documents titled Nondisclosure Agreement, Confidentiality Agreement, or even Disclosure Agreement, go beyond just addressing trade secret issues and can include other restrictive provisions --  for example, it may temporarily prohibit solicitations of competitors or contact with customers. So, numero uno, be sure that you didn't sign paperwork that presents additional hurdles. If the agreement is more than an NDA, you may need to consult an attorney.
What can't you do? Assuming it is a straight NDA, keep in mind that their language is often overly restrictive and purposely vague. Those who insist on them sometimes rely on their ambiguity to instill a sense of fear. However, an NDA only prevents disclosure of trade secrets -- confidential information that's unknown by competitors and which is kept confidential via reasonable security efforts. Many such "secrets" don't qualify as trade secrets, and -- if you're confident that they're not protectible -- you are free to disclose them regardless of the NDA. In other words, if all of the information disclosed to you is publicly available, the foreign company will have no basis to sue under the NDA should you go with someone else.

Can NDA be Governed By Two States?

Dear Rich: I’m working on a Non-Disclosure/Trade Secret Agreement for an employee that we have in California. Our main office is in Kansas City, Missouri. Is this wording legally appropriate?

Governing Law and Jurisdictions: This Agreement will be governed and interpreted according to the substantive laws of the State of Missouri and the State of California. Parties hereby expressly consent to the exclusive jurisdiction of the state and federal courts located within Platte County, in the State of Missouri, USA with respect to the interpretation and enforcement of the provisions of this Agreement. 

Can the laws of 2 states govern an agreement? If not o.k., could you please make a verbiage recommendation? We're hesitant to suggest specific verbiage for your contract ... that might cross the imaginary line between providing legal information and providing legal advice. But we can help you avoid ambiguities in your agreement.
Jurisdiction provision. You've combined two provisions (governing law and jurisdiction) which is not uncommon. The jurisdiction provision (also known as "forum selection") requires that any lawsuits arising from the agreement will be filed in Missouri. In normal circumstances, a California citizen may not be obligated to defend a lawsuit in Missouri (but the jurisdiction provision is intended to give consent in advance). Keep in mind that jurisdiction provisions are not uniformly enforced. For example, Idaho and Montana won't enforce them at all while other states require that the parties have some contact with the state beyond the contract provision.
Governing Law. This provision (also known as "choice of law") allows the parties to choose which state's laws will be used to interpret the agreement. If two states are named there will likely be some ambiguity, and ambiguity may be interpreted against the drafter (your company). It's true that this may not be a major issue for your NDA because both Missouri and California have adopted trade secret laws based on the Uniform Trade Secrets Act. Still, there are some substantive issues on which the two states differ and your clause may create unneeded confusion. As a general rule, we believe California law is more likely to favor employee rights than Missouri -- for example, California has strict rules prohibiting noncompetes. Because you are forcing any cases to be filed in Missouri, it would be less ambiguous to use only Missouri law.  Finally, although you are probably aware, NDAs are only enforceable to protect company trade secrets. We've posted some examples of NDAs at this site.

How Do You Create a Trade Secret?

Dear Rich: How are trade secrets made official? Do you have someone sign a NDA? Here's how you create a trade secret: (1) you think something up that will give your business an advantage (2) you keep it to yourself and hide it from others, and (3) if you need to tell someone you make sure that person is bound not to disclose it under the terms of an enforceable agreement (or under a law--for example, most states bar employees from disclosing an employer's trade secrets). There are a few other common sense requirements but that's basically it. The real test of your trade secret program occurs if someone steals your secrets or violates an NDA. For more info, check out this website we created about trade secrets.

Contract Worker Broke My NDA!

Dear Rich: I just found out that a contract sewing employee I had sign an NDA is making my product! What can I do to stop him? An NDA is helpful if you want to stop someone from disclosing or using your secrets. So if the contractor took a confidential process or secret information, you can sue. If, however, your products are publicly available and there is no secret element in their production or marketing, you may have a hard time claiming trade secret theft and violation of the NDA.
What else? If you have a noncompete provision and your state enforces noncompetes, you also may have a solid claim. Is your product protected under copyright or trade dress laws? That may be a way to stop copying. Bottom line dept. Assuming this product is important to your business, you should have a lawyer look at your agreement and your product.

Can I Expose Exxon in My Documentary?

Dear Rich: I am making an independent film about life on our ranch with ExxonMobil. I had a blog for a few years and youtube page. For three years, I filmed lots of Exxon activities on the land that is owned by my husband. About a six months into my blog writing, ExxonMobil sued me for tortious interference saying "my shenanigans raised their operating costs" because they had increased inspections from regulators. So, I am aware of how they can be big bullies with their lawyers. However, when I was not intimidated, they just backed off and I kept filming and writing. I never got any releases from Exxon workers or subcontractors but I have the permission of the land owner (my family). Of course, everything has Exxon stickers, etc. I even interview the people working there. Exxon's partners (El Paso Corp) sued me for tortious interference and exposing trade secrets on my blog. But, we made an agreed judgement where those claims were dismissed with prejudice. I am planning to make my movie free and put it on iTunes and the Internet. I have this idea that free speech is more protected than commercial speech. But, I don't know if that is true and where I got this idea. I also think that people are less likely to sue me if they think there is no money in sales to fight over. What do you think? We admire anyone who has something to say and doesn't let other people stop them from saying it. But we're also protective of anyone who calls themselves a Dear Rich reader, so we'll provide the legal rules with a caveat that you're already probably aware of --  free speech will protect your rights, but proving you have those rights may prove to be a burden. There is some recent good news for you. Last month, Texas passed its version of an anti-SLAPP law (as explained here). Anti-Slapp laws even the playing field by stopping lawsuits that are used to censor speech. That law could prove helpful if the claims brought against you are trivial or have no legal basis. Anyway, here are the legal rules.

• Copyright - Because you did all the filming, we don't see much of an issue with copyright. If you are quoting from Exxon's written materials, using their photos, or video, that's an infringement but we think you have a strong fair use claim. However, as we always note, fair use can only ultimately be excused by a court which means you're spending money on lawyers.
• Trademarks - We don't see much in the way of trademark issues. The reproduction of trademarks in an informational film about Exxon is permitted under first amendment principles and we discussed those issues here. These rules regarding informational uses would protect you against claims for trademark infringement and trademark dilution. Our only suggestion would be to avoid modifying the logos.
• Privacy/Publicity Rights - Because your film is a documentary (and it's not a commercial endeavor), you may be able get away without releases as you are skirting right of publicity issues. However, without a release, the people portrayed in your film can possibly argue the film violates their right to privacy, or alternatively, it defames them. These aren't likely claims if you make a fair factual film, but as you know, employees who are concerned about retaining employment may regret their statements or wish to recant them. In your defense, you may be able to claim that their permission is implied by the fact that they talked to you and were aware of who you were, and that the material was being filmed. (In the future, you should consider getting a video release. While the camera is rolling, explain what you're doing and what the video will be used for and ask for authorization to use the material in your film. We explain more of these releases in our Getting Permission book.)
• Trade Secrets - You're familiar with this one. When you disclose confidential business information that you acquired by an unlawful means, a company can claim that you stole their trade secrets. So, if someone has stolen trade secrets from Exxon and they give them to you and you publish them, you could be enjoined (stopped) from distributing them. As you know, this is a gray area encouraging litigation because only a court can ultimately sort out what qualifies as a trade secret. 
• Contract Claims - You're already familiar with tortious interference -- when you're accused of coming between two parties to a contract to undermine their dealings with each other -- another gray area of law in which a he said/she said battle can drag on in the courts. Your settlement agreements may also establish some contractual limitations on your future behavior (although it doesn't sound like it from your description).
• Defamation/Trade Libel -- If you include untrue statements that cause harm to Exxon's business reputation (or to any of their executives or employees), you may expose yourself to defamation claims.
• Likelihood of Being Sued When There are No Profits -- You asked if you were a likely target if you had no profits. Profits probably only matter when discussing copyright, trademark and contract claims. And Exxon may not care about your profits, anyway. They may be more concerned about stopping the film (getting an injunction). You could be personally liable for defamation, right of publicity or other tort claims. Some people who make documentary films attempt to shield their personal assets by creating an LLC or corporation to produce, own, and distribute the film. 

How Do You Protect Trade Secrets?

Dear Rich: How are trade secrets made official? Do you have to have someone sign a NDA? NDAs won’t protect just any business information; the information must qualify as a trade secret. To qualify, the info you're trying to protect must not be generally known or ascertainable through legal methods and must provide you with a competitive advantage or have economic value. In some ways, trade secrets are like tamagotchis -- remember those little creatures from Japan that needed constant digital tending or they would pass on. If you have a trade secret, you must always conceal it, disclosing it only to those bound to maintain confidentiality. An NDA helps to conceal a secret because it is an agreement promising to keep a secret. If broken, the agreement provides remedies against the discloser. Other advantages of using an NDA are:

• It places the party receiving the information on notice that you consider the information confidential. 
• It specifies what information is defined as confidential, which helps prevent misunderstandings and resolve disputes.
• It can establish a method for resolving disputes—for example, mandating that the parties arbitrate any disputes instead of going to court.
• It can guarantee that any dispute will be decided in your geographic area.
• It can establish which state’s laws will govern disputes. For example, if you are entering into an agreement with a company in another state, you may prefer to have disputes resolved under your state’s trade secret laws rather than the laws of the other party’s state.
• In some cases, you may have a longer period of time to file a lawsuit than if you did not have a signed agreement.

There are many decent NDAs available on the web but we prefer the ones posted by the Dear Rich Staff  at this website. 

Can Research Assistant "Borrow" Professor's Ideas?

Signed NDA; Lost Patent Rights

Dear Rich: In 1995, Company A signed an NDA with me that enabled a presentation to their executives concerning my ideas and vision in the implementation of bar code reading applications using cordless telephone technologies. Following the presentation, and after leaving the documentation with the company, they wrote to me rejecting participating in the proposals presented. In 2001 Company B, which is wholly owned by Company A entered into a joint venture funded by Company A with Company C. Company C has been awarded patents in this area of technology that I proposed in 1995 to Company A. All the major players in the mobile phone market now licence from Company C to enable cordless phones to read and transact operations over the air. In 2003, I wrote to Company A concerning these facts that Company C may not have good title to these patents due to the history of circumstances inter alia myself. They responded with a letter stating that they (Company A) were a strategic supplier to Company C and that the executive who signed the NDA was employed by the business network division at that time and as there was no longer a business network division that position no longer existed. Are there any statute of limitations that would prevent me taking further action legally? Would it be more productive to start addressing these issues directly with Company C in the USA? The short answer is that you've probably waited too long to pursue your trade secret claims. 10 or 15 years may not seem like a long time when considering human history or geophysical activity, but it's eons within the legal system. (You should consult with an intellectual property lawyer to be positive).
The clock started ticking ... As a general rule, you have a certain number of years (typically 3 to 5) to take legal action after your problem developed. For example, most states have adopted the Uniform Trade Secrets Act which has limit of "3 years after the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered." In addition, there's a legal theory known as laches that could limit any damages you may have suffered because you waited too long to bring the suit.  (Here are some of the other defenses that Companies A, B, and C could make to a claim of trade secret misappropriation.) Although it's not the same as a lawsuit for damages, you may be able to argue that the issued patents are invalid by having the patents reexamined.