Legal Information for Large and Small Business Owners
Posts tagged Business Trade Secret
Do I Need a Business Lawyer?
May 30th
When do I need to hire a corporate attorney for my business?
Some scenarios are obvious — you should call a criminal or corporate attorney when you’re being investigated by government officials for tax or securities fraud, when an employee is injured on the job or when a customer is injured by one of your products.
But you should also consider hiring a corporate attorney in other situations, like:
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When you are starting a business.
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When you are buying or selling a business.
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When you are considering dissolving your business.
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When you are hiring senior or key employees.
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When you are hiring employees with access to company secrets or confidential information.
When You Probably Need a Business Attorney
Here are a few examples of when you should consider hiring a good business attorney for your large business or small business.
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The members of your LLC, shareholders of your company, or partners of your partnership want to allocate the profits and losses is a special way in the LLC operating agreement, shareholder agreement or partnership agreement.
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The business partners will be contributing capital other than cash to the partnership, company, or LLC — like intellectual property, know-how, or appreciated property.
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In connection with the purchase of a business that has significant potential liabilities like: environmental issues (state and federal environmental laws impose liabilities on landowners in the chain of title, regardless if they caused the contamination); product liability, employee liability (sexual harassment or employee discrimination claims); excessive debt; or special capital calls.
Please note. If you are a member of a limited liability company, a shareholder in a closely held company, or a partner in a partnership, keep in mind that the company lawyer is representing the company, not you. There are times when members, shareholders or partners decide to form their business or eventually go separate ways. The corporate attorney hired for the business has the business as its client and protects the business’ interests. In the scenario of forming the business, each business partner has its own interest in mind, which may be adverse to the proposed company (for example, if one member is contributing intellectual property to the new business, it may want to have an exit strategy to keep its intellectual property if they part ways). Or in the event of a “business divorce,” where the remaining members, shareholders or partners are buying out other LLC members, company shareholders or partnership partners, the company lawyer has the company’s best interest in mind, which interest is adverse to the departing business partners. Business partners, members and shareholders should be represented by their own corporate attorney to avoid conflicts of interest, or at the very least, the business lawyer needs to advise the partners of, and they have to waive in writing, the conflicts of interest.
If you need help with deciding whether you need to hire a business attorney, you should contact a licensed business lawyer for an initial consultation. As the old saying goes, an ounce of prevention is worth a pound of cure.
Your Company Should Have a Nondisclosure Agreement (Confidentiality Agreement) with its Employees
Mar 22nd
A Non-Disclosure Agreement (also known as an NDA or confidentiality agreement) is meant to protect a business from its employees misusing valuable proprietary information. Often it is a good idea to have a confidentiality agreement in place with each of your employees (regardless of position). For instance, your receptionist and salesperson might have access to your customer lists, which your company would deem confidential.
You should not use a “form” NDA that you download from the internet or obtained from another business. Your NDA should be customized for the facts and opportunity at hand and more importantly, for your particular business. It is important to keep in mind that your company’s confidentiality which is designed for the purpose of a “business-to-business” transaction (where both corporate parties disclose confidential information to each other) won’t suffice for the employer-employee relationship. You should consult a New York Business Lawyer (or corporate attorney) to prepare your company’s employee confidentiality agreement.
Your employee non-disclosure agreement should be specific as to what is considered “confidential information” and also include things that the employee ought to reasonably know is confidential. You should also include company trade secrets (see “When Do You Need a Nondisclosure Agreement (NDA)?” for more discussion about Trade Secrets).
Your corporate attorney should set forth for what purposes the employee can use the confidential information and how he or she can use the confidential information (may not be removed from the offices, no reverse engineering, no copying, etc.). Of course, you need to have provisions specifying what the employee must do with the confidential information when his or her employment ends.
Your company lawyer needs to add “teeth” to the NDA stating that employee indemnifies the company for any breach and that the company may resort to any remedy at law or in equity to enforce its rights in the proprietary information (this means the employee could be sued for monetary damages as well as enjoined from using the information).
Of course, depending on what your business does, an employee confidentiality agreement may be part of a more encompassing agreement that includes provisions limiting the competitive activities of an employee when he or she leaves your company (sometimes referred to as a “non-compete agreement” or “forfeiture for competition agreement”) and requiring the employee to disclose prior inventions (and promise to either not include the prior invention in what they create for your company and/or grant your company a royalty free license to otherwise use the prior inventions).
Lastly, like protecting trade secrets, it is not enough to merely have non-disclosure agreements (confidentiality agreements) in place — your company needs to implement policies and procedures to maintain the secrecy of your company’s confidential information.
I recommend that you consult with a New York Business Lawyer to prepare your company’s employee confidentiality agreement, “non-compete agreement” or “forfeiture for competition agreement” to help ensure the best ways to protect your company’s confidential information and competitive edge.
When Do You Need a Nondisclosure Agreement (NDA)?
Mar 21st
