Most Maryland employers wisely utilize non-compete and non-solicitation agreements. Many of these agreements also contain provisions that protect a company’s confidential information, called a confidentiality clause or confidentiality provision. Few employers, however, fully appreciate the protective force of these confidentiality agreements.
The purpose of this article is to highlight the added power that a confidentiality agreement brings to a non-compete or non-solicitation agreement.
The importance of a non-compete agreement was stated succinctly by the Court of Special Appeals of Maryland:
Once the employment relationship is terminated, the employee may solicit his former employer's business absent an enforceable covenant restricting competition, misuse of trade secrets, or misuse of confidential information.
Optic Graphics, Inc. v. Agee, 87 Md. App. 770, 781-82, 591 A.2d 578, 584 (1991).
The importance of a confidentiality agreement is often overlooked. Employers typically don’t think much of a confidentiality agreement. If you’ve ever perused or scanned such an agreement your eyes may have glazed over from all of the legalese.
People often think, “I’m not The Coca-Cola Company.”
I don’t have the “world's most guarded secret” known only to two senior executives of a multi-billion dollar international company who are prohibited from traveling on the same plane.
I don’t need a purpose-built vault in headquarters with red lighting, fake smoke, palm scanner, numerical code pad and massive steel door.
However, a confidentiality agreement protects much more than a secret formula.
A confidentiality agreement can be used as supplemental support to prevent the theft of clients or customers, and even the theft of client or customer names or contact information.
Maryland Courts recognize customer lists as protectable information via confidentiality agreements.
The most important point of this article is that confidentiality agreements are not subject to the time constraints of non-compete or non-solicitation agreements. Non-compete and non-solicitation agreements are typically valid for two years or so.
Confidentiality agreements, on the other hand, are upheld by Maryland Courts without any time limitation—there is no expiration period.
Therefore, if an employee steals customer lists and attempts to trade on or capitalize on his or her theft, such an action may violate a confidentiality agreement even if the applicable non-compete or non-solicitation agreement already expired.
Confidentiality agreements are a potent tool for protecting companies from solicitation and diversion of clients by former employees.
The employment lawyers at Luchansky Millman have extensive experience in counseling and litigation in the area of confidentiality agreements.
Additionally, Luchansky Millman carefully drafts enforceable agreements, thereby successfully preventing litigation or positioning companies for success in the event of litigation.
Whether you are in need of aggressive and effective litigation representation or advice regarding current agreements and policies, contact Luchansky Millman today.