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LEGAL ISSUES

Proprietary Information: Nondisclosure Agreements

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A strong nondisclosure agreement is especially critical to Silicon Valley businesses and other fast-growth companies. An employer must insist that all its employees agree, in writing, not to disclose or use the company's proprietary information without prior authorization from a specified party. The writing should stress that this obligation does not end with the employee's termination, whether voluntary or involuntary.

The nondisclosure agreement may contain these additional provisions:

  • A definition of proprietary information;
  • An agreement that in its work with the employer, the employee will not use or reveal proprietary information of third parties such as former employers or business partners;
  • A "no moonlighting" clause, prohibiting the employee from engaging in other business ventures while employed with the company;
  • An agreement to return all company materials, including notes and computer files, upon termination; and
  • The ever-popular at-will disclaimer.

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