And just where do you think you're going with that PalmPilot? Drop it right there, buddy.

In an employment market where high-tech workers can jump jobs every few months, confusion over the issues of confidential information and competition can lead to some naïve mistakes by both employers and employees – and, potentially, some costly legal tangles.

Suggestion Box Have a tech careers issue you'd like to get expert advice on? Send it in and then keep your eye on the Q&As.

Before you run aground on the reefs of confidentiality, let Steven Meltzer and Paul Thomas, partners in the law firm of Shaw, Pittman, Potts & Trowbridge, explain the legal ramifications of intellectual property, non-competition agreements and related issues.

But first, a brief disclaimer: The rights and obligations of employers and employees depend upon their specific circumstances and the laws of their jurisdictions. The questions and answers are not and should not be used as a substitute for legal advice. They cannot be relied upon as guidance for any particular circumstance.

Q: When you change jobs, what happens to knowledge of marketing plans, customer lists, business strategy or experimental technologies you helped develop?

A: The answer to who owns what is in your head depends on the kind of knowledge or information that is in your head when you move from one employer to the next. The law recognizes that you are not expected to forget everything you know when you leave a job. You are entitled to retain information that is generally known or knowable by others in your occupation or trade through training or experience. You may also take with you knowledge or information that is generally known or available to the public. The courts describe this information in the following manner in Maryland Metals Inc. v. Metzner:

"An employee enjoys a right, in competing against his former employer, to utilize general experience, knowledge, memory and skill – as opposed to specialized, unique or confidential information – gained as a consequence of his employment."

What you should be cautious about using in a new job is knowledge or information that would provide a competitive advantage to you or your new employer, either because the information is known only by your former employer or would be difficult or time-consuming to obtain from other sources. You should also avoid taking documents or other forms of stored information that belong to your former employer.
The examples in the question – marketing plans, customer lists, business strategy or experimental technologies – are among the most sensitive types of business information. These categories of information would likely be covered by an employer's confidentiality agreement. The information is also likely to be protected by trade secret laws if the employer has taken appropriate steps to protect it from disclosure.

A: The courts generally disfavor agreements that are restraints on competition. They review them carefully to see if they are reasonably necessary for the protection of the business of the employer, do not impose an undue hardship on the employee, and are not harmful to the public interest.

Courts will enforce confidentiality agreements that appear necessary to protect the legitimate competitive business interests of employers. Some courts will even modify or rewrite agreements that are overly broad, unfair, or unnecessary, and then enforce the modified terms.

Courts are especially likely to uphold agreements that prevent employees from exploiting personal contacts with customers of their former employers. Courts are also likely to uphold non-competition agreements designed to prevent the employee from releasing confidential information or trade secrets.

Even in the absence of agreements, courts will enforce statutory trade secret laws. Courts have also begun to invoke the doctrine of "inevitable disclosure" to permit an employer to prevent a former employee from taking a new job if the duties of the new job will inevitably result in the use or disclosure of sensitive information.

A: Yes. Courts carefully scrutinize non-competition agreements to ensure that they are reasonable. For example, courts view with disfavor agreements that are overly broad in duration, geographic scope, or in the description of competing activities. If an agreement does not meet the legal requirements, and the agreement cannot be modified, the courts will strike it down as non-enforceable. However, it is not prudent to sign a non-competition agreement on the assumption that it will not be enforceable. A court may direct you to not violate the terms of the agreement until there is a trial, which can take months or years.

A: Your rights as an employee depend on: (1) the agreements you have entered into with your employer, (2) the trade secret laws and (3) the case law in your jurisdiction regarding your confidentiality obligations. Many employers seek to protect against the loss of sensitive business information by requiring employees to sign confidentiality, non-solicitation, assignment of rights or non-competition agreements.

An employer can require you to sign such an agreement as a condition of a job offer. A prospective employee would have to sign the agreement to obtain the job, although he or she may be able to negotiate more favorable terms. An employer also may insist that you sign an agreement after you are already employed.

In some jurisdictions employers must give current employees something in exchange for signing such an agreement, although other jurisdictions treat continued employment as enough by itself to make such agreements enforceable. In certain jurisdictions the employer will have the right to terminate your employment if you do not sign.

A: As a new employee, you should review any agreement very carefully before you sign. You should not sign if you think the agreement will unduly restrict you in pursuing your occupation if you take another job. You should beware of restrictions that apply even if your job is involuntarily terminated. You should also not sign any agreement that contains representations by you that are not accurate.

A: You should not sign anything that contains inaccuracies. You should not sign anything that adds restrictions to your post-employment activities, unless you are being paid for the additional restrictions. You should not sign anything that says you reaffirm something you do not believe you agreed to in the first place.

You should not agree to any new obligations, such as indemnifying the employer, unless you knowingly agree to take on the obligation. You should not sign anything that releases the employer from obligations or liabilities unless you are prepared to knowingly give up or be paid to relinquish those rights.

A: You should disclose the existence of any obligations to safeguard the intellectual property rights of others, including your former employers. It would also be prudent to disclose fully the existence of any intellectual property rights you believe you have at the beginning of the employment relationship, or as soon as you become aware of them during the employment relationship. If you delay any such disclosure, you may increase the likelihood of a dispute with your employer over the rights to valuable intellectual property.

A: An employer may make truthful statements to a former employee's new employer, although they need to be careful about the effect of their statements on the former employee's relationship with the new employer. Nevertheless, many employers will advise new employers of restrictions on the activities of their former employees. Typically this involves sending a copy of written agreements the employee has signed. Some employers will also advise new employers that the former employee was exposed to certain sensitive information and that disclosure of the information would be a breach of the former employee's obligations to the former employer.

A: Yes. Some employers are successfully invoking the doctrine of inevitable disclosure to stop former employees from taking new jobs. The inevitable disclosure doctrine allows courts to prohibit workers from taking new jobs with companies that are competitors of former employers if the duties in the new job are so close to those of the prior job that the worker will be unable to avoid using or disclosing confidential information in the performance of his new duties. It is more likely that restrictions will be applied to executive than non-executive employees and to persons with specialized knowledge or technical expertise.

A: Many employers ask new employees to sign a statement that they will not use any intellectual property that they do not have the right to use. The agreements may also contain a provision that the employee will indemnify the employer if there is a violation of the representation. This is particularly important to the new employer because the employee is the only person who knows what intellectual property he or she had access to or may claim a right to and is in the best position to avoid its improper use. The indemnification provision protects the employer from the employee's mistakes.

A: The former employer may bring a court action suing the employee for violating an agreement, statute, or legal principle protecting intellectual property. If the court finds that the employee has acted illegally, the court may permanently enjoin the employee from engaging in the offending behavior, enjoin the new employer from utilizing the employee's knowledge or retaining the employee and assess monetary damages.

Steven L. Meltzer (703-790-7950) is the managing partner of Shaw, Pittman, Potts & Trowbridge's Regional Technology Practice Group based in McLean, Va. Paul M. Thomas (202-663-8241) is a partner in the Employment and Benefits Practice Group in Shaw Pittman's Washington, D.C., office and has served as the Group's chair.