Legal Case: Trade Secrets

Case Study # 104839

Business > Law
Law > Business

Looks at a legal case regarding trade secrets, conflicts of interest, and covenants not to compete.

1,130 words () | 13 sources | APA | 2008 United States

Paper Summary:

This paper explains that, as employees have access to trade secrets, they pose the threat of stealing the secrets when they leave the business. Thus, American law allows the employer to protect his interests through the somewhat limited enforceability of covenants not to compete. The paper then points out that, while these covenants have been used for many years, new issues have emerged as the economy has become more flexible with employees frequently changing jobs and with businesses being sold to successor companies. The paper goes on to analyze the test case of "Riamonde v. Van Vlerah" (1975) whereby the Ohio courts uphold covenants to not compete thus protecting trade secrets. The paper includes references to several other cases as well.

From the Paper:

"In trying to balance the reasonable rights of the employer to protect trade secrets and the right of the employee to work, Ohio courts seem most inclined toward what might be called the "Express Consent" approach. A successor employer can enforce a non-compete agreement only if it meets three requirements. First, the employer must show that employees expressly consented not to compete against the successor employer. This could be shown by either of two means: (1) the non-compete provision must state that the covenant is an asset of the predecessor employer, and must state that it can be transferred to the employer's successors and assigns."

Sample of Sources Used:

American Eutectic Welding Alloys Sales Co. v. Rodriguez (1973), 480 F. 2d 223 (1st Cir.).
Dau-Schmidt, Kenneth & Timothy Haley. (2007). Governance of the Workplace: the Contemporary Regime of Individual Contract. COMP. LAB. L. & POL'Y J. 28: 313.
Ehlers v. Iowa Warehouse Co. (1971), 188 N. W. 2d 368 (Iowa).
Karpinski v. Ingrasci (1971), 28 N. Y. 2d 45, 268 N. E. 2d 751.
Model Code of Professional Responsibility, DR 2-108.