Limitations Upon the Enforceability of an Employee’s Covenant Not To Disclose and Not To Use Confidential Business Information Without Authorization

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Employee covenants not to disclose and not to use confidential information without authorization are widely used to protect employer trade secrets and other confidential information. However, the covenants are not as routinely enforced as many believe. At a minimum, in addition to satisfying consideration requirements, these covenants should use conventional definitions of “trade secret” and “confidential information,” should not elaborate when use is unauthorized, should not alter materially the employer’s burden of proving breach, and should be supported by employer practices that both identify and safeguard the confidentiality of protected information.

An enforceable covenant not to disclose and not to use can justify a limited injunction against direct competition. On the other hand, in order to deter deliberately overly-broad covenants, the courts do not and should not judicially modify deliberately overly-broad covenants in order to make them enforceable.

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