Chapter 27
PROTECTION AGAINST UNFAIR COMPETITION BY EMPLOYEES
Summary
COMMON LAW DUTY OF LOYALTY
- Employees owe a common law duty of loyalty to their employers; however, this doctrine is not well-developed under Texas law.
- Officers and directors and other employees in positions of special trust have a more defined duty of loyalty to their employers.
TRADE SECRETS AND CONFIDENTIAL INFORMATION
- Common law provides specific protection for an employer's trade secrets and confidential information.
- Key factor is determining what constitutes trade secrets and confidential information.
- Some jobs may be prohibited for an employee to pursue because they would inevitably and improperly result in the use of trade secrets for the benefit of a former employer's competitor.
EMPLOYEE INVENTIONS AND IDEAS
- Federal law provides employers rights in works created in the course of employment.
UNFAIR COMPETITION
- Unfair competition claims may arise from conduct that is clearly designed or intended to damage a competitor.
AGREEMENTS RESTRICTING COMPETITION
- Non-competition contracts are valid in Texas if they serve to protect a legitimate business interest; however, Texas law provides very specific and narrowly construed requirements for a non-competition agreement to be enforceable by statute (Business Code §15.50, et. seq.).
- Agreements restricting solicitation or raiding of employees may not be considered non-competition agreements and may be enforced separately.
- Non-solicitation of customer agreements are treated as non-competition agreements subject to the statute's requirements.
Depending on the facts, employers can seek injunctive relief, as well as damages, for violation of the duties described above and for non-competition contract violations.