How Do I Protect My Company from Wrongful Competition without a Non-Competition Agreement?

You have spent years and enormous amounts of money to build your company. Along the way, you’ve hired many people, some better than others. Now, without your blessing, one of your former employees or independent contractors has taken what you’ve taught him and is setting up a shop of his own, trying to do the same thing you do. You don’t have a non-competition agreement (“non-compete” or “noncompete”) with this person, because you felt you could trust him, or for technical reasons (there are many), your non-competition agreement may not be valid.

You Still Have Options

While it is always preferable to have a valid and enforceable non-competition agreement (it’s often easier to win that way), even without one, you have options to protect what you have fought to build. Both Washington and Oregon have adopted the Uniform Trade Secrets Act, RCW 19.108 etc. and ORS § 646.417, etc., and these can provide the grounds you need to protect your business.

These statutes prohibit misappropriation of trade secrets and provide remedies for such conduct. A “trade secret” is something that (1) is secret, (2) is valuable because it is secret (and not generally known to your , and (3) that you take reasonable measures to protect the secrecy of that item (keep information encrypted, use non-disclosure agreements, etc). “Misappropriation” generally means a use or publication without permission.

Keeping Track of Your Trade Secrets

Many business owners do not consciously realize it, but there are any number of things that may constitute trade secrets in their hands. These include client lists, financial performance information, business methods and strategies, custom-created forms for closing deals, and the like. Many of these items can be overlooked because they are usually not technical in nature. It is that very fact that often makes them easy to steal. For that reason, it is good practice to itemize your trade secrets and to keep track of who has had access to what information.

Every business has barriers to entry. When that barrier is know-how (your trade secrets), and people can acquire it by working for you, it is important to systematically protect what you’ve developed. If you do not, the foundations of your business and livelihood may become eroded.

Ask a Portland Business Lawyer about Oregon Trade Secret Statutes

Fortunately, in the hands of an experienced and skilled attorney, the trade secret statutes of Washington and Oregon provide the tools you need to protect what you’ve built. Both statutes provide for attorney fees in the event of willful misconduct, and Oregon’s statute provides for punitive damages for willful or malicious misappropriation. The specter of attorney fees or punitive damages can be a powerful deterrent to people who may otherwise feel free to steal your business model after a short time working for you.

As always, please feel free to call our office at (503) 224-9946 (Portland, Oregon) or (206) 407-2536 (Seattle, Washington) if you have any questions, and thanks for following our blog.

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