Duty of Loyalty Employees owe duty of loyalty to employer -- even if no non-compete agreement Breaches: competing while employed, “seducing” customers and employees, referring business opportunities, kickbacks or bribes Liability for breach: injunction, compensatory damages (lost profits, costs of replacement), forfeit salary and earnings, punitive damages

Trade Secrets Employee can’t appropriate trade secrets or proprietary info even in absence of non- compete agreement Common law rule -- enforced by injunction & damages State legislation: –Criminal: Cal. Penal Code, Mass. –Civil Cal. Civil Code –Uniform Trade Secrets Act (not adopted by NY or Pa.)

Trade Secret: Factors extent known by employees and those involved in employer’s business nature of measures taken to guard secrecy of info value of info to employer and competitors money and effort expended to develop info ease or difficulty for others to acquire or duplicate properly

Confidential Information Confidential info: needn’t be trade secret, patent or copyright Is info treated as private: restricted access, locked up? Proprietary info: benefits employer or provides competitive advantage to employer If easily obtainable or accessible to others, not protected

Restrictive Covenants: Non-Compete Judicial Disfavor -- Changing Factors for enforcement: is it reasonable -- scope, time, geographic area –employer’s legitimate interest to be protected –will enforcement burden public –can employee find other employment –was consideration given May enjoin use of trade secrets even if no agreement