CONFIDENTIALITY AGREEMENTS… IS THAT STUFF REALLY SECRET?

Get this question alot.

“Hey, Lawyer. I signed this document 7 years ago when I started that says I wouldn’t share any confidential information with anyone outside of Virginia Corporation Company, LLC. I want to start my own business that sort of compete and I don’t have a non-compete… but customers and clients aren’t considered confidential, right? I mean, its a free country and I can still be friends with, call on, do business with these people? RIGHT?”

Ok. I will admit the question is often presented in a more articulate way, but the issue is the same.

People and their relationships are confidential, or are they?

To answer this question, I usually ask a question.

“What does your confidentiality clause say or deem to be considered confidential?”

If it says nothing (which is rarely the case) we look to the Va. Trade Secret Act for help. Va Code § 59.1-336 defines Trade secret as”information, including but not limited to, a formula, pattern, compilation, program, device, method, technique, or process, that: 1. Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and 2. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”

Clear as mud, right? So what does that mean? readily ascertainable blah blah blah blah.

It means, you can’t use, take, share or use for your own benefit, any information which your company has generally kept a secret if the info helps the company make money (obtain economic value).

Does that help at all?

Let us explain by example.

QUIZ: If your company has a list of customers on line or shares it with the SEC, and it is therefore public information, do you think the identity of those customers is secret, confidential, protected by your agreement?

Probably not.

But if no one knows that company has a formula for its billing or a super secret formula for hair tonic, and that information is kept totally secret from anyone who is not on the “need to know basis,” then the hair tonic formula and billing procedure may indeed be protected and deemed confidential or Trade Secret information.

Bottom line is this: Don’t assume anything, and remember, every case, company and agreement is different.

Let me know if you need help figuring your agreement out. Or if you want to share the formula for hair tonic.

Lauren Ellerman
Lauren Ellerman

In 2011, Lauren Ellerman was named "Young Lawyer of the Year" by the Roanoke Bar Association for her work in the community. To speak with Lauren about your personal injury case, contact her at lellerman@frithlawfirm.com.