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  1. #1
    SitePoint Zealot Norrad's Avatar
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    Unhappy Restraint of trade clause

    Hi All,

    After a bit of a fallout with my current employer, I am finally free to concentrate on my own business. I checked through my contract and I came across this Confidentiality and Restraint of Trade clause. In your interpretation, does this mean Iím screwed? Iím not looking at going after their existing clients but at the same time I canít stop their clients from coming to me. I was the only developer at the company so the clients have a good relationship with me as they often communicated with me directly regarding their sites and systems

    By mutual agreement you hereby accept to refrain from communicating with or divulging any confidential matter or information relating to the business affairs, processes or trade secrets of Business Name. This shall be deemed to include but not be limited to:

    1. Business Nameís trade secrets, products, new developments, business methods and techniques.
    2. The identity of the companies clients or customers.
    3. All work carried out by the company on behalf of itís clients.

    It is agreed that upon leaving Business Name, you and Cinergy Interactive, or any other company of your creation or association, shall not continue to work for or engage in graphic design or web related business with Business Nameís existing customers.

    It is agreed with Business Name that any design, invention, process or technique developed during your employment with the company shall remain the property of Business Name.

    It is further agreed that you fully undertake not to tamper or affect in any way whatsoever, directly or indirectly, any of the companies current or future websites. Be this through Ďliveí interaction with any clients Content Management System, through ftp access or any other referred access and interaction whatsoever.
    Also, some of the systems I developed I did completely in my own time. I then used some of these systems in projects for them. I kept my own copyright in the code though. Can they rightfully claim ownership to these?

    Any help would be appreciated as this has got me panicking.

  2. #2
    SitePoint Wizard cranial-bore's Avatar
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    <i'm no expert clause>
    Parts of this contact seem a bit vague. For example I have today received an employment contract with a clause very similar to the one about designs created during your employement. I think this is vague because it doesn't specify if <em>"during your employment"</em> means from when you took the job, to when you left, or if it means for your actual hours at work, on the clock.
    Hopefully the latter is the correct interpretation, but I will be getting this clarified on my contract. I have no idea of the legally authoritive answer.
    </i'm no expert>

    Good luck
    mikehealy.com.au
    diigital.com art, design . Latest Work ó Saturday Morning

  3. #3
    SitePoint Evangelist bronze trophy Derek Sheppard's Avatar
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    Non-compete agreements are problematic and thier legality and enforcement vary state-to-state, so you ought to spend the $100 or so to run this by a lawyer.

    Parts of this agreement do seem very vague and difficult to enforce. Most non-compete clauses I've had experience wth must be specific and limited in scope and duration. For example, you agree not to compete within 25 miles of the office for 2 years following separation. Courts are usually reluctant to enforce these as they don't like to tell someone he can't work at his trade.

    If existing customers leave the company and engage you directly, what does that mean? I'd argue that when they leave the company, they are no longer existing customers and are therefor fair game for you.

    The copyright issues are knottier and you'll need expert advice to see if your copyright trumps this agreement.

  4. #4
    Word Painter silver trophy Shyflower's Avatar
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    I agree with Derek. This is a matter for an attorney. By all means CYA!
    Linda Jenkinson
    "Say what you mean. Mean what you say. But don't say it mean." ~Unknown

  5. #5
    SitePoint Zealot cpiwc's Avatar
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    Quote Originally Posted by Derek Sheppard
    Non-compete agreements are problematic and thier legality and enforcement vary state-to-state, so you ought to spend the $100 or so to run this by a lawyer.
    And here I think we're talking about the potential to vary from country-to-country so some of our usual knowledge/experiences may not hold.

  6. #6
    SitePoint Evangelist bronze trophy Derek Sheppard's Avatar
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    Quote Originally Posted by cpiwc
    And here I think we're talking about the potential to vary from country-to-country so some of our usual knowledge/experiences may not hold.
    Oops! Missed that. Good catch.

  7. #7
    SitePoint Zealot Norrad's Avatar
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    Thanks guys, I met with my former employers this afternoon to clarify things. I am not allowed to actively go after their clients but they can't stop their clients coming to me. And they just want permission to continue using systems developed by me but can't stop me from using them in the future.

  8. #8
    Life is short. Be happy today! silver trophybronze trophy Sagewing's Avatar
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    Also I notice that there's no duration on the non-compete language, so the agreement might be bound be an overall termination clause.

    Is there a duration or termination date for the contract? That might help you determine when you are no longer bound by the non-compete.
    The fewer our wants, the nearer we resemble the gods. ó Socrates

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  9. #9
    Non-Member Gator99's Avatar
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    Regardless of your NDA contract, all work you did for this employer is their property by copyright law -- it is considered a work-for-hire since you were their employee. As far as the systems you created, if there is not any contract regarding software you created before the time of your employment, it is their property -- regardless of when or where you created it.

  10. #10
    Life is short. Be happy today! silver trophybronze trophy Sagewing's Avatar
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    I wonder if the laws are similar in S. Africa. I would be intersted to know.

    Norrad, sounds to me like you did the wisest thing - just talking it over with them. That way, you know how THEY interpret the language and can easily avoid any legal matters.

    Also, don't forget the all time greatest technique is jump-starting your freelance career: to contract yourself back to your ex-employer!! It happens all the time.. That relationship might still have lots of value.
    The fewer our wants, the nearer we resemble the gods. ó Socrates

    SAGEWING LLC - QUALITY WEB AND MOBILE APPS. PREMIUM OUTSOURCING SERVICES.
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