Nondisclosure and Noncompetition Agreements* Apart from formal employment agreements, it may be worthwhile to draft and require your employees to sign confidentiality or nondisclosure agreements. If an employee, or any service provider such as a Web site designer, is going to have access to information that you do not disclose to the public and you would not want shared with your competitors-such as customer lists, pricing information, business plans, or proprietary business methods-a nondisclosure agreement can give you an added level of security. Such agreements should make it explicit that the employee is prohibited from using or disclosing any confidential information that he or she learns from your business except as authorized by the business.

You may also want to consider having certain employees sign noncompetition agreements. In those agreements, employees agree not to compete against your firm for a given time period and sometimes in a specific area or with specific clients. If a person subject to a noncompetition agreement leaves your company and starts competing against you, it may be possible to go to court and get an injunction prohibiting the person from violating the agreement. However, it is essential to consult with a lawyer about entering into such contracts. The laws of different states differ widely. In some states, such agreements are not enforceable at all, and even in the states in which noncompetition agreements are enforceable, there are often specific requirements that must be met before such an agreement will stand up in court.

Intellectual Property Issues

Intellectual property issues also present a number of difficulties to the professional services firm. Often, intellectual property developed by the firm is one of the firms most important assets, particularly for consulting firms. This part of this chapter outlines some major considerations with trademarks, copyrights, patents, and trade secrets.

Trademarks. A trademark is a word, name, or symbol (or even a color, sound, or smell) that is used to identify products or services of a company and to distinguish them from another companys products or services. To have rights in a trademark, you must initially pick a mark that is protectable. Courts have found terms such as Discount Muffler or Lite beer to be too generic to be protectable trademarks. On the other hand, arbitrary or fanciful associations between a mark and a product-such as Apple computers-are protectable.

If you are the first one to use a protectable mark, you automatically obtain some rights in it by displaying it in connection with the sale or advertising of your service. However, to ensure that you will have rights in a trademark that you may spend money promoting, you should be sure that you are not using a trademark in which someone else already has rights. Although commercial

trademark search firms exist, a lawyer often better can help you decide how thorough a search you need to undertake given your needs.

Trademarks do not automatically offer protection to your mark across the country. They typically apply only in the area in which you use the mark. Thus, it is possible for two businesses in the same line of work to have the same name, as long as they operate in different areas. You can receive priority in your mark nationwide if you register it with the United States Patent and Trademark Office. If you do not intend to operate nationwide, registration with your states government may be sufficient. (Note that you do not obtain trademark rights in the name of your company simply by incorporating or by registering an assumed name under which to do business.) Seeking legal advice to guide you through the various questions you may have about how best to protect your trademarks can help ensure that the investment you make in the identity of your business does not go to waste.

Copyrights. Copyright gives legal protection against others who copy anything original that you write or record. You automatically have copyright rights in any book, article, advertisement, software, movie, or music recording that you create. Copyright protects the particular expression that you write or record; it does not, however, protect the underlying idea that you have expressed. Your copyright rights generally give you the exclusive right to reproduce, distribute, display, or create derivative works from your copyrighted material.

There is no requirement that a copyright owner put a copyright notice on a protected work, but printing the copyright symbol-©-along with the copyright owner and the date of publication on a copyrighted work alerts others to the fact that the material is copyrighted and perhaps reduces the chance of unauthorized copying in the first place. Attaching this notice can entitle the owner to enhanced damages in a copyright lawsuit as well.

Apart from attaching the copyright notice, it can be worthwhile to register copyrighted works with the Copyright Office of the Library of Congress. It is necessary to register a copyrighted work in order to recover statutory damages and attorneys fees from an infringer.

Patents. A patent is basically a government-issued monopoly over an invention. Many people think that patents apply only to machines, but patents are available for business processes and methods. You can protect a new hybrid of a plant with a patent, and you can obtain a design patent to protect the aesthetic look of a product. Patent protection is also available for improvements to preexisting inventions.

If you invent a new process or business method, you can obtain a patent to protect your invention, if you can show that your invention is useful, new, and nonobvious. For example, Amazon.com, Inc. obtained a patent on its one click Internet ordering process.

Obtaining a patent simply gives you the right to prevent others from using your invention by suing others who make, use, sell, or import a product produced by the process. Other people can be liable to you for patent infringement even if they did not know about your patent. There are a variety of reasons to consider seeking patent protection for your invention. Obtaining a patent can discourage others from copying your know-how, increase the recognition of your products or services, provide a potential source of licensing revenue, serve as a marketing tool, and attract investors and venture capital.

To obtain a patent, you have to apply for one within one year of the date you first used the invention publicly or commercially, although the safest course is to apply for a patent before you begin commercial use of your invention. A patent issued by the federal government is valid only in the United States. If you plan to do business in other countries, you will have to seek patent protection from those other countries. Finally, a patent is valid only for a certain number of years. Most U.S. patents are good for 20 years from the date you first seek patent protection.

The process of obtaining a patent can be complex, and it is usually worth the expense to hire a patent attorney to assist you in seeking patent protection for your invention.

Trade Secrets. Finally, the professional services business should make special efforts to protect its trade secrets. Trade secrets can be anything that a business knows or does that gives it an advantage over competitors. Trade secrets can be customer lists, pricing information, marketing plans, and other processes. To be a trade secret, information need not be novel enough to be patentable, but it must be, and remain, secret. It can thus be useful to have a lawyer perform a trade secret audit for your business to ensure that you are doing all that you can to ensure that your protectable secret information remains secret. Such an audit can review your businesss confidentiality notices, confidentiality agreements, and procedures to ensure that access to sensitive information is appropriately restricted.

Contract Review

Consulting a lawyer to review contracts that you enter into can also be a wise use of your resources. Particularly with major agreements, it is essential that the firm understands all of the terms of the contract it is are going to execute. Your lawyer should be able to explain the provisions of a proposed contract to your satisfaction; you should not rely on an interpretation of a proposed agreement made by the other party to the transaction. It is also a good idea to discuss with your lawyer the nature of the deal involved. Through a discussion of the matter, you and your attorney may identify areas of uncertainty that need to be clarified.