• October 2018
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Are there clauses in the NDA / inventions / non-compete agreements for new hires that should be raising red flags?

Typically, a NDA will have the following components: 1) the names of the parties; 2) what is deemed to be confidential; 3) the remedies for a breach; 4) consideration provided in exchange of non-disclosure; and 5) the term of the agreement. (More of my thoughts on NDAs here). In regard to inventions, most startups will share intellectual property (IP) rights with you or require you to convey any IP rights for any inventions you create in the scope of your employment. Any language in the agreement which attempts to assert rights to inventions you create in your own time and that are unrelated to your employment should be cause for concern.

You will want an attorney to go over this type of language carefully and have it negotiated out of your contract. Also, you will need to be somewhat proactive and specifically identify the inventions and other IP that you already have an interest in prior to the employment relationship. This will protect you in case any dispute arises as to what work has actually been generated during the term of your employment. As for a non-compete agreement or restrictive covenant, courts will typically will uphold them if they are deemed to be “reasonable.” Of course, what is deemed reasonable will vary based on what jurisdiction you are in and, sometimes, what industry you are in (i.e., in NYC restrictive covenants on broadcasters are disfavored).

These are just general things you need to think about; legal professional would be able to give you specific advice about the state laws at play, including New York and California. For example, California has very specific regulations about what can and cannot be contained in an employment agreement concerning an employee’s IP. (More on that here). In contrast, New York does not have specific regulations as to what must be included in an employment agreement. Where there is no agreement, any work for hire during the employee’s tenure is generally considered to be the employer’s property. This means it is imperative that your agreement be very specific as to its terms.

My company LawTrades provides a cost-effective platform to secure legal services for issues pertaining to startups, including reviewing employee-employer agreements. Our roster of attorneys are pre-vetted, highly-trained and have solid legal experience, especially with tech startups. We also have attorneys who practice in New York and California, as well as other states. Any work our lawyers do for you is based on an affordable flat rate so you never have to worry about your legal expenses getting out of hand. We offer a free consultation and no obligation price quotes. Check us out; we’d love to help. Good luck!

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