What is "client stealing"?

Dear Rich: I was asked to sign an agreement with a company in L.A. that creates music for film trailers and production music libraries. The agreement says that I am not permitted to contact the clients of the company and if I do, it will be considered "client stealing"? What does that mean? One way or the other, we think the company is trying to prevent you from competing against it in the future.
Is it a noncompete? If the agreement is viewed as purely a noncompete agreement -- that is a court considers it as preventing you from competing -- a court is unlikely to enforce the agreement in California where such arrangements are prohibited.
Is it an NDA or nonsolicitation agreement? If however, the client list is considered to be confidential information -- that is, it's not easy to determine who is a client or to locate the client pool through typical industry sources -- then this information may be considered a trade secret. In that case the company can enforce the agreement. If, however, the company's clients are publicly known and a simple Google search could turn up a list, it's less likely that the provision will be enforced under an NDA or under a nonsolicitation agreement.

She Has Non-Compete in Book Contract

Dear Rich: I have a contract for a book that will contain entries from my website. In addition to my own site, I write a regular freelance column and occasional one-off articles on a certain subject for print and online publications. The freelance work I produce is not identical to what I'm planning to include in the book but there is a lot of overlap in the basic information (suggested lists of supplies, how to use cookie cutters, etc.) Considering the clause, below, that came with the contract, would my own site, my freelance column and my one-off articles be deemed to be competitive? The clause reads as follows:

 NON-COMPETITION. The Author shall not prepare or be concerned in the preparation other than for the Publisher of any work which shall be an expansion or abridgment of the current Work, in whole or in part, or of a nature likely to affect prejudicially sales of the current Work. The Author will consult with Publisher before publishing or producing another work likely to affect prejudicially the sales of the Work herein contracted for.

How long? Our initial concern about this provision -- besides the fact that it doesn't accurately define a competing work, and is written in a funky old-school contract writing style -- is how long the provision can be enforced. Since no time period is mentioned, we assume it's enforceable for the term (time period) of the agreement. We don't know what the term is, but it should be written somewhere in your agreement. In book contracts, it's typically for as long as the book remains in print (see our previous entry) or for the length of copyright. In either case, that's a long time. So, if you have the bargaining power, you might want to put a timer on this one -- for example, to preface the provision by saying, "For a period of one year, following publication of the Work, the Author shall not ....
What's competing? Our second concern is that it doesn't clearly define a competing work. It's no accident that this provision is vague. In the minds of some attorneys, ambiguity increases the breadth of coverage because it makes it possible to threaten and intimidate an author over any type (as long as it will "affect prejudicially sales") or size ("an expansion or abridgment") of work.  An author with some bargaining power would want to limit this to a specific thing -- for example book-length works on the same specific topic. Also, if the contract contains a clause providing a right of first refusal for your next work (the publisher has first dibs on your next book), you should add language saying that if the publisher doesn't want to publish it, that your second book will not be considered a competing work.
Does your other stuff compete? Because the provision is so vague, we can't say whether the publisher will care about your other works and if so, what will the publisher do. If we were a betting blog, we would bet that the publisher probably won't care or do anything. First, they're probably aware that you're the expert on this particular subject and they're aware of your site and your freelance column, so they won't want to put a halt to this type of self-promotion -- it helps the book. Your one-off articles may or may not trigger friction. That depends on who is publishing them and where they are being published. One way to secure your position is to include a mention of the book in any of these efforts as that way you can make a reasonable argument that they are promotional not prejudicial.
Just sayin'. If you speak with one of the editors or publisher reps, you may want to discuss these concerns. The publisher may not change the contract (which will ultimately control what happens) but they may assure you that the provision is rarely enforced.
PS Feel free to send our contracts book to the company's legal counsel.

Wants NDA+ for Taiwanese Manufacturer

Dear Rich: I’m trying to find a triple-N agreement to send to my Taiwan manufacture (NNN = non-disclosure, non-use and non-compete). I am concerned that customers in the Far East will try to get him to manufacture our product directly for them. If we have a good NNN agreement, it will help dissuade him from doing that. Can you direct me to any resources? We've spotted a few of these templates floating around the Internet, but from our research (and limited experience) it's not a good idea to use off-the-shelf NDA-type agreements with foreign manufacturers. The main reason is enforcement: a manufacturer that operates solely in the People's Republic of China (ROC) would only be subject to Taiwanese law and you would need to rely on ROC courts to enforce the agreement. That reduces the chances of enforcing an English-language off-the-shelf agreement -- particularly if you are relying on American style injunctive relief (a hard sell in some Asian courts).  The only way to increase your chance of enforcement is to show the manufacturer that you mean business by preparing a properly translated agreement that caters to the laws of the ROC -- or Peoples' Republic of China (PRC), depending on who is really in control in Taiwan. That means engaging an English speaking lawyer who is familiar with ROC laws. For more information, you may wish to check these two articles: one explains why a Triple-N agreement is the way to go with Chinese manufacturers, and the second explains the common pitfalls when trying to make the agreement enforceable.
An exception .... One exception to the rules expressed above is if the foreign manufacturer has a presence in the U.S. -- for example, there's a U.S. subsidiary or headquarters. In that case, the company is likely to be subject to U.S. jurisdiction and you may be able to enter into a typical template agreement. If you're seeking a basic NDA for various purposes, we've uploaded a collection of agreements with explanations.

Must Ex-Employee Disclose Post-Employment Inventions?

Dear Rich: Can an employer in California require an ex-employee to disclose all inventions created after the employment has ended. I've been asked to sign an agreement that requires me to disclose all inventions I create even for a year after I leave the company? The Dear Rich Staff is always fascinated by post-termination provisions. Yes, they are usually insidious, over-reaching, poorly drafted, and a desperate attempt to assert control by the legal-capitalist puppet-masters. But there's also an element of hopefulness to them. After all the employer sees some kind of future for you. So, when you get that call from the HR department and you start to see pink, remember that the employer who is about to end your career also has enough faith in you to pursue you for months after you've cleaned out your desk.
Right, you had a question. We can't say for sure whether your post-termination clause is enforceable but we can give you some background. California's Labor Code Secs. 2870-72 sets the rules for some invention disclosures. That law prohibits the employer from claiming rights to inventions you create on your own time with your own supplies and equipment. It also permits an employer to require employee disclosures of all inventions created during the course of employment. Unfortunately, it doesn't say anything about disclosures made after employment is terminated.
Two cases that shed a little light. In a 2006 case, STMicroelectronics v. Harari, a federal court indicated that California's disclosure requirements could be construed broadly for purposes of protecting an employer's trade secrets (although it didn't specifically address post-termination provisions.) In Yield Dynamics v. Tea Systems, a California Court of Appeal looked at a post-termination disclosure and ruled that an ex-employee had honored it. Again, the court didn't specifically address whether such clauses are always enforceable.
California policy. We think that a California court will consider it unenforceable if the provision is primarily being used as a means of preventing you from competing (that is, like a noncompetition clause). If a court considers it as a legitimate attempt by the employer to preserve company trade secrets, it is more likely to be enforced. The factors that are likely to tip the decision are the length of the provision (generally the longer, the less enforceable), the industry, or category of technology or invention involved (in some industries such as high-tech, trade secrets are short-lived), and the relative behavior of the parties (for example, it would be less enforceable if the employer customarily uses this provision to hassle ex-employees). We also think this is something you should make your new employer aware of as you want to avoid disclosing any newly acquired trade secrets. It's also the kind of thing you may want to consider hiring an attorney for an opinion.