A competitive edge can make the difference between a business’s success and failure. It may be something simple, such as a lower price or better customer service.
And some businesses have become global leaders because of their unique offerings, such as Coca-Cola’s secret recipe or Dyson’s cyclone technology. If this information got out to their competitors, it could decimate their sales. For these companies, protecting their intellectual property (IP) is vital for their success.
What is intellectual property?
Intellectual property (IP) is a creation of the mind. It could be an invention, logo, secret ingredient, literary and artistic works or something else that is used in commerce. It’s a legal concept that gives the creator exclusive rights to their creation through the use of:
- Patents to protect inventions and processes
- Trademarks for symbols, names and slogans
- Copyrights to protect original works, such as books, music, films and software
- Trade secrets refer to formulas, practices, processes or designs
Both non-disclosure (NDAs) and non-compete agreements can be used by businesses to protect their interests, but they each have key differences.
NDAs are contracts that require the signee to keep IP confidential, which prevents them from sharing it with other companies. They specify which information is considered confidential, such as trade secrets, so each party understands what needs protection.
A non-compete agreement is much more strict. It protects IP by prohibiting employees from leaving their current company and working for a competitor or starting their own business. A non-compete typically outlines the geographic area and duration where the employee can’t work.
NDAs are generally easier to enforce than non-competes. While non-competes are legal in Kentucky, courts will scrutinize them to ensure they are reasonable and don’t cause undue hardship to the employee. Employers need to ensure that all employment contracts are reviewed for regulatory compliance.