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socrateaser, Lawyer
Category: California Employment Law
Satisfied Customers: 39048
Experience:  Retired (mostly)
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I work for a company that provides software as a service. I

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I work for a company that provides software as a service. I have worked there 5+ years and now they want everyone to sign a Confidentiality Agreement. One part of it says that I cannot create anything that is derived from my work at the company or is related to the company's business. I would like to leave and start my own software as a service company that would be in semi-direct competition. If I sign it, and then terminate employment, how long would I have to wait before I can start my own company? And how different is this than just working for a competitor?

California Bus. & Prof. Code 16600 absolutely prohibits employers from enforcing noncompetition agreements against former employees. Because of this, the part of the agreement that prohibits you from creating anything that is related to your current employer's business is unenforceable. The part that prohibits you from creating something derived from your work with the company is enforceable.

In other words, you cannot steal your employer's intellectual property, but you can create competitive products using your own knowledge, talent and experience, and your employer cannot stop you.

Hope this helps.

Customer: replied 4 years ago.

Thank you. This does help very much so.


Hypothetically, could I sign it, then create my own product that I solely create from my own knowledge, then terminate employment, and then launch my site?

Hypothetically, your employer cannot stop you from developing a competitive product, as long as you don't use the employer's intellectual property to do so (designs, algorithms, libraries, objects, etc.).

The crux of the problem is that your former employer could claim that your work is derived directly from specific knowledge gained from your employment, whereas you would claim that you used nothing other than your own knowledge. This could make for a complicated and expensive legal dispute, which could require a settlement between you and the employer, just to stop the bleeding caused by the litigation. Because of this, if you were to stay with the employer, you may want to think about trying to get yourself placed on project team that does not develop anything like what you are contemplating developing after you leave your employment.

Hope this helps.

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