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Trade secrets usually considered a legitimate business interest

Many Nevada business owners come to the Aldrich Law Firm when there is a risk that their companies’ trade secrets will be made public, and we help these clients defend against the misappropriation of their confidential business information. In such situations, enforcing noncompete agreements can be a useful tool in protecting our clients’ rights.

According to the American Bar Association, the existence of a legitimate business interest is one of the requirements of an enforceable noncompete agreement. While there is no strict rule on the topic, the general consensus is that most states will recognize trade secrets as legitimate business interests. This means that a company that has valid trade secrets will most likely be considered to have fulfilled this requirement. This brings the business one step closer to being able to prevent current and former employees from disclosing confidential company information. 

Not all company information will be considered a trade secret. As they are legally defined, trade secrets are a type of information that is kept secret and which derives value from its confidentiality.

It is important to note that simply having a legitimate business interest is not in and of itself enough to ensure a noncompete agreement’s enforceability. The ABA explains that an enforceable noncompete must also meet the following requirements:

  • The state must recognize these types of contracts.
  • There must be consideration.
  • The contract’s restrictions cannot be overbroad.
  • The contract must not place an undue burden on the employee’s ability to earn a living.

For additional information on trade secret litigation, please visit our page on the subject. 

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Aldrich Law Firm, Ltd.
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Las Vegas, NV 89117

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