It is important for Las Vegas businesses to protect their trade secrets and other elements that distinguish their brands from competitors. This is why many companies have employees sign noncompete agreements or vigorously pursue legal action against another company that infringes upon a trademark.

Recently, the bakery restaurant chain Panera Bread filed a lawsuit against its former information technology vice president, after the executive took a new job with the pizza company Papa John’s International. The lawsuit states that the executive violated the terms of his noncompete agreement and expressed concern that his position would create an unfair competition situation. Papa John’s, however, states there is no reason to worry that the pizza chain would unduly compete against Panera Bread or learn its company secrets.

Are noncompete agreements fair? In some cases, a former employee can easily put his or her previous employer at a disadvantage due to the knowledge he or she has about the company or the skills learned on the job. For example, if the executive from Panera Bread were to share his knowledge of recipe secrets with Papa John’s, or use Panera’s client information to benefit his current employer, it could potentially harm Panera’s business.

Most noncompete agreements limit employees from obtaining employment in a similar, competing industry within a certain geographical area for an average of three to five years. The purpose of this is to protect the company’s interests while not entirely limiting the employee’s ability to find work. Companies that take legal action against a former employee over a noncompete agreement would need to prove that their business was harmed or likely to be harmed because of the alleged violation.

Source: ABC News, “Panera Sues Former Executive, Papa John’s Over Trade Secrets,” Jim Salter, July 20, 2016