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In the wake of Enron and the breach of integrity in corporate America, building trust in potential business relationships seems much more challenging. The traditional handshake and personal guarantee no longer hold any weight in the current business environment, and therefore leaves a strong incentive for business owners to protect themselves from unscrupulous business practices.

As human beings are inherently creative, the entrepreneurial spirit is conducive to developing innovative ideas to give one's business a competitive advantage in the marketplace. These ideas are a culmination of experience, creativity, and observation of market demand. While such ideas are the vehicles of progress in our economic system, many would-be-successful entrepreneurs have failed because someone else misappropriated their ideas for their own personal benefit. While real businesses thrive on reputation and long term investment of good will, the "get rich quick, retire early" mentality of the last thirty years has caused some people to compromise integrity as the shortcut to quick wealth accumulation.

As such, it would be prudent for any business owner to inventory the extent of their intellectual capital and proprietary information, because such assets contribute to the increased value of their business. There are many types of protections that the law affords, depending on the nature of the proprietary information being protected. Patents, trademarks and copyrights are a few mechanisms used, not only as a sword to prevent unlawful infringement, but also as a shield to prevent competitors from instituting legal claims against oneÍs business. While the nuances of these three vehicles would require a much deeper analysis and are related to protection in the public realms, the focus of this article is on trade secret protection through non-disclosure and non-circumvention agreements.

Therefore, a business can protect its proprietary information as a trade secret through contractual means. All agreements, whether with vendors, manufacturers, partners, employees, independent contractors, customers or suppliers should contain some language that relates to confidentiality and non-circumvention. The objective of such language would be two-fold: (1) it will keep the information from being disclosed publicly so third parties cannot steal the ideas and dilute one's competitive advantage, and (2) it will prevent the receiving party from simply executing on these ideas, leaving the disclosing party's business out of the profit-sharing equation.

In today's marketplace, personal trust and rapport has nothing to do with asking for prudent business protection. One never knows when the person with whom they are negotiating will leave their business, get fired, or take another job. Therefore, it is always a good idea to plan as if the other side one is dealing with is not a single person, but a community of individuals (and their successors) that may or may not turn out to have the same level of integrity as the person across the negotiation table. Moreover, if the non-disclosure language is mutual, then both parties benefit from it. So whether the proprietary information is a script, a business plan, a manufacturing process, business process or a methodology, this type of protection may be advantageous.

David Michail has been a business and corporate attorney since 1996. This article is intended for informational purposes only, and shall not be construed as legal advice. For more information about protecting proprietary information, please feel free to contact Mr. Michail at (310) 559-4333 or at david.michail@michaillaw.com.