Trade secrets can be the most vital aspects of an organization’s edge in the market, but it can be difficult to safeguard these from employees who leave to work for another company or start their own. Noncompete agreements can provide some measure of protection. However, the focus of the state’s Business and Commerce Code is to prevent the monopoly of trade and unfair competition, and Texas courts may rule in favor of the employees when these agreements end in litigation.
U.S. copyright law outlines the rules governing ownership of intellectual property and can be helpful in defending the validity of a noncompete agreement. Works prepared during the course of employment are owned by the employer rather than the creator as long as the creation of the works occurred within the scope of the job duties. This is known as a “work made for hire.” The employer-employee relationship is critical in determining the ownership, though, and courts often consider the following questions: