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Houston Business & Commercial Law Blog

Determining employer ownership of intellectual property

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:

New legislation would protect employers’ faith-based decisions

Federal laws regulate employment in Texas and around the country. The Equal Employment Opportunity Commission enforces legislation such as the Civil Rights Act of 1964 to protect employees from discrimination based on race, sex, nationality or religion in the workplace. In light of the new U.S. Supreme Court ruling that makes same-sex marriages legal, many wonder how employment regulations will be affected. A proposed House bill called the First Amendment Defense Act seeks to allow employers to make employment decisions based on their religious beliefs regarding marriage, according to its supporters.

Theoretically, employers would be able to make decisions regarding workers who are in same-sex marriages based on personal religious beliefs because the proposed legislation uses a definition of marriage that limits the union to a man and woman and reserves sexual activity for those who are in this type of legal relationship. If this bill passes, companies that get federal funding would be able to make these faith-based choices without fear of retribution.

Drafting a non-compete agreement with reasonable time limits

The court will rule a non-compete agreement unenforceable if it is not drafted correctly. One critical aspect of enforceability is the inclusion of a reasonable time period that the covenant is in effect. According to Texas Business and Commerce Code §15.50(a), the time limitation is not reasonable if it is vague, or if the restriction it imposes goes above the amount of time needed to protect the interests of the business.

The time necessary to protect the company’s interests should be considered and set carefully. There is not a specific time frame that works across contracts within the same industry, company or job title. Instead, when an employer is preparing to offer a position, the prospective employee’s duties and the knowledge specific to those duties should be considered in relation to how time will affect their application to business. For example, if the company produces computer software, the relatively quick obsolescence of the product may render a limitation of even one year unnecessary.

What is Title VII and how does it affect Texas employers?

State and federal laws grant workers in Texas, and elsewhere, certain protections. One such law is Title VII of the Civil Rights Act of 1964. Actual or perceived violations of this law could result in disputes between you and your employees.

Whether a private, state, government or education institutions, you are subject to Title VII compliance if you have 15 employees or more. A federal law, this portion of the act prohibits most workplace discrimination and harassment. Under Title VII, Texas employers are banned from doing the following:

  •        Refusing to hire people based on their national origin, religion, color, race or sex
  •        Discriminating against workers based on their compensation, conditions, privileges or terms of employment
  •        Classifying, limiting or segregating employees or employment applicants that would deprive them or limit their opportunities based on their sex, race, color, religion or national origin

New study focuses on CEO pay gains

In the business world, a company’s success often depends on its leadership. The right CEO or executives can turn a small company into a global leader. Because of this important role they play, it is not uncommon for Texas companies to pay their CEOs a substantial income and provide other perks. However, some people are calling for more employment regulations when it comes to CEO compensation. A recent study focused on whether CEO pay gains are justified.

A recent study from the Economic Policy Institute, a liberal think tank, echoes other studies that show a negative impact from high inequality in pay. The authors build on previous research to reach the conclusion that the pay of top CEOs over the country’s largest corporations is not necessarily based on the talents and abilities of those executives, nor is the pay scale directed by fair competition in the marketplace. If this is correct, then lowering the pay of the top CEOs would not affect the corporations’ ability to excel in the marketplace, according to the study.

What is commercial real estate fraud?

As you may be aware, there has been an increase in mortgage and real estate scams in Texas, and throughout the U.S. While private homeowners are often the targets of these schemes, many businesses have also been taken advantage of in the commercial real estate market. In order to help protect yourself, and your business, it is important for you to have an understanding of real estate fraud.

Commercial real estate fraud schemes are often complex and can take on many forms. There may be multiple people involved, including appraisers, accountants and brokers. The aim of these schemes is to take advantage of, deceive or exploit you, or your business.

Contract issues: Terminating business contracts in Houston

We have previously discussed avoiding contract disputes in Houston. In some cases, however, a dispute may be unavoidable and businesses may want to terminate a contract. At The Jackson Law Firm, we are often asked if it is possible to end a contract before the term or work is completed. In this post then, we will discuss how business contracts may be terminated.

In most cases, contracts require one or both sides to do something. For example, a business may outsource the production of a product to another company. The business will have a contract with the other company that stipulates what is being made, how many items are being made and the cost of production. As such, fulfilling the specified obligations is perhaps the easiest, and least contentious, way to terminate a contract. Once the terms have been met, the contract often ends without dispute.

How can Houston business owners avoid contract disputes?

Even with the best laid plans, not all Houston businesses run smoothly all the time. At one time or another, you may face challenges that can have an adverse effect on the long-term health of your business. Contract disputes can be particularly difficult because it is often hard to predict their resolutions. At The Jackson Law Firm, we often consult with people who are involved in such disputes. In this post, we will discuss some guidelines you can take as a business owner to help avoid contract disputes.

Since most business agreements rely on contracts to spell out the terms, it is important for you to use caution when signing them. You will want to ensure that the terms of the agreement are clearly spelled out and that you fully understand them. Additionally, it can be helpful to ensure the contract includes the specific consequences that you, or the other party, will meet if you do not fulfill your contractual obligations.

Jawbone files lawsuit against Fitbit, alleges trade secret theft

As was discussed in previous post, companies in Houston, and elsewhere, may have certain information and plans that they wish to keep confidential. Generally known as trade secrets, the theft of this information by competitors may be used to provide advantages in the market. Therefore, businesses often take legal action when they suspect that trade secret theft has occurred.

Jawbone, a cellphone headset and wireless device manufacturer, recently filed a lawsuit against Fitbit for alleged theft of trade secrets and intellectual property. According to reports, lawyers for Jawbone claim that Fitbit has been poaching workers from its chief competitor. It is alleged that a number of these workers downloaded sensitive information regarding Jawbone’s future plans and products. Jawbone is reportedly requesting the court to prohibit the former employees from using this information, as well as financial damages.

Keeping your edge: Protecting trade secrets from theft

Many businesses in Texas, and throughout the U.S., have trade secrets, which contribute to their operation and success. Sometimes, a business’ competitors may seek to obtain this information through nefarious means in order to catch up or gain a competitive advantage in the market. At The Jackson Law Firm, we often consult with businesses that have information that must be kept confidential. In this post then, we will discuss trade secrets and how they can be protected.

In general, trade secrets are confidential devices, techniques or information that a company uses to manufacture, distribute, sell or advertise its products. This could include food recipes or beverage formulas, as well as manufacturing techniques or marketing strategies. When the owner of these types of information makes an effort to keep them confidential, they may be protected by federal trade secret law. According to the U.S. Department of Justice, this law prohibits the theft or unauthorized disclosure of trade secrets.

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