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Protecting Your Brewery, Brew Pub or Distillery’s Trade Secrets, Confidential Information and Customers From Former Employees

Your company’s recipes, methodologies and customer base are what distinguish it from the competition. If this information is disclosed to third parties, it could detrimentally hurt your business because a competitor could seemingly replicate the same or similar beverage. It is important that you protect your company’s trade secrets, customer relationship and other confidential information from employees, especially the brew master or distiller, in the event the employment relationship ends.

The good news is that New Jersey, like many other states, has recognized three categories of interests that may be legitimately protected:  (1) employer’s trade secrets, (2) employer’s confidential information, and (3) protection of customer relationships. However, the general rule is that a former employee may utilize information from a prior employer with a new employer or new business after his term of service has expired. That could lead to the dissemination of your trade secrets to a competitor or a new company formed by the former employee to directly compete with your business. In order to protect your businesses’ trade secrets, confidential information and customer relationships it is critical that proper employment planning is taking place.  Before or during the course of employment, the employee must agree to be restricted from competing with your business through a covenant not to compete, i.e., a restrictive covenant or non-compete agreement.

In most cases, a non-compete agreement can effectively limit the specified geographic area where a former employee can work, the type of job that the former employee can engage in, and the duration of the restricted type of work. The terms of the non-compete agreement must be “reasonable” in scope, location and duration in order to protect the interests of the employer. The timing of entry into the non-compete agreement is also important. Generally, entry into the agreement must take place at the inception of the employment relationship or when the employee receives a raise or promotion.

These are only a few examples of the issues that your business must consider in connection with its employees, especially the brew master or distiller, who knows your company’s trade secrets, confidential information and customers. Due to the importance of these issues, counsel should be consulted to help protect your brewery, brew pub or distillery’s trade secrets, confidential information and customer relationships.

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About this Author

marshall kizner, stark law, bankruptcy attorney, creditors rights group,
Shareholder

Marshall Kizner is a Shareholder in Stark & Stark’s Bankruptcy & Creditor’s Rights Group, where he practices in the area of commercial litigation, focusing on the representation of secured and unsecured lenders in workouts and litigation in state court and federal court. Mr. Kizner also focuses his practice on real property tax appeals, condemnation, eminent domain, valuation litigation, landlord-tenant litigation, and lease disputes.

Mr. Kizner is also a member of the firm’s Beer & Spirits group where he focuses on assisting breweries, wineries and distilleries in state...

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