In ‘Ashland Management,’ confidentiality knows no bounds.

We live in a world where global markets are falling all around us; where competition is keener than ever, and where a company’s confidential business information, or "trade secrets," may provide it with its only critical edge over competitors. As a result, it is more important than ever to protect such intellectual property. That’s why employers frequently require their employees to sign agreements containing restrictive covenants that prohibit them from leaving to go to work for a competitor, from soliciting the employer’s customers, and from stealing the company’s trade secrets. And that’s why restrictive covenant litigation appears to be on the rise.

Unfortunately, however, restrictive covenants – whether styled as covenants not to compete, more limited non-solicitation agreements, ¹ confidentiality agreements or a combination of the three – are heavily disfavored under New York law. This stems from New York’s strong public policy favoring an individual’s ability to earn a livelihood. See, e.g., Columbia Ribbon & Mfg. Co. v. A-1-A Corp., 42 NY2d 496, 499, 398 NYS2d 1004, 1006 (1977); Reed, Roberts Assocs. Inc. v. Strauman, 40 NY2d 303, 307, 386 NYS2d 677, 680 (1976). Courts will generally enforce agreements that contain restrictive covenants only where the restrictions are reasonably limited geographically and temporally and the enforcement is necessary to protect a valid business interest. See Columbia Ribbon, 42 NY2d at 499.  

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