Legal Question in Business Law in California

Re: Are sales leads and proposals proprietary?

Maria, this is a very complex area of the law, and general platitudes about what is legal and permissible, on the one hand, and what is an unlawful misappropriation of a trade secret, on the other, can be misleading, with bad consequences.

One suggestion I would offer is to locate the law library in your county, and ask the librarian to let you look at "Trade Secrets Practice in California," a practice manual published by Continuing Education of the Bar (CEB), a joint venture of UC-Berkeley and the State Bar.

This publication is written for lawyers, but it contains a lot of material that can be understood and put to use by non-lawyers, including an appendix containing the text of the Uniform Trade Secrets Act.

In this area of the law, there is a constant tug-of-war going on between two legal principles: first, that no one should be hindered by contract, or otherwise, from practicing a lawful business, trade or occupation. In furtherance of this policy, California has Business and Professions Code section 16600 declaring any contract by which one is restrained from pursuing a business, trade or profession void to the extent of such prohibition. Then, on the other hand, trade secrets are zealously protected from misappropriation. Customer lists can be, and often are, trade secrets.

So, to oversimplify, an employee can quit and go into competition with the former boss, without regard for any supposed "non-compete" agreement she signed, but she can't take the Rolodex from the sales manager's desk.

Your question states that there are no trade secrets, but I think your opinion takes too narrow a view of what may be deemed a trade secret in California (and elsewhere). Data bases and other information about customer preferences and needs that isn't widely available with little cost or effort has often been held to be "trade secret" and even if the departed emloyee compiled it.

In my opinion, the fact that you were paid on an after-the-fact commission-only basis is relatively unimportant. You were an employee, that's what counts. Matter of fact, if you had been a bona-fide independent contractor, the law would be the same, both as to the invalididy of future employment restraints and the illegality of misappropriating trade secrets.

Re: Are sales leads and proposals proprietary?

You need business counseling, both as to forming your new business and as it relates to the issue of competing with your previous employer. Generally, former employees are free to compete. There are a few exceptions, but none that seem to fit your cicumstances. The trade secret issue simply cannot be answered without much more detail. One thing I would caution: don't take any customer lists. If you're interested in business counseling, feel free to contact us.