Legal Question in Technology Law in California

What is Conflict of interest

If a person is working in a consulting firm that does software consulting, which includes building software systems for his companies clients, placing people at client site, would it be a conflict of interest if the individual started his own company still being employed in the previous one. This new company would do the same on a smaller scale but would target clients that are not clients to his employer.

Would this be a conflict of interest and can the individual get into trouble in doing that


Asked on 10/15/03, 4:19 pm

2 Answers from Attorneys

Re: What is Conflict of interest

Yes. This is a conflict of interest. You could (and should) get fired if you do this.

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Answered on 10/15/03, 4:57 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: What is Conflict of interest

First, you should read your employment contract (as well as any collateral secrecy or non-compete agreements you signed) and the employer's policy manual carefully.

Next, you must not use any of your employer's resources OR any time for which your employer is paying you. This includes no use of employer-provided computers or telephones for communicating with prospects, potential partners, or anyone.

Your list of potential problems includes not only conflict of interest but misappropriation of trade secrets, which includes knowledge bases complied by the employer -- not just patents, true secret formulas, computer code and routines, but also information of all kinds about present and prospective customers.

Having said that, it is a simple fact of today's business world that many startups are created by people who did just what you are planning to do. The ones who successfully avoid civil suits by their ex-employers are those who avoid theft of company time and resources and misappropriate as few so-called trade secrets as possible.

The law favors competition but frowns upon misuse of a former employer's time, resources or base of business knowledge.

Oh, also, avoid recruiting co-workers to join you while still employed.

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Answered on 10/16/03, 2:34 am


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