“Trade Secret” shall mean the trade / commercial information, which is not in a publicly-known basis or could not be accessed by the persons, whom in-general are required to be related thereto. Provided that the trade secret shall be of the benefit / interest to the commercial aspect and due to its confidentiality and being of the information that the trade secret’s controller has implemented a proper measure(s) to secure of its confidentiality. Anyhow, some samples of trade / commercial information, which shall be deemed to be as the trade secret, are technique, method, production formula, business-management information, research’s outcome, product’s advertising strategy, the details of the product’s price, the list of customer’s names and so forth. Nonetheless as per such trade / commercial information being not only in a non-publicly known basis, but also it shall:
– Be of the benefit / interest to the commercial aspect, and
– The trade secret’s controller has implemented a proper measure(s) to secure of its confidentiality.
At this stage, the reader may basically-understand the meaning of trade secret and to pre-understand prior to going in-depth onto this article. By the reason that a business operator purports to protect of its trade secret by not to divulge as such towards their business competitors. Provided that the business operator, as the owner of such trade secret, shall prepare an agreement / a covenant to secure of its trade secret. So that a person who knows of such trade secret shall execute thereon so as to attest to the business operator that such person shall not divulge, possess or use of such trade secret to any third party. Whilst under this article, the author may focus on the employees of the business operator owing to they are the closest ones to such business operator, who have a likelihood to know such trade secret. Mostly, such employees are deemed to be in the key-positions and specialized in some area, whom an employer has well-treated. In the event that a business operator has not executed any agreement to protect itself, a business competitor may solicit such employee somehow, which deems to be as a throwing of a stone that kills two birds, i.e. getting of an experience-employee to work with, as well as, knowing of the business competitor’s trade secret at the same time.
An execution of a covenant or an agreement to secure of trade secret, which is frequently-used, having of 2 methods i.e. a business operator, as an employer, is taking a confidential covenant
to be annexed into an employment agreement. The other method is that an employer has prepared a separate-confidentiality agreement for an employee to execute in a separate manner.
By whatsoever means to execute such covenant or agreement, the main condition that the employer is required to prescribe therein is to prohibit an employee to operate a business in a competitive manner against the employer. Whereby, an author kindly provide some sample of such provision as followings:
“An employee shall not operate any business or being as a partner, shareholder, a contractual party with a company or partnership, which operates business in the same nature or similar to the company’s business, including nor to act in any manner, which competes with the company’s business, either directly or indirectly and in a temporarily or permanently manner, or during holiday or during the off of the office-hours, including shall not assist or allow any person to undertake as such during the period of employment and for the period of……….year(s) from the date the employment has been terminated by whatsoever reason.”
By considering on such provision, there be reflected that an employer prohibits an employee to act in any manner, which competes against the employer’s business, during the period of an employment of such employee and upon said employee has been terminated for some certain period of time. Provided that such provision is a prohibition to said employee to work somehow; therefore, kindly be concerned that whether or not said provision is void. Due to Section 40 of the Kingdom of Thailand’s Constitution B.E. 2560 (2017) is prescribed that:
– A person shall have freedom to work,
– A restriction of freedom under the first paragraph shall not be undertaken, unless having a provision by law to maintain of the national security or economics, the fair competition or the protection or anti-discrimination or anti-trust, the consumer protection, the regulation on career as deemed necessary or for the other national interest.
By virtue of a supreme court’s precedent has adjudicated in the same manner that the provisions to prohibit an employee to operate a business in a competitive manner against an employer shall be deemed that despite such provisions restrict the employee’s freedom to work; however, said restriction merely restricts the employee’s freedom to work in some certain aspect and within the proper period of time (from the author’s experience is ranging from 6 months to 5 years), which an employer has prescribed thereof so as to protect its trade / commercial information and its trade secret for the benefit of the employer. Therefore, such provisions are not void.
There be further issue to be considered that the provisions to prohibit an employee to operate a business in a competitive manner against an employer shall be, whether or not, regarded as an unfair contract, by virtue of the Unfair Contract Law B.E. 2540 (1997). By considering on Section 5 of the Unfair Contract Law, which is prescribed that:
“A provision that restricts on the rights and freedom to work or to enter into a contractual activity pertaining to a business operation or career, which is not void, but such provision restricts to a person thereof to create more burdens / obligations as compared to a usual circumstance shall be effective only as long as said provision being fair and proper under such circumstance.”
In adjudicating that, whether or not, such provision in the first paragraph causes the restricted-person’s rights and freedom to have more burden / obligation as he / she should be in an ordinary manner. Provided that there should consider on the scope and timeframe of such restriction or freedom, including performance and opportunity to work or enter into the other contractual activity(s) or with the other(s) of such restricted-person, including other interest by law of the contractual parties.
Meanwhile, according to a supreme court’s precedent, which opines that an employer creates a covenant with an employee to prohibit said employee to operate business in a competitive manner against such employer, so as to protect the employer’s information and trade secret for the business interest shall be deemed effective by law somehow. However, an employment agreement or a confidentiality agreement is mostly regarded as a template-agreement due to there is prescribed in-advance of its material-provisions; therefore, that agreement is applicable under the law(s) of Unfair Contract. So that the court could apply this notion to review / revise on said agreement by considering onto the length of a non-competition period for such restriction, what job function an employee is working for an employer, whether or not an employee has known of an employer’s trade secret and how? How long an employee has been working for an employer? Thereby, such factual information shall be taking into the court’s consideration and review / revise on an agreement to be effective towards an employee only to the extent that there be deemed fair and appropriate thereto.
Author : Mr. Worasete Phueksakon
Legal Consultant
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