DISCUSSION

Employment Related Agreements

If you have ever held a job, there is a good chance that your employer required you to sign at the time of your hiring a Confidentiality and Assignment of Inventions Agreement (or something similarly named). The key provisions of this type of agreement include the following types of provisions:

• Confidentiality: You agree to keep to yourself and not share with others outside of the company its confidential information. If there is a secret sauce they put on the hamburgers for example, you agree not to disclose its ingredients.
• Assignment of Inventions: For example you work at a shoe company and you discover the formula for a new kind of rubber compound that allows the wearer to jump 20% higher, the company retains any intellectual property rights. In other words, you can't just fly up to Beaverton, OR and try to sell that formula to Nike for a large pay day.
• Non-Disparagement: While not always present in these agreements, some employers may include a requirement that you not speak ill of the company.
• Non-Solicitation: Also not always present and perhaps not enforceable, but you agree for a short period of time after leaving the company not to try to hire away or encourage others to quit their job with the company.

These agreements are presented at the time of hiring as a condition of employment. In other words, employment is the consideration in exchange for your signing this type of agreement. Courts have consistently upheld the validity of these types of agreements.

You are the General Counsel and employee in good standing at ACME, Inc. In fact, you just celebrated your third anniversary at the company. When you first started way back when, you were presented with a Confidentiality and Assignment of Inventions Agreement and you readily signed - you were thrilled to get this very prestigious job.

ACME is so successful that the company was just sold to a private equity firm. Private equity firms focus on buying companies, increasing their value and then selling them at a higher price typically three to five years later. New ownership comes to you, in this case Tom Cruise, tells you that the new name for the company is Tom Cruise Delivery Company ("TCDC") (this is where you meet him for the first time) and puts before you a new Confidentiality and Assignment of Inventions Agreement. Tom Cruise informs you that the previous agreement did not contain all the terms that he wanted and so to fix that error, he is asking you to sign their new form.

Question Presented

If you sign the new agreement, is it binding on you and TCDC? Why or why not?

Does your answer change if Tom Cruise offers you $1,000 in exchange for your signature? Hint: This is not a bribe.