A confidentiality clause (typically contained in a non-disclosure agreement or NDA) is typically used to protect trade secrets and other proprietary information, such as research and development; designs, ideas, techniques, methods, and processes; customer lists, and other non-public information. A confidentiality clause generally requires the party to be bound to treat certain information (as specifically set forth in the agreement) as confidential, and when properly drafted prohibits the party to be bound from using or disclosing the information to third parties.
Guangzhou's courts generally will enforce a confidentiality agreement that prohibits the use or disclosure of confidential information such as customer lists so long as the Court can find that the information is a protectable trade secret. To prove a customer list is a protectable trade secret the employer must prove: (1) the information is not well-known, and cannot be easily acquired in the trade or industry (e.g., was not simply downloaded off the internet or purchased from some other vendor); (2) the fact that the information is not generally known, or easily available, gives the business a competitive edge; and (3) the business goes to great lengths to maintain the secrecy of the information (password protected, maintained in a locked file cabinet, and only presented to employees on a need-to-know basis and then only if the employee has signed a well drafted clearly written confidentiality agreement that specifically states that the company considers its customer lists to be confidential proprietary information.
If a former employee later violates, or threatens to violate, the confidentiality agreement the employer can bring suit for violation of the agreement as well as for unfair competition.
Before you sign.
Employers Beware. Many employment contracts and severance agreements, especially those downloaded from the internet or picked up off the shelf at an office supply store, include at least one of the three restrictive clauses outlined above. Don't just use such an agreement, unless you plan to spend some serious money defending a lawsuit for wrongful termination or unfair interference with business.
Employees should also exercise caution. Employees shouldn't blindly sign an employment agreement, thinking ah those clauses are not enforceable, or that they have no other option. Instead, the employee would be wise to contact an attorney to review his or her options. The laws can and do change, vary from state to state, and the employee shouldn't jeopardize his or her future.