Monday, July 29, 2013

What is "client stealing"?

Dear Rich: I was asked to sign an agreement with a company in L.A. that creates music for film trailers and production music libraries. The agreement says that I am not permitted to contact the clients of the company and if I do, it will be considered "client stealing"? What does that mean? One way or the other, we think the company is trying to prevent you from competing against it in the future.
Is it a noncompete? If the agreement is viewed as purely a noncompete agreement -- that is a court considers it as preventing you from competing -- a court is unlikely to enforce the agreement in California where such arrangements are prohibited.
Is it an NDA or nonsolicitation agreement? If however, the client list is considered to be confidential information -- that is, it's not easy to determine who is a client or to locate the client pool through typical industry sources -- then this information may be considered a trade secret. In that case the company can enforce the agreement. If, however, the company's clients are publicly known and a simple Google search could turn up a list, it's less likely that the provision will be enforced under an NDA or under a nonsolicitation agreement.

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