EMPLOYMENT CONTRACTS ,9,0 tending a professional or social meeting and seeing or hearing of all the available opportunities he may qualify for, he decides to leave for an- other position. Prior to departure, the technically sensitive employee should be reminded by the employer of his contractual obligations not to disclose confidential information or trade secrets to his new employer. Some corporations have even gone so far as to establish a standard exit inter- view with all employees to be certain that the departure procedure is properly and effectively handled. Depending on the circumstances or reasons of the employee's ter- mination which may vary within the spectrum from involuntary de- parture to voluntary termination, it is not surprising to visualize that the termination may cause the ex-employee to brood on real or fancied unfair treatment, to recall that he was paid less for creating some highly successful product than a salesman who sold the product, and to seek the seemingly easy road of using trade secrets of one employer as a basis for establishing his new position with a subsequent employer. Under such circumstances, what action can be taken by a former employer when the ex-employee loaded with trade secrets leaves to work for a competitor but is not officially hired ? Since it is apparent that no contract of em- ployment is valid which withdraws from an employee the right to earn a living, the employer's hands are usually tied in such situations. An ex- ception exists, however, when the employee is going from a position in which his complete time was spent in a highly confidential capacity to a precisely similar position with a competitor who desires the trade secrets to increase his competitive position in the industry. Probably the leading case in which the employer was successful in preventing an em- ployee from working with a competitor is that of Eastman Kodak Co. vs. Powers Film Products, Inc. (ll)). In this case, Powers Film Products located its plant in Rochester, N. Y., and sought to employ one of East- man's film processors. Eastman thereupon brought suit seeking an injunction against the employee from working with Powers Film Prod- ucts. The Court upheld the employment contract between Eastman and the employee and issued an injunction restraining him from dis- closing trade secrets and from entering into the employment of Powers. interesting enough, the Eastman contract contained a holdover clause which limited employment with a competitor for a period of two years after term ination of the employment in any part of the United States except the Territory of Alaska. The year of the decision was 1919 !

100 JOURNAL OF THE SOCIETY OF COSMETIC CHEMISTS What action may be taken by a former employer after the contro- versial employee has been hired by the new employer? Several recent cases have considered this question, among which are included the well- publicized cases of E. I. du Pont de Nemours & Co. vs. American Potash & Chemical Corp. et al., (11) and of B. F. Goodrich Co. vs. Wohlgemuth (12). In both of these cases, the employee continued to work for the new employer, although injunctions were issued by the courts enjoining the employee from improperly disclosing any trade secrets of the former employer. * What about the new employer and his obligations when hiring an ex- employee who is loaded with confidential information ? First of all, it is highly advisable that the old employer place the new employer on written notice that the employee in question may have knowledge of confidential information or trade secrets. Once so notified, the new employer must exercise good faith in seeing that the information re- mains undisclosed. Generalities present difficulties, but once it is deter- mined that trade secrets are in fact involved and that these secrets may be disclosed to the new employer, the new employer becomes involved in a very awkward position and should advise his new employee that he is not interested in any confidential information of the former employer. Preferably, the new employee should be employed in a capacity dif- ferent than that of his past employment to increase the certainty of non- disclosure. Although this is good advice in theory, it has little practical value, especially with less reputable concerns which usually hire an employee on the basis of his knowledge of confidential matters. Disclosure of trade secrets obtained during the course of employment by employees is a cause of increasing concern. What once first appeared as a very limited geographical problem has now expanded into one of world-wide importance. Some of the causes of the concern are obvious and may be directly attributable to the great annual expenditure on re- search and development. Even legislators are becoming more aware of the problem of protecting trade secrets such as in New York (13) where certain acts of an employee are now considered grand larceny in the second degree and punishable by a prescribed term in prison. Both present and projected future attempts to resolve and control unau- thorized disclosure of trade secrets, however, will continue to be complex, since the employer's legitimate interests must be balanced with the cor- relative interests of the employee. Such a balance of interests is further * For a xnore detailed discussion of these cases and the problems involved, attention is directed to Ref. (1).