Q: What is the difference between a non-compete obligation and trade secret confidentiality obligation?

A: When setting an employee non-compete obligation and trade secret confidentiality obligation, the companies should pay special attention to their differences and should not mix them up. Confidentiality obligation is to protect corporate trade secrets and not to let them be known to the public. Non-compete obligation can be used either to protect trade secrets or to maintain competitive advantage in the industry. The obligation of confidentiality is based on the operation of law, or based on the employment contract. Employees are required to keep commercial secrets during the employment and upon exiting the company, whether or not there is agreement on that. Non-compete obligation is provided by the agreement of both parties. As long as trade secrets are confidential, the obligation will remain. A non-compete obligation, according to the “Employment Contract Law,” exists during employment and a certain period after the expiration or termination of employment contract as agreed by the parties and the period after the expiration or termination of the employment contract shall not exceed two years.

There is generally no consideration exchanged between employee and employer for keeping trade secrets. On contrast, the employer is required to pay reasonable compensation to an employee for a non-compete obligation. The breach of confidentiality obligation and violation of trade secrets may constitute not only tort liability, but also entails criminal punishments. However, the breach of non-compete obligations can only result in contract liability.