Black Hats and White Hats: Wear a White Hat

(Part One in a Series)

Watch an old time black and white Western, and you’ll quickly discern the “good guys” from the “bad guys.”

The “good guys” invariably wear white hats while, for some unexplained reason, the “bad guys” feel compelled to wear black hats.  When a new character comes on the screen, the color of his hat reveals the secret intentions of his heart.

If only it were that easy to distinguish good from evil in real life.

We have talked previously about how to preserve the trade secrets and other intangible assets of your business by implementing prudent practices and procedures.  Your efforts to preserve, protect, and promote those invaluable assets must take into account the possibility that you one day will need to file suit to enforce your legal rights.

Litigation over misappropriation of intangible assets will almost always involve a preliminary injunction hearing — an expedited hearing held shortly after the Complaint is filed in which the Court decides how likely it is that the Plaintiff will prevail in a full-blown trial.  Preliminary injunction hearings are expensive, exhausting, and emotionally draining.  In a very short time, you must convince the judge that your cause is just.

Because the proceedings are expedited, judges search for clues on how they should rule.  They are, in essence, trying to determine who is wearing the black hat and who is wearing the white hat.

If you want the judge to perceive you as a “good guy,” you cannot simply mosey into court on the day of your hearing and hope that you can find a white hat to wear.  Nor can you rely on being able to portray your opponent’s hat as a darker shade of gray than your hat.

You must develop a plan to acquire a white hat, wear your white hat, and make sure your hat is always white.

Your efforts to protect your intangible assets must be beyond reproach.  People who wear white hats do not try to enforce overly broad restrictive covenants, they look for the least restrictive means possible.  White hats do not try to unfairly slip in additional restrictions after their employees have started working.  They do not seek to exploit the trade secrets or confidential information of their competitors, but instead seek to protect and preserve the property of others.

“Good guys” wear white hats all the time.

White hats identify their trade secrets early on, implement appropriate procedures to secure those assets, and follow those procedures religiously.  They treat their employees fairly, and insist on ethical business practices.  They spell out their expectations, and enforce reasonable restrictions.

Your company’s continued existence depends in large part on your ability to protect your intangible assets.  You cannot afford to be caught wearing a black hat.


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Black Hats and White Hats:  How to Protect the Intangible Assets of Your Business

  • The color of your hat depends on the cumulative effect of your behavior.
  • Draft narrow restrictions; use the least restrictive means possible.
  • One size does not fit all.  Draft specific agreements for the particular position.
  • Not everything is confidential or trade secret. Don’t overreach.
  • Tailor restrictions specifically for your business.
  • Tell prospective employees about any restrictive covenants before they accept the job offer.
  • Give employees adequate time to consider restrictive covenants.
  • Create a Culture of Confidentiality.
  • Establish expectations early; enforce consistently.
  • Offer additional consideration when creating a restrictive covenant with existing employees.
  • Respect the intellectual property and intangible assets of your competitors.
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