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Covenants Not to Compete and Confidentiality Agreements in the Natural Resources Industry

Lynn P. Hendrix, Proceedings of 38th Annual Rocky Mountain Mineral Law Institute (1992)

Probably the most valuable asset of a company in the natural resources industry is its information. This asset exists in various forms and may be recorded or compiled in a variety of ways, including documents and instruments, computer memory, or the memory of employees. Information generally constitutes intangible property which makes it more difficult to protect than tangible property, but if properly protected from competitors it can give a company a significant competitive advantage. If unprotected from competitors, this asset is practically worthless.

The protection of information falls under an area of law known as intellectual property. In addition to information, intellectual property includes such things as patents, copyrights, and tradenames as well as trade secrets.

Two common means of protecting information are covenants not to compete and confidentiality agreements. This paper will discuss both covenants not to compete and confidentiality agreements, including the underlying law and how such law affects arrangements in the natural resources industry. This paper will also discuss various drafting considerations relating to covenants not to compete and confidentiality agreements and provide sample forms of each.

This paper is not intended to be the definitive statement or commentary on covenants not to compete and confidentiality agreements.