Protecting Intellectual Property in the Age of Employee Mobility: Forms and Analysis

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Bradford K. Newman

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Protecting Intellectual Property in the Age of Employee Mobility: Forms and Analysis

Bradford K. Newman

With workers and executives changing jobs with increasing frequency, valuable ideas and data can be difficult to safeguard.  Yet, it is essential that companies find ways to preserve their competitive advantage, prevent intentional or inadvertent transfers of trade secrets, and minimize liability when hiring employees who have worked for competitors.

Protecting Intellectual Property in the Age of Employee Mobility: Forms and Analysis offers timely, authoritative guidance on legal risks and remedies and the practical steps employers can and should take.

Topics covered include:

•    Conducting a "trade secret audit" to determine what needs to be protected
•    Monitoring and managing technology, external devices, and social media in the workplace
•    Minimizing risk when recruiting competitors' employers
•    Employment, confidentiality, and invention assignment agreements
•    Exit interviews and "high-risk departure programs"
•    Strategies when operating in jurisdictions that recognize the "inevitable disclosure" doctrine
•    Non-competition and non-solicitation agreements
•    Dealing with a competitor who has hired away a key employee

This focused yet comprehensive treatise handbook also contains numerous sample agreements, letters and other forms.  Whether you are adopting internal procedures or seeking the magic words to make a contract enforceable, it can help prevent costly problems.

#00727; looseleaf, updated as needed.  Looseleaf print subscribers receive supplements. The online edition is updated automatically.

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  • Availability: Available
  • Brand: Law Journal Press
  • Product Type: Books
  • Page Count: 630
  • ISBN: 978-1-58852-342-6
  • Pub#/SKU#: 727
  • Volume(s): 1

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  • Bradford K. Newman

Bradford Newman founded and chairs Paul Hastings’ International Employee Mobility and Trade Secret Group. According to Chambers, he is a recognized “authority on trade secret cases.” Mr. Newman regularly utilizes his substantial knowledge of computer forensics to advise the world’s leading technology, banking, professional service, manufacturing and commerce companies on how to prevent, detect and remediate data theft. In connection with his national practice spanning across industries, Mr. Newman routinely serves as lead trial counsel in cases with potential eight and nine-figure liability, and has successfully litigated (both prosecuting and defending) a broad spectrum of data theft, trade secret and employee mobility cases in state and federal courts throughout the country. He also successfully argued a case of first impression under the Communications Decency Act before the California Court of Appeal. Mr. Newman is the past Chair of the Employment Law Subcommittee of the ABA Business and Commercial Litigation Section.


The “Trade Secret Audit”: Identifying and Protecting Intel-lectual Property and Corporate Assets
§ 2.01    Introduction
§ 2.02    Identifying Trade Secrets
[1]    Canvassing Broadly to Identify Trade Secrets
[2]    Finding the Source of Information About Inno-vations
[3]    Developing Scalable Processes for “Bottom Up” Accounting of Intellectual Property
§ 2.03    Identifying Existing Protections of Intellectual Proper-ty–and the Potential Deficiencies in These Protections
[1]    Site Security’s Role in Protecting Intellectual Property
[2]    Human Resources: Protecting Company Data During the Hiring Process
[3]    IT: Securing Company Networks and Computer Media
[4]    Employment Forms: Confidentiality Agreements with Employees
[5]    Employee Exits: Special Protections for High Risk and Other Employee Departures
§ 2.04    The Attorney-Client Privilege in Connection with Con-ducting the Audit
§ 2.05    Forming an Intellectual Property Committee (IPC) and Developing an Effective Trade Secret Plan (TSP)
[1]    The Intellectual Property Committee
[2]    Formulating the Trade Secret Plan
[3]    “Reasonable Measures to Protect”—Proper Classification of Trade Secrets and Correspond-ing Protection Measures
[a]    Sliding Scale Protection Based on Value of the Trade Secret: Limiting Access to Sensitive Information
[b]    Determining Appropriate Tiers of Pro-tection
[c]    Assigning Owners
§ 2.06    Acting on the TSP: Implementing the Plan and Updating Regularly
[1]    Ensuring Employees Are Informed of Their Ob-ligations
[2]    Auditing Compliance and Effectiveness
§ 2.07 Form: Employee Confidentiality and Invention Assignment Agreement
Appendix: Visio-Diagram of IPC Committee


Understanding Corporate IT Infrastructure and Risks Re-lated to Employee Computer Media Usage
§ 3.01    Introduction
§ 3.02    Email and Instant Communication
[1]    Corporate Email
[2]    Personal Web-Based Email
[a]    “Pushing” Corporate Data to Private Web Accounts
[b]    Slack Space
[c]    Unallocated Space
[3]    Office Communicators
[4]    Instant Messenger Clients
[5]    Text Messaging
§ 3.03    Social Media
[1]    Social Networking Websites
[2]    Employee Blogs
[3]    Employer Hosted/Sponsored Sites
§ 3.04    Devices
[1]    Company-Issued Devices
[a]    Establishing Ownership
[b]    Controlling Use
[2]    External Devices
[3]    Remote Access
[4]    Cloud Storage Hosted by Third Parties
§ 3.05    Metadata
[1]    Limits of Metadata
[2]    Destruction of Metadata
[3]    Metadata by Program
[a]    Documents
[b]    Corporate/Web-Based Email
[c]    Internet Activity
[d]    Metadata Stored on Mobile Devices
[e]    External Devices
§ 3.06    Form: Data Collection Questionnaire


Monitoring Corporate Computer Media
§ 4.01    Introduction
§ 4.02     Laws Governing Employer Workplace Technology Monitoring
[1]    Employee Personal Web Accounts and the  Electronic Communications Privacy Act
[a]    “Intercepting” “During Transmission”: The Wiretapping Act
[i]    Exceptions
[ii]    Penalties
[b]    The Stored Communications Act
[2]    Computer Fraud and Abuse Act
[a]    “Exceeds Authorized Access”
[b]    “Without Authorization”
[3]    Constitutional Concerns
[a]    Federal Constitution
[b]    Relevant State Constitutions
[4]    Tort Liability
[5]    Employer Privacy Disclaimer
[a]    Expectation of Privacy
[b]    Invasion of Privacy
§ 4.03    Strategies for Effective Monitoring Computer Usage
[1]    Monitoring Corporate Email Accounts
[2]    Monitoring Web Mail
[3]    Monitoring Corporate Computer Systems
[a]    Servers
[b]    Computers
[i]    Personal Communications Stored on Company Computers
[ii]    Keystroke Logging
[iii]    The Attorney-Client Privilege
[4]    Monitoring Employer-Issued Cell Phones
[5]    Monitoring Through GPS
[6]    Monitoring Texts
[7]    Monitoring Phone Conversations
[8]    Monitoring Internet Use
[9]    Monitoring Cloud Storage
[10]    Monitoring Premises
[11]    Monitoring Hard Copy Documents
§ 4.04    Form: Sample Monitoring Policy


Recruiting a Competitor’s Employees
§ 5.01    Introduction
§ 5.02    Recruiting: Dangers and Risk Mitigation
[1]    Competitor Employee Recruiting Policy
[a]    Third-Party Recruiters
[b]    Targeting Employees of Certain Compet-itors
[c]    Social Media and Other Non-corporate Communication
[d]    Tracking Contact with Competitors’ Em-ployees
[e]    Information to Avoid Receiving
[f]    Questions Not to Ask
[2]    Initial Contact: Minimizing Unwanted Data Transfer
[3]    Proper Interviewing
[a]    Questions Relating to Work Performed at a Competitor
[b]    Requesting Samples of Work
[i]    Work Samples
[ii]    Homework Assignments
§ 5.03    Onboarding: Dangers and Risk Mitigation
[1]    Training against Trade Secret Disclosure
[2]    Post-Hire Measures: First Sixty-Ninety Days
[a]    Additional Training
[b]    Temporarily Re-Assigning Duties or “Walling Off”
[c]    Monitoring Computer Usage
[3]    Remedial Measures If Third-Party Data Discov-ered
[a]    Discovered Before Work Commences
[b]    Discovered after Work Commences
[i]    Forensic Imaging
[ii]    Removal from Systems
[iii]    Interview and Investigate Possible Usage
[iv]    Search Term Follow-Up
[v]    Keep in House or Escrow with Third Party
[vi]    Self-Disclose and Self-Report
§ 5.04    Form: Candidate Certification Letter
§ 5.05    Form New Employee Certification Letter


Protecting Assets Through Contract
§ 6.01    Introduction
§ 6.02    Employment Agreements
[1]    Stand-Alone Agreements
[2]    Employee Handbooks—The Limits of Incorpo-ration by Reference
§ 6.03    Employee Confidentiality and Invention Assignment Agreements
[1]    Defining Contractual Terms
[a]    Distinctions Among Patents, Trade Se-crets, Proprietary Information, Ideas, and Developments
[b]    Risks of Overbroad Definitions
[2]    “Magic” Language
[3]    Duty of Loyalty Clauses
[4]    Choice of Law
[5]    Consideration
[6]    Remedies
[a]    Injunctive Relief
[b]    Other Remedies
[7]    Assignment of Inventions
[8]    Agreement to Perform Necessary Acts
[9]    Utilizing Power of Attorney
[10]    Post-Employment Restrictions
[11]    Considerations for Third Parties
[a]    Independent Contractors/Contingent Workers
[b]    Suppliers
§ 6.04    Equity Agreements and ERISA Plans
[1]    Forfeitures and Clawbacks
[2]    Severance Agreements
§ 6.05    Form: Employee Invention Assignment and Confidenti-ality Agreement


Departures and Exit Interviews
§ 7.01    Introduction
§ 7.02    Measures Before Departure
[1]    IT Practices
[2]    Human Resources Practices
[3]    Human Resources and IT After Notice but Before Departure
§ 7.03    Measures to Implement During Employee Departures
[1]    Return of Company-Issued Devices
[2]    Return of Company Property
[a]    Electronic Files
[b]    Hard Copy Files
[3]    Information Technology Access
§ 7.04    Use of Exit Interviews
[1]    Before the Exit Interview
[a]    Consistent Procedure
[b]    Guidelines for Exit Interviews
[c]    Interview Communications and Escala-tion Plan
[d]    Select the Exit Interviewers
[2]    Conducting the Exit Interview
[a]    Documenting the Exit Interview
[b]    Reviewing Contractual Obligations
[c]    Confirming Disclosure of Ideas and In-ventions
[d]    Reviewing All Possible Locations of Trade Secret Material
[e]    Determining Future Plans
[f]    Termination/Exit Certifications
[3]    After the Exit Interview
§ 7.05    Form: Human Resources Checklist for Conducting Exit Interviews
§ 7.06    Form: Employee Exit Acknowledgment and Certification


High Risk Departure Program
§ 8.01    The Perils of Departure
§ 8.02    Identifying the High-Risk Employees
[1]    Job Classifications
[2]    Access to Sensitive Data
[3]    Specific Employee Risk Factors
§ 8.03    Precautions Before Departure
[1]    Identify Vulnerable Data and Inventory Com-puter Media
[2]    Disable Access and Passwords
[3]    Forensically Image and Analyze Computer Activity
[4]    Review of Corporate Emails at the Server Level
[5]    Commence Legal Monitoring of Computer Activ-ity
[a]    Company Computer and Email Monitor-ing
[b]    Web Activity
[6]    Analyze Smart Phone Usage
[7]    Monitor Online Social Media
[8]    Segregate Certain Communications
[9]    Ongoing Monitoring Where Feasible
[10]    Monitoring and Interviewing the Employee’s Team
[11]    Review Employee’s Physical Access
[12]    Intelligence About the New Employer
[13]    Exit Interview
§ 8.04    Responding to Departure
[1]    When an Employee Gives Notice
[a]    Collect All Devices and Documents Quickly
[i]    Computer Devices
[ii]    Hard Copy Documents
[b]    Forensic Imaging
[2]    Immediate Forensic Review v. Creation of a “Li-brary”
[a]    Immediate Forensic Review
[b]    Creating and Maintaining a Forensic Li-brary
[3]    Legal Strategies for Publicly Addressing High-Risk Departures
[a]    Public Messaging
[b]    Retaining Employees
[c]    Communicating With Key Customers and Partners
§ 8.05    Form: Human Resources Checklist for High-Risk Depar-tures
§ 8.06    Form: New Employer Letter


The Inevitable Disclosure Doctrine
§ 9.01    Introduction
§ 9.02    Policy Considerations   
[1]    Arguments for the Doctrine
[2]    Arguments Against the Doctrine 
[3]    Strategic Use of the Doctrine
§ 9.03    State by State
§ 9.04    Drafting Contracts
[1]    The Importance of Choice-of-Law
[2]    Employee Contracts
[3]    Threatened Disclosure When Inevitable Disclo-sure Is Unavailable
§ 9.05    Application in an Inevitable Disclosure State
[1]    Current Employees
[2]    Defense: Hiring
[3]    Offense: Departures


Non-Competition and Non-Solicitation Agreements: Their Use in Protecting IP and Enforceability Concerns
§ 10.01    Introduction
§ 10.02    Basic Overview of Non-Competition Agreements
[1]    Drafting Agreements to Protect IP
[a]    Protecting Confidential and Valuable Corporate Data Is a Legitimate Purpose for Utilizing Non-Competition Agree-ments
[b]    Components of a Strategically Drafted Non-Competition Provision Aimed at Protecting Trade Secrets
[c]    The “Necessary to Protect Trade Se-crets” Rationale for Enforcing Non-Compete Agreements—A Cautionary Tale for the Unwary
[d]    The Narrow Restraint Doctrine
[e]    The “Employee Choice” Doctrine
[f]    Anchoring the Non-Competition Provi-sion in the Duty of Loyalty
[2]    Agreements Relating to the Purchase of a Busi-ness
[a]    Duration of Non-Competition Agree-ments’ Protection of “Good Will”
[b]    Which Acquired Employees Can Be Bound by Non-Competition Restrictions
[3]    Unique Potential Risks in Knowingly Employing Unenforceable Non-Competition Agreements—California Private Attorneys General Act of 2004
§ 10.03    Basic Overview of Non-Solicitation Agreements
[1]    Enforceability Can Rest on the Targets of Pro-hibited Solicitation—Employees, Customers or Suppliers/Vendors
[a]    Non-Solicitation of Employees
[b]    Non-Solicitation of Customers
[c]    Non-Solicitation of Suppliers/Vendors
[2]    What Constitutes “Solicitation”
[3]    Risks of Entering into No-Hire and Non-Solicitation Agreements with Competitors
[4]         Possibility of “Blue Penciling” or Court Modification of Non-Solicitation Agreements
[a]    No-Hire Agreements
[b]    Non-Solicitation/ “No Calling” Agree-ments
§ 10.04    Enforcing Non-Competition and Non-Solicitation Agreements—Considerations When Contemplating In-junctive Relief


Strategies for Dealing with Competitors
Who Hire Key Employees
§ 11.01    Introduction
§ 11.02    Determining Whether to Contact the New Employer
[1]    Strategic Advantages of Informal Resolution Versus Initiating a Lawsuit without Prior Notice
[2]    Goals of a Demand Letter
[a]    Determining the Extent of the Data Compromised
[b]    Ensuring an Investigation Is Conducted
[c]    Obtaining the Stolen Information and Preventing Misuse
[d]    Preserving Relevant Evidence
[e]    Making a Pre-Litigation Record of Efforts to Resolve
[i]    Advantage for Injunctive Relief
[ii]    Advantage for Trial
[3]    Specific Strategies to Accomplish Goals of De-mand Letter to Competitor
[a]    Protocols for Identifying and Securing Company Data beyond Active Files Spe-cifically Identified by the Competitor
[i]    Narrow Universe of Active Files
[ii]    Agreement to Produce File Lists from Certain Electronic Storage Devices
[iii]    MD5 Hash Searches
[iv]    Search of Slack and Unallocated Space on Certain Competitor De-vices
[b]    Advantages to the Responding Party of Forensically Imaging Relevant Devices
[4]    Risks of Being Overly Demanding
§ 11.03    Considerations When Contacting the Former Employee
[1]    Sending the Reminder Letter Where There Is No Proof of Data Theft
[2]    Where Data Theft Is Established or Strongly Suspected, Sending the Letter Seeking Resolution
§ 11.04    Avoiding Defamation, Interference, and Other Tort Claims through Contact with the Competitor
[1]    Defamation
[a]    Protection of a Business Interest
[b]    Litigation Privilege
[2]    Tortious Interference with Contract
§ 11.05 Forms: Sample Letters to Competing Companies
[1]    Sample Template Letter Notifying Hiring Entity of Departed Employee’s Contractual Obligations
[2]    Sample Template Letter to Hiring Entity Ex-pressing Concern over Specific Examples of Potential Intellectual Property Theft
§ 11.06 Forms: Sample Letters to Departed Employees
[1]    Sample Template Letter Reminding Departed Employee of Contractual Obligations to Former Company
[2]    Sample Template Letter to Departed Employee Identifying Only Some Examples of Intellectual Property Theft
[3]    Sample Template Letter to Departed Employee Identifying All Discovered Examples of Intellec-tual Property Theft
§ 11.07 Form: Sample Litigation Notice Letter and Litigation Hold Notice


Pleading and Pre-Trial Litigation Strategies in Lawsuits In-volving Trade Secrets, Breach of Fiduciary Duty, and Related Torts
§ 12.01    Introduction
§ 12.02    Pleading Misappropriation Claims
[1]    Pleading Misappropriation in UTSA States
[2]    Pleading Misappropriation in Non-UTSA States
[a]    Massachusetts: State-Specific Statutes
[b]    New York: The Common-Law Approach
§ 12.03    Pleading Causes of Action in Addition to a UTSA Claim
[1]    Claims against the Former Employee
[a]    Common-Law Claims
[i]    Breach of the Duty Loyalty
[ii]    Breach of Fiduciary Duty
[b]    Contractual Claims: Breach of Contract
[c]    Statutory Claims: Computer Fraud and Abuse Act
[2]    Claims Against the New Employer
[a]    Aiding and Abetting Breach of Fiduci-ary Duty/Duty of Loyalty
[b]    Interference with Contractual Relations or Prospective Economic Advantage
[3]    Claims Against Both Parties
[a]    Common-Law Unfair Competition
[b]    Statutory Unfair Competition
[c]    Conversion
§ 12.04    UTSA Preemption of Common-Law Claims
[1]    The Doctrine and Its Rationale
[2]    Strategies for Avoiding UTSA Preemption: Pleading Proprietary Information as Distinct from Trade Secrets
§ 12.05    Identifying Trade Secrets with Reasonable Particularity
[1]    The Requirement and the Governing Standard
[2]    Preparing a Trade Secret Identification State-ment: Strategies and Risks
[3]    When to Serve the Trade Secret Identification Statement
[4]    Obtaining Certification of (and, Challenging) Compliance with Identification Requirements
[5]    Defendants’ Strategies: Challenge Sufficiency; Demand More Detail; Start Discovery First
§ 12.06    E-Discovery Issues in Trade Secrets Cases
[1]    Protective Orders
[a]    Tiers of Protective Orders Regarding Confidentiality of Data
[i]    “Confidential” Information
[ii]    “Attorneys Eyes Only” Infor-mation
[iii]    “Outside Attorneys’ Eyes Only” In-formation
[iv]    Special Designations for Source Code and Similar Data
[v]    Strategic Considerations for De-fining Designations
[b]    Who Should Be Able to Access Designat-ed Data?
[c]    Abuse of Confidentiality Designations
[i]    Defining the Process For Challenging a Party’s Designation of Documents Under Each Confidentiality Tier
[d]    Procedures Governing Expert Retention and Access to Protected Documents
[i]    Expert Retention and Disclosure
[ii]    Expert Access to Opponents’ Des-ignated Data
[e]    Strategies for Sealing Publicly Filed and Otherwise Preventing Non- Party Access to Trade Secrets


Trial Themes, Selecting a Jury, Remedies, and Unique Set-tlement Considerations
§ 13.01    Trial
[1]    Choosing a Theme
[a]    Plaintiff Themes
[i]    The Technology at Issue Is Valua-ble
[ii]    Defendants Engaged in a Conspir-acy to Steal What They Could Not Obtain through Lawful Means or Purchase on the Open Market
[iii]    Contrasting How Responsible Companies Act with How the De-fendant Allegedly Proceeded
[iv]    Contextualize the Harm in Materi-al Terms
[v]    Defendant Stole to Shortcut Tradi-tional Development Costs
[vi]    David v. Goliath
[vii]    Betrayal
[b]    Defense Themes
[i]     No Theft Occurred
[ii]     Even if Data Was Taken, No Use Was Made of It
[iii]     Defendant’s Success Comes from Independent Innovation— Not From Theft
[iv]    Attacking the Nature and Value of Plaintiffs’ Claimed Trade Secrets
[v]    Reverse of “David v. Goliath” Theme—the Plaintiff’s Real Mo-tive in This Lawsuit Is to Stifle Lawful Competition
[vi]    Highlight the Substantial Re-sources and Time Necessary to Develop Technology Similar to the Plaintiffs’ Technology
[vii]    The Plaintiffs’ Claimed Trade Se-crets Were Actually Stolen from a Third Party by the Plaintiffs
[viii]    The Plaintiff Failed to Protect Its Trade Secrets Adequately
[ix]    The Claimed Trade Secrets Are Public and Therefore Not Confi-dential
[x]    Lack of Harm to the Plaintiff
[2]    Selecting a Jury
§ 13.02    Remedies and Relief for Trade Secret Theft
[1]    Temporary Restraining Orders
[a]    Likelihood of Success on the Merits
[b]    Irreparable Harm; Inadequacy of Legal Remedies
[2]    Which Injunctive Remedies to Seek
[a]    Evidence Preservation, Including No Use or Disclosure
[b]    “Give Back”
[c]    Imaging and Inspection of Personal Computer Devices
[d]    Sworn Certification
[e]    Enjoining Sale and/or Release of Product
[f]    Restriction of Employment
[3]    Damages
§ 13.03    Unique Settlement Considerations 
[1]    The Single Claim Doctrine
[2]    Requiring Waiver of the Single Claim Doctrine in Settlement
§ 13.04     Form: Sample Juror Questionnaire
§ 13.05     Form: Sample Juror Questionnaire
§ 13.06     Form: Sample Court Order Requiring Evidence Preser-vation, Including No Use or Disclosure
§ 13.07    Form: Sample Court Order Requiring Evidence Preser-vation, Including No Use or Disclosure, Return of Data, Computer Imaging, and Sworn Certification
§ 13.08    Form: Sample Court Order Enjoining Release and Sale of Product
§ 13.09    Form: Sample Court Order Imposing Restriction on Em-ployment


Criminal Remedies
§ 14.01    Introduction
§ 14.02    Federal Criminal Laws Regarding Theft of Trade Secrets and Other Corporate Data
[1]    Economic Espionage Act of 1996
[a]    Overview
[b]    Establishing the Existence of a Trade Se-cret
[c]    Attempt and Conspiracy to Violate the EEA
[d]    Section 1831: Establishing That the Theft Was Intended to Benefit a Foreign Government, Instrumentality, or Agent
[e]    Section 1832: Establishing That the Sto-len Secret Was “Placed in Interstate Commerce”
[f]    Penalties Under Section 1831
[g]    Penalties Under Section 1832
[2]    The Computer Fraud and Abuse Act
[3]    Mail and Wire Fraud
[4]    The National Stolen Property Act
§ 14.03     State Criminal Laws
[1]    Whether to Pursue State or Federal Remedies
[2]    California
[3]    New York
[4]    Texas
§ 14.04    Strategic Considerations in Pursuing a Criminal Remedy
[1]    When to Seek Law Enforcement Involvement
[a]    Advantages
[i]    Investigative Powers
[ii]    Dissuading Data Thieves from Further Compromising Stolen Da-ta
[iii]    Potential Criminal Remedies
[b]    Disadvantages
[i]    Loss of Control
[ii]    Lack of Resources
[iii]    Burden of Proof
[iv]    Delay
[2]    Presenting the Case to Law Enforcement
[3]    Risk of Becoming a State Actor
§ 14.05    Using a Criminal Prosecution in Subsequent Civil Litiga-tion
[1]    Obtaining the Prosecution’s Evidence: Touhy and FOIA Requests
[a]    Touhy Requests
[b]    Freedom of Information Act (FOIA)
[2]    Using a Plea Agreement
§ 14.06    Form: Sample Touhy Request
§ 14.07    Form: Sample Plea Agreement