Minimum Requirements to Maintain Information as a Trade Secret

While some businesses believe that all of their business information can be deemed a “trade secret,” the Second Department recently reaffirmed that not to be the case.

In an action by a lighting company seeking to prevent an ex-employee from working for a competitor, the company’s claim that the employee was misappropriating trade secrets was dismissed. In discussing that claim, the Court noted that for a secret to be such, it must be maintained as a secret. This means that where information is “readily ascertainable outside the employer’s business as prospective users or consumers of the employer’s services of products, trade secret protection will not attach and courts will not enjoin the employee from soliciting his employer’s customers.” Because the lighting company’s alleged secrets were “customer lists, prices, and profit margins,” which were described as “distinctive” by the company, the company’s failure to maintain that information as secret within the company defeated its claim.

This is not to say that customer lists, for example, cannot be confidential and enforced as a secret. However, to accomplish that designation, there must be a demonstration of how the information is maintained. Therefore, where a business seeks to keep its information secret, it must take specific steps to treat that information as secret, including by documenting how and for whom the information is available.

Tri-Star Light Corp. v. Goldstein