Two Recent Trade Secret Cases Fail to Find That Secrets Existed or Were Capable of Protection

Two cases, one State and one Federal, declined to prevent a competitor from using what was alleged to be another’s secret information.

In Art and Cook, Inc. v. Haber, the Eastern District court found that the secrets alleged to have been infringed or disclosed were in fact not secrets, legally speaking. The plaintiff claimed that Haber, an ex-salesman of plaintiff’s cookware and kitchenware, had been caught emailing himself a list of buyers and separately, marketing, sales and customer list information. After Haber’s termination, he began to compete against plaintiff.

In declining to find that these lists were protectable trade secrets, the court addressed each of these two categories of information that Haber had sent himself. The court discussed the reason and manner of how a customer list could be deemed a trade secret. Specifically, a customer list created through significant effort and which contains unique or valuable information generated by a business, and maintained by the business as a secret, may be enforced as a secret. But, a “contact list [that] contains little more than publicly available information, even if it takes considerable effort to compile, it is not accorded protection… .” In this case, the court determined that the customer list was a compilation of names that the plaintiff hoped to solicit but which did not reflect unique information. That the list took substantial time to create would not convert a list consisting of largely public information into a secret. Finally, the court noted that where “the contacts on Plaintiff’s customer lists are generally known within Plaintiff’s industry is fatal [to a claim of infringement]. Simply put, knowledge that is generally known within an industry cannot be said to constitute the trade secret of one industry participant.”

Turning to the marketing and branding information led the court to a different approach. The court acknowledged that this information gave the plaintiff a competitive edge and could be deemed a secret. However, independent from the proprietary information and its value, to be deemed a secret, that information must be treated by the company as secret. In this case, notwithstanding that the owner of the plaintiff emphasized the secret nature of this information, it was not sufficiently maintained as a secret. Haber refused to sign an employee handbook or a non-disclosure agreement after his employment had started. Yet, even after refusing to sign, Haber was provided access to that secret information. And other employees that also refused to sign were also allowed access. With this, and even though the company had password protected computers and internet security, led the court to question whether Haber could be found to have misappropriated a true secret where the company did not sufficiently treat it that way.

This case again demonstrates that a company’s treatment of its secret will be determinative of whether or not that information is protected. Information can be called secret and kept in a secure location but, as we see here, that does not end the considerations of what information will be protected as a secret.

We’ll discuss the second case in a future post.

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