UnIP (UnIntellectual Property): Trade Secret for Customer Contact Information

The Missouri Court of Appeals affirmed the trial court’s grant of summary judgment for Defendants, a former employee of Plaintiff and his new employer.  Plaintiff had sued Defendants for misappropriation of trade secrets, among other causes of action, under MUTSA, the Missouri Uniform Trade Secrets Act.  Plaintiff’s alleged trade secrets were its “Client Database” and “Client Lists.”  The Court held that Plaintiff, whose trade secret identification was apparently not specific enough for the Court, did not own a protectable trade secret, stating:

Client lists and databases are not specifically listed in the definition of “trade secret” found in section 417.453 and, under the facts in the record before us, the information at issue simply does not meet the statutory definition of a trade secret nor does it meet the six-factor test set out in case law. First, attached to Kennedy’s employment contract was a list of his clients with no matching proviso that such information was to remain confidential in any way. Further, it was admitted by Central Trust that Kennedy could probably remember the names and personal information of each of his clients such that any type of written client list would be unnecessary for him to re-create his relationships. Second, Central Trust admits that it has-and does-share its client lists and their concomitant personal information with various affiliates such as local banks. Third, Central Trust and its predecessor, STC, admittedly allowed all employees to access the so-called Client Database without concern for the privacy of the potential client information contained therein and there was no assertion from Central Trust that these other employees were subject to any type of confidentiality or other privacy agreements. Fourth, prior to Kennedy’s departure, it was admitted that previously three other employees left work with STC for other employ and either took lists of clients with them or actively solicited clients that had been with STC. None of those former employees were pursued legally. Fifth, despite assertions in its pleadings, Central Bank admitted that STC had, in fact, used some of its clients’ names and likenesses in its marketing and advertising campaigns, including listing a variety of client names on its website. Sixth, Central Trust admits that technically each client has control of his or her own name and information such that its clients have the ability to cease doing business with Central Bank at any time to seek financial advice elsewhere. Seventh, while there was testimony the information at issue was “important,” Central Trust has cited to no specific assertion in the record that the information at issue had any recognizable extrinsic or intrinsic value.

This Court relied heavily upon a recent Missouri Supreme Court decision that held “‘in the sales industry the goodwill of a customer frequently attaches to the employer’s sales representative personally; the employer’s product becomes associated in the customer’s mind with that representative.’ While these ‘customer contacts’ are protectable, they are not protectable under a theory of confidential relationship or trade secret.”  Instead, a non-competition agreement was the recommended way of dealing with such an issue, according to the Court.
Can you blame the Plaintiff here?  An ex-employee left, taking a cell phone with its client contacts on it, started working for a competitor, and solicited those same clients.  The answer, to a certain extent, is yes.  With the benefit of revision, the trade secret could have been more specifically identified and the non-compete could have been more specific and allowed it to remain applicable despite a sale of the entity.  Or, did the Defendant benefit from law that makes it difficult for Plaintiff’s to prevail when the trade secret does not fall squarely within the definition set forth by UTSA, along with a little luck that made the non-compete he signed void?
Cent. Trust & Inv. Co. v. Kennedy, SD31658, 2013 WL 268687 (Mo. Ct. App. Jan. 24, 2013).

 

Leave a Reply

Your email address will not be published. Required fields are marked *