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Trade Secret Misappropriation: Soliciting a Former Employer's Customers

An issue that often arises is an employee, upon terminating his or her employment, attempting to solicit his former employer's customers. An employee can plan to go into competition with his employer and may even take active steps to do so while still employed. However, an employee may not use his employer's confidential information to do so.

A recent decision highlights the perils and remedies of trade secret misappropriation. Under Massachusetts law, trade secrets can include anything tangible or intangible or electronically kept or stored which evidences or records a secret scientific, technical, merchandising, production or management information, design, process, procedure, formula, invention or improvement. While the recent decision by the 1st Circuit Court of Appeals highlights the perils of misappropriating a trade secret in the context of a physical product, trade secret protections extend far beyond physical products to proprietary business information such as customer lists. Confidential information such as customer lists, which companies invest time and money in developing, are protected under Massachusetts law.

The key factor in determining the existence of a trade secret is confidentiality. Factors in determining the confidential nature of business information include:

- The extent to which the information is known outside the business

- The extent to which it is known by employees and others involved in the business

- The extent of measures taken by an employer to guard the secrecy of the information

- The value of the information to the employer and to his or her competitors

- The amount of effort or money expended by the employer in developing the information

- The ease or difficulty with which the information could be properly acquired or duplicated by others

A list of customers is a trade secret and if a former employee utilizes such a list they can be found liable for misappropriation of trade secrets. If you or your company has been the victim of a former employee utilizing your confidential and proprietary information to strike out on their own, an attorney can help you protect your trade secrets and recover damages including lost profits.

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