Employment: Customer Names - Are They Trade Secrets?

10.01.10

The Oklahoma Court of Civil Appeals recently discussed Oklahoma law as to whether customer names should be treated as trade secrets. Chilcutt Direct Marketing, Inc. v. A. Carroll Corporation. 2010 OK CIV APP 58.

James D. Hall, Jr., worked for Chilcutt Direct Marketing, Inc. (CDM). Upon the termination of his employment with CDM, Hall was allowed to keep his address book based upon his assurance that he would only use the book to stay in contact with his friends. When he went into direct competition with CDM five days later with the assistance of the customer list, CDM sued for damages and injunctive relief. The jury ultimately awarded damages to CDM specifically finding that Hall had misappropriated a trade secret and was liable for deceit. The remaining issue presented to the trial judge was whether injunctive relief should also be awarded. The trial judge denied injunctive relief and CDM appealed.

In discussing whether Hall had taken a trade secret, the appellate court cited previous Oklahoma Supreme Court decisions stating that, in the absence of an express prohibitory agreement to the contrary, names and addresses of customers that are remembered or easily ascertainable will not be treated as trade secrets. However, a list of customers built up through years of effort in the course of business constitutes an important asset of the business and will be treated as a trade secret. Any employee who departs and takes such a list, through confidence placed in him or surreptitiously, may be enjoined from using it. In the Chilcutt case, the court ultimately declined to enter injunctive relief, but only because Hall and his new employer satisfied the court that they had returned the customer list and purged the list from their phones and computers. The court decided that further injunctive relief was unnecessary.

From the employer's standpoint, the lesson to be taken from this case is that customer lists, if they are to be treated as trade secrets, should be well-protected and maintained confidentially. Employees should be expressly prohibited from taking any such lists with them upon termination of their employment. Even then, names and addresses well known to the departing employees may not be protected.

By Lewis N. Carter lcarter@dsda.com

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Rebecca D. Bullard

Rebecca D. Bullard

Rebecca represents clients primarily in labor and employment
litigation and counsels clients regarding everyday employment matters. 

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