Trade Secrets

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In Colorado, employers often claim that noncompetes signed by salemen are enforceable because the company has customer lists and other proprietary information which are trade secrets. Employers resort to the “trade secret” exception in Colorado’s noncompete statute, because many salesman don’t have management responsibilities and the statutory exception for executive and management personnel can’t be invoked. It is true that the trade secret exception can be used by employers against salesmen or non-managers. And Colorado courts repeatedly have held that sales histories, buying patterns and customer preferences can, under the right circumstances, be trade secrets even if the names and addresses of the company’s customers are publicly available.
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Continue Reading Customer lists aren’t always trade secrets

Ready, fire, aim. That’s how one commentator describes the mistake often made by many companies when they commence a trade secret lawsuit.

What he means is that companies rush to file a lawsuit for trade secret misappropriation when an employee quits and takes a prominent position with a competitor. Immediate action seems necessary to protect the company’s trade secrets and to prevent the former employee from using and exploiting the trade secrets. In their rush to file the lawsuit, however, companies often fail to analyze whether they truly have trade secrets and, if so, what their trade secrets are. This failure results in the company claiming that information is a “trade secret” when it really isn’t — typically because the information isn’t secret, either because it is known to the competition or because it is readily ascertainable by the competition. Because the company can’t identify a trade secret, the lawsuit fails, often after a signficant expense for fees and costs to prosecute the lawsuit. In effect, the company fires before it has taken aim.

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Continue Reading First things first; the need to identify the trade secret

In a noteworthy, but dated, decision from July 2013, Judge Daniel on the federal district court bench ruled that an employer had failed to prove that a "referral source list" was a trade secret. Accordingly, in Continental Credit Corp v. Dragovich, Judge Daniel held that the employee’s noncompete was not enforceable and denied employer’s…

We recently wrote about the Tenth Circuit’s September, 2009 decision in Southwest Stainless v. Sappington, but the decision is worth another look. An issue presented by Southwest Stainless was whether a price quote was a a trade secret. Southwest claimed that a price quote was and asserted a claim for misappropriation of trade secret.

The defendant…