A recent case from the Illinois Appellate Court is a reminder to business owners of the need to be proactive in protecting their trade secrets and confidential information. In this case, three sales representatives left their employer, who was in the radio advertising business, and joined a competitor. When they left, the three sales representatives were alleged to have taken with them their sales and renewal lead lists to help them solicit customers for their new employer.
The court found that the lead lists were eligible for protection as trade secrets. The lead lists contained information regarding a customer’s name, telephone number, purchase history, public service announcements purchased and pricing. As a result, the compilation of customer information could be eligible for protection as a trade secret provided that the other hallmarks of a trade secret were met – that the information was kept sufficiently secret and that reasonable efforts were made to maintain the secrecy. This is where the former employer failed.
The court found that while the former employer provided the names of its customers to the radio stations, that did not necessarily mean that the information on the lead lists could not be protected as trade secrets. However, the court found that the former employer had not taken appropriate steps to protect the trade secrets. Among other things, the former employer had not entered into non-competition agreements with the three sales representatives. In addition, the former employer did not enter into confidentiality agreements with the radio stations, and once a competitor received the name of the customer, the competitor could contact the customer and acquire whatever information the customer is willing to provide to it.
While one cannot say that this case would have turned out differently if the former employer had been more proactive in protecting its trade secrets, there were certainly steps the former employer could have taken to better position itself for success. Among those steps were entering into employment agreements with the sales representatives that contained provisions that prevented them from competing against their former employer or soliciting their former employer’s clients; entering into confidentiality agreements with sales representatives in which the sales representatives specifically acknowledged that the lead lists were confidential information; and entering into non-disclosure agreements with the radio stations so that they could not disclose customer information to others. Regardless, this case is a reminder that businesses should take affirmative steps to protect their trade secrets and confidential information.
The case is Multimedia Sales & Marketing, Inc. v. Marzullo, 2020 IL App (1st) 191790.