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Fall 2002
Stolen Customer Lists
Home food service companies sell and deliver food products and appliances to their customers, many of whom later reorder more products. When a home food service company bought a customer list of one of its competitors, what might have been a competitive advantage instead became a legal headache. The list had been stolen and the food service company that bought it knew it was stolen.
The company whose list got into the wrong hands sued the purchaser of the list for misappropriation of a trade secret. Some courts have refused to recognize customer lists as protected trade secrets when they contain information that is readily available from public sources. The essence of a trade secret is that it has value because it is not easily ascertainable. The customer list for the home food service company was protected because of the time and effort that had been expended to identify particular customers with particular needs or characteristics. The defense that the list contained only information that was easily compiled was undercut by the fact that the defendant had paid a lot of money for it.
A state court found a violation of the law governing trade secrets. It ruled that monetary damages should be awarded to the plaintiff based on net profits earned by the defendant from improper use of the list. The court also barred the defendant from ever using the stolen list again.
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