Comments on: 3. Trade secrets + customer lists = company gold.

By: Dave Berkus

Dave Berkus — Thu, 29 Oct 2009 21:55:48 +0000

Mike,
The problem you describe is more steeped in the emotion of the moment than in the law. The fact that your client’s former employer may have made ill-advised or even fraudulent moves and may be close to bankruptcy are all conjecture until the bankruptcy is public and the trustee awards the assets to a purchaser. Until then, your client’s former employer retains its rights to all confidential property, including customer lists. That said, many, many people leave firms and send out notices of a change of address. As long as that notice does not solicit business directly and the person receiving it volunteers to call the new number, and as long as the list was not derived “directly” from the previous employer, no court will stop a former employee from independently finding names and mailing out an address change. The line is drawn at the point where a customer list from the past employer is used. Courts have long since biforcated “knowledge about customers” from use of a list of names obtained from the former employer. Hope this helps.
-Dave

By: Mike

Mike — Thu, 29 Oct 2009 18:05:39 +0000

David,

Are there any circumstances in which the customer list could be up for grabs?

For example I am working with a client who is starting a competing business with her former employer. Her employer proved to be completely unethical and completely ignored all his customers after losing enormous amount of their money in extremely ill advised or fraudulent investments. Her former employee breached her employment contract and has not paid her for months and is now considering bankruptcy.

Throughout this process my client took all the heat from the customers and was there for them day in and day out (while not even being paid). In the process she earned herself a reputation with these clients as both an astute investor and ethical and supportive service provider. These clients are asking where she is going and what she is doing ‘next’ as they want to maintain a relationship with her. She has signed to confidentiality agreements at all with her former employer and many of the customers on the list she brought in herself.

Given these circumstances should she still steer clear of previous clients?

Thanks for your input.

Mike.