Under the federal Uniform Trade Secret Act (UTSA), a trade secret is information that derives economic value, actual or potential, from not being generally known to the public or ascertainable by other people who could obtain economic value from its use. In order to be a trade secret, the information must also be the subject of reasonable efforts to maintain its secrecy.
Therefore, to be considered a trade secret, a customer list must provide economic value to your company, be confidential, and not be generally known to the public.
If the list can be obtained through a simple directory search (or search through the yellow pages) and does not contain additional information about customers, a California court will likely not protect the list. If, however, it is evident that the business has spent time and money creating a unique list with information that is difficult to obtain, the court will be more likely to consider the list a trade secret.
Protecting Your Customer List
There are several steps you can take to protect your customer lists. First, keep customer lists separate from other documents and files and mark the lists as confidential and proprietary. Keep hard copy files locked and password-protect computer files. Also, limit the number of employees that can access the documents.
Second, it is important to limit how employees can use your customer lists. You can have them sign non-disclosure agreements and non-solicitation agreements that protect your customer lists from misappropriation. Teach your employees about maintaining the confidentiality of customer lists and include confidentiality policies in your employee handbooks. Be sure to remind your employees about the confidentiality agreements and have them return any confidential information in their possession before they leave your company.
Taking steps to protect your customer lists will not only help keep the lists confidential, but will also help ensure the lists are considered trade secrets should they ever be compromised.
Source: Graziadio Business Review, "Protect Your Trade Secrets," Keith M. Gregory and Stephen J. Baumgartner, 2002.