Amy, formerly employed as a sales staff at Dashan Company, was entrusted with the responsibility of promoting and selling the company’s products in South China, including the task of finalizing sales contracts with customers. During her tenure at Dashan, Amy entered into an agreement that explicitly outlined her obligation to maintain the confidentiality of Dashan’s Customer List and her commitment to upholding this responsibility, you may check our previous post: Distinctions: Confidentiality Agreement & Non-Competition Agreement
However, after Amy’s departure from Dashan, she joined another company as their Sales Manager, engaged in selling similar products. In a relatively short span, Amy successfully signed numerous sales agreements with Dashan’s former customers in South China on behalf of her new employer. In response, Dashan initiated legal proceedings against Amy, seeking an injunction to cease infringement, an apology, and compensation for incurred damages. Dashan contended that their trade secret had been violated.
Following the court’s deliberation on the matter, a decision was reached that Amy’s utilization of Dashan’s Customer List did indeed constitute an infringement of their trade secret. Consequently, Amy was mandated to cease the infringement and compensate Dashan for the corresponding losses.
Are all customer lists considered trade secrets? The answer is unequivocally no. The pertinent question is: under what circumstances does a Customer List qualify as a trade secret? In order for a Customer List to be categorized as a trade secret, it must meet specific criteria in addition to the foundational elements of a trade secret:
1. Specificity of the Customer List
The Customer List should be discernibly distinct from general customer lists that are publicly accessible.
2. Comprehensive Content of the Customer List
The content of the customer list should encompass essential details such as customer names, contact information, purchasing preferences, operational data, price tolerance, and other relevant customer-related information. It’s important to note that a mere list of individual customer names does not qualify as a trade secret.
3. Stability of the Customer List
The customers included in the list should have been acquired by the right holder after significant effort and substantial investments in terms of human resources, finances, materials, and time. These customers should be regular clients with unique trading habits over a relatively consistent period.
4. Confidentiality of the Customer List
The list must be safeguarded by reasonable confidentiality measures implemented by the right holder, making it inaccessible to others through public channels.
In essence, customer lists can be legally recognized as trade secrets and afforded protection only if they satisfy the aforementioned requirements. In Amy’s case, her employment at Dashan granted her access to a highly specific customer list containing detailed information about products, quantities, pricing, and settlement methods, among other factors.
This customer list was not publicly known to other companies and remained inaccessible due to Dashan’s diligent implementation of confidentiality measures. Consequently, the court ruled in favor of Dashan, concluding that Amy’s utilization of her former employer’s client list amounted to an infringement of Dashan’s trade secrets.
