Amy worked in sales at Dashan Company. She was responsible for the promotion and sales of the Company’s products in South China, and directly responsible for signing sales contracts with the customers. During this period, Amy entered into an agreement with Dashan which specified an obligation to keep the Customer List confidential, as well as a commitment to confidentiality. After Amy left Dashan, she joined another company which sold similar products. In a relatively short period of time, Amy signed a number of sales agreements with Dashan’s old customers on behalf of her new employer in South China. Dashan sued Amy and demanded her to “stop infringing, apologize and compensate for damages” on the grounds that their trade secrets had been infringed upon.
After hearing the case, the court decided that Amy’s use of Dashan’s Customer List constituted an infringement of their trade secrets, and ordered Amy to stop the infringement and compensate for the corresponding losses.
Are all Customer Lists trade secrets? Obviously not. Then, here’s the question: Under what conditions does the Customer List constitute a trade secret?
The Customer List is a trade secret. In addition to the required elements for a trade secret （you may check our previous post: The Protection of Trade Secrets in China for more information regarding trade secret) , the following requirements should be met for a Customer List to be considered a trade secret:
1) The Customer List should be specific
The list should be specific and distinct from the general list of customers which are available from public sources.
2) The content of the Customer List should be comprehensive
The content of the Customer List should include the client’s name, contact, type and habit of the client’s need, operational situation, affordability of prices and other related information. Please note that a list of individual customer names does not constitute a trade secret.
3) The Customer List should be stable
The clients listed should be acquired after considerable effort and input from human resources and finance in terms of materials and time. They should be regular clients with unique trading habits during a relatively fixed period of time.
4) The Customer List should be confidential
The list containing client information should be protected through reasonable confidentiality measures taken by the right holder, which cannot be obtained by others through public channels.
Generally speaking, Customer Lists can be identified as trade secrets and protected by the law only if the above requirements are met. In this case, Amy’s work in Dashan provided her access to the Customer List, which included specific product, quantity, price, settlement method, etc. This Customer List is not generally known to other companies, and is not readily available to other companies due to the confidentiality measures taken by Dashan. As a result, the court ultimately found that Amy’s use of the Customer List of her former employer constituted an infringement of Dashan’s trade secrets.
