DETROIT – Trade secret law may help to protect a business from the raiding of its customers by means of information theft. Yet, many people think only of the example, ?Coca Cola Formula,? when they hear of ?trade secrets.?

In fact, though, trade secrets encompass far more than formulas and can include customer lists, customer preferences, prospective customers, prices and pricing policies, costs, margins, internal weaknesses, business, marketing, strategic, and sales plans, business processes, planned products and services, mergers and acquisition targets, and identities of, and information about, suppliers and employees as well as other information. Moreover, both trade secret law and the law of non-competes are available to prevent theft of customers by use of a former employer?s secret data.

If an employee were to go to a competitor and use the former employer?s confidential information (even if he or she allegedly only ?memorized? this information), the Uniform Trade Secret Act would allow a suit for an immediate injunction against use, disclosure, or even ?threatened use? of such information (and in some cases even against employment with the competitor or solicitation of the businesses? customers). The Act also allows recovery of money damages and in certain cases allows recovery of attorneys? fees from the offender(s).

Naturally, the trade secrets must be provably ?secret,? but if the information is truly valuable, the secrecy required for a trade secret claim may be demonstrated by some or all of the following recognized steps:

1. Storage of information with locked or limited access.

2. Need-to-know information access.

3. Electronic key access to rooms/information.

4. Clear marking of confidential information.

5. Limited access of computer-stored information.

6. Visitor restrictions.

7. Employee policies on confidential information.

8. Routine verification of confidentiality procedures.

9. Routine employee reminders of confidentiality policy.

10. Pursuit of departing employees with access to confidential information.

11. Prohibiting removal of confidential information from company premises.

12. Restricting copying of confidential information (numbering copies, etc.).

13. Conducting exit interviews.

Of course, consideration of the above 13 precautions is recommended regardless of whether a trade secret suit is contemplated–simply as a means of protecting the business from harm.

Non-Competes: Separate from the filing of a trade secret claim, a useful means of protecting the business from customer raiding or trade secret violations is a non-competition or non-solicitation or non-disclosure agreement. These agreements may help to satisfy the Trade Secret Act, but are not necessary to bring a trade secret claim. Nonetheless, for employees in possession of information that is especially sensitive, non-compete or at least non-solicitation and non-disclosure agreements are an especially appropriate means of protection.

To be enforced in court (and such a claim should be brought quickly so that an immediate injunction may be obtained), a non-competition agreement (barring employment at a competitor) must generally be reasonable as to geographic scope, duration, and the line of work it prohibits (e.g., the former employer?s business) and must have the purpose of protecting a reasonable competitive interest (such as trade secrets or good will).

Even if a non-compete agreement is not adopted, a non-solicitation agreement (in which the former employer?s customers may not be solicited for a time (such as a year)), or at least a confidentiality agreement (identifying business secrets), is an appropriate means of protecting trade secrets and the goodwill of customer relationships. These agreements also may be enforced by suit for injunctive and other relief. Again, relief should be sought immediately.

The bottom line is that the customer lists and other data underlying customer relationships may qualify as trade secrets if they have been treated as such. The key to protecting this asset is security measures that every business should employ to prevent disclosure. Among these measures are non-compete and non-solicitation agreements, which may allow an injunction against customer theft.

This column was written by Carey A. DeWitt of Butzel Long. You can email DeWitt at [email protected]