The trade secret question asked most often by clients is: can I use my customer list after moving to a new job?
We are asked this – or some variation on this – question from individuals contemplating a change in employment, from companies about to hire a new employee, as well as from companies losing a key employee (or employees) to a competitor. The frequency of the question is not surprising, because every business relies on its customers, every individual relies on his or her contacts to advance their career, and everyone wants to protect its customer base from competitors.
- A customer list can be a trade secret.
A customer list is entitled to protection under California law if it derives “independent economic value” from not being generally known, and the owner undertakes reasonable efforts to maintain its secrecy. So ask yourself this question about your customer list: how easy would it be to duplicate the list? Also important is the way in which the list was generated. Was it generated by a number of different employees over a number of years, or is it a personal list of industry contacts that you compiled over the course of your career?
- Even if the customer list is a trade secret, you can use the list to “announce” your new job.
Trade secret law prohibits the “use” of another’s trade secret. But in California, you can announce your change in employment without running afoul of trade secret laws. So even if the customer list at issue is a confidential list belonging to the former employer, the law permits you to announce your new business affiliation to those customers.
- But you may not use your former employer’s confidential customer list to “solicit.”
You can announce, but you may not solicit. According to the California Supreme Court, “solicit” means asking for with earnestness, endeavoring to obtain, appealing to, or inviting. So you may not “invite” the customer to do business with you, or appeal to the customer to send you business.
- “Solicit” does not include the willingness to respond to an invitation.
While “solicitation” is prohibited, if a customer asks you to make a proposal, you can respond without running afoul of the law. Of course, you must take steps to ensure that in responding to the customer’s request for a proposal, you are not using any other trade secrets of your former employer, such as confidential cost or pricing information.
- Remember, “solicit” is in the eye of the beholder.
Even if the law permits you to announce your departure to the customers on your former employer’s confidential list, keep in mind that the line between “announce” and “solicit” is often blurred. And even if you are vindicated in the end, vindication may come at a significant cost in attorneys’ fees.