Customer lists that your company has developed, along with marketing and business plans, are considered your company’s “intellectual property” under trade secret laws and, as such, are entitled to protection under that law. Sales and marketing personnel who go into business for themselves or who go to work for a competitor may be tempted to remove and use a former employer’s customer lists to get off to a fast start in a new job.
Be aware: Lists of prospects compiled from directories or similar public sources may not be protected. But a company’s “confidential” lists are protected, including names of customers that an employee could have learned about only through his or her employment, and names of potential customers obtained on the basis of the company’s past selling experience.
The problem is that a salesperson can easily claim that his “customer/prospect list” has been obtained from sources other than his previous employer’s lists (e.g., his memory), or that he had known about them prior to his employment. In that case, your only protection is a written agreement with those employees that they will not compete with your company for a specific period of time after they leave the company, and within a certain geographical area.
What to do: Send a memo to all employees to make them aware of the company’s rules on customer lists, patents, processes, etc., and get a written agreement for select employees. Even without a written agreement, an employee is generally bound to the proper use of his employer’s secrets and prohibited from divulging them to others.
But the best approach is to use a written agreement and/or include the guidelines in your company’s employee manual. Both of these approaches are much stronger deterrents with employees. But be careful. Enforcement of the agreement depends on the reasonableness of the restrictions you impose. So get expert advice on the wording of these agreements from a lawyer who specializes in employment contracts and trade secret laws in your state.
This article originally appeared in The Business Owner Journal, the periodical of choice for owners of small and midsize private businesses. All rights reserved, D.L. Perkins LLC. © 2012.
This publication is intended to provide general information on the subject matters covered. It is sold and distributed with the understanding that neither the publisher nor any distributor or advertiser is engaged in providing legal, tax, insurance, investment or other professional advice. The advice of a qualified professional should be sought before any reader applies a concept presented herein to his or her particular situation or business.
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