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Customer Lists and the Texas Uniform Trade Secrets Act

Customer lists are important assets for companies. They provide crucial leads, a history of consumers' purchases, and other important data. Before the enactment of the Texas Uniform Trade Secrets Act, determining whether a customer list met the definition of a trade secret was complicated and required a heavily factual analysis. However, when the Texas Legislature enacted the Texas Uniform Trade Secrets Act (TUTSA) in 2013, it was clear that the legislature considered customer lists trade secrets. TUTSA defined trade secrets as "information, including...list[s] of actual or potential customers." Tex. Civ. Prac. & Rem. Code § 134A.002 (6). Despite this clear inclusion as information worth protecting, customer lists must still meet the requirement of including information that is not "readily ascertainable" to be considered a trade secret. Tex. Civ. Prac. & Rem. Code § 134A.002 (6) (A).This blog will look at what information should be included in your customer list to ensure it qualifies as a trade secret and two exceptions to the "not readily ascertainable" requirement.

What is readily ascertainable? Information is said to be readily ascertainable if an independent investigation would reveal the information or if it is generally known by others in the same business. A.M. Castle & Co. v. Byrne, 123 F. Supp. 3d 895, 901-2 (S.D. Tex. 2015). Information in customer lists that has been found to not be readily ascertainable (and therefore a trade secret) includes: customer's quantity, pricing, and timing demands. His Company, Inc. v. Robert Stover, 202 F.Supp.3d 685, 698 (S.D. Tex. 2016). However, it does appear that names alone are not enough to qualify as information that is not readily ascertainable. Id.

What if you customer list only contains information that is readily ascertainable? There are two exceptions to the not readily ascertainable requirement. The first is customer lists remain trade secrets if the competitor accused of misappropriation "gained the information in usable form while working for the [plaintiff]." A.M. Castle & Co. v. Byrne, 123 F. Supp. 3d 909, 920 (S.D. Tex. 2015). The second exception is when "compiling the [readily ascertainable] information was difficult and expensive." His Company, Inc. v. Robert Stover, 202 F.Supp.3d 685, 697 (S.D. Tex. 2016).

Here, at Taylor Dunham and Rodriguez LLP we are experienced in enforcing the trade secret rights of companies and individuals. If you believe that your customer list has been misappropriated, do not hesitate to contact Taylor Dunham and Rodriguez LLP for legal assistance.

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