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Is An Online Rolodex a Trade Secret?

Posted in Trade Secrets and Competition

Probably not.  The case law of many states is littered with what are sometimes referred to as “rolodex” cases.  These cases typically involve a departing employee who takes a rolodex (or other collection of customer or vendor information) that was created while on the former employer’s payroll.  The former employer claims the rolodex is company property.  Customer lists or compilations of customer information (such as rolodexes) have long been recognized as potential trade secrets.  But what happens to those same contacts if they are listed on an individual employee’s LinkedIn or similar website?  Can a recruited employee (who would not be permitted to take their rolodex) rightly consider contacts listed on their LinkedIn page to be theirs rather than their employer’s?  This scenario has been the source of litigation.  (See, for example, TEK Systems, Inc. v. Hammernick, CV00819, filed March 2010, which has since settled.) 

The argument is fairly simple.  Is anything listed on a LinkedIn or similar social media website secret or is it now part of the public domain?  Many companies have responded to this possibility by seeking to prevent employee’s use of LinkedIn or restricting the identification of company customers on the website.  Many commentators fear that such restrictive policies may result in babies going out with the bath water.  Effective sales professionals need to network and barring them from use of evolving social media may hamstring those professionals in doing what they were hired to do – making and establishing a network of contacts that are willing to do business with them.

In Sausko Group, Inc. v. Courtney (WL *3613855), a federal judge in New York found a defendant could not be sued for taking client lists because the information could be collected in just a few minutes on Facebook or LinkedIn.  Information that is readily obtainable through an internet search is, by definition, not secret.  Given the existence of the large volume of customer identity and contact information that is now available on the internet, the idea that lists of customer identity and contact information are trade secret may be obsolete.  Of course, a particular determination that specific customer information constitutes a trade secret will depend on the circumstances.  Where social media messaging systems have been used as part of company policy or where information is linked to more than customer identity and contact information, the claim that the information constitutes a trade secret may be stronger.