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Current Developments in the Commercial Divisions of the
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Posted: July 6, 2017

Theft of Trade Secrets Claim Fails; Customer Lists Were Not Shown to be Secret

On June 28, 2017, the Second Department issued a decision in Tri-Star Lighting Corp. v. Goldstein, 2017 NY Slip Op. 05261, affirming the dismissal of a theft of trade secrets claim because the alleged trade secrets (customer lists) were not adequately alleged to have been secrets, explaining:

The Supreme Court properly granted that branch of the defendants’ cross motion which was to dismiss the third cause of action, which sought to recover damages for misappropriation of trade secrets against the defendants. The elements of a cause of action to recover damages for misappropriation of trade secrets are: (1) possession of a trade secret; and (2) use of that trade secret by the defendant in breach of an agreement, confidential relationship or duty, or as a result of discovery by improper means. An essential prerequisite to legal protection against the misappropriation of a trade secret is the element of secrecy. Generally, where the customers are readily ascertainable outside the employer’s business as prospective users or consumers of the employer’s services of products, trade secret protection will not attach and courts will not enjoin the employee from soliciting his employer’s customers. Here, the complaint stated that other companies provide similar services. Although the plaintiff described its customer lists, prices, and profit margins as distinctive, the complaint contains no allegations that the plaintiff employed measures to keep its customer lists and pricing information confidential, or that this information was not generally known outside of its business, so as to actually render its customer information a trade secret.

(Internal quotations and citations omitted).

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