By Adam W. Childers
When one thinks about "trade secrets," the mind inevitably drifts to the heavily guarded formula for Coca-Cola, or the secret as to how in the world those magicians can appear to saw their lovely assistants in half and yet they walk away unscathed. However, in the world of business, trade secrets can be much more mundane, and yet no less important. That includes customer lists, the life-blood of many companies that depend on cultivating customer-based relationships to make money.
Just a few months ago, the Oklahoma Legislature underscored the importance of customer lists when it amended 21 O.S. § 1732. This statute criminalizes the theft of trade secrets, categorizing such conduct as larceny under 21 O.S. § 1704. Traditionally, trades secrets have been defined in Oklahoma as information, "deriving independent economic value from not being generally known to and not readily accessible by proper means by, other persons." Trade secrets must also be the subject of reasonable efforts to maintain their secrecy.
Whether or not a customer list constitutes a trade secret is oftentimes at the heart of criminal prosecution efforts and/or civil litigation over the misappropriation of trade secrets by departing employees. The reason is that an employee who has departed with a customer list in his or her possession usually argues that the list is not a trade secret because it is "easily ascertainable" by proper means such as just as thumbing through a phone book and searching for potential customers, or that that the employer failed to take reasonable steps to protect the customer list from the public eye.
As part of SB 1013, effective November 1, 2009, the Legislature sought to settle this debate, and to clarify the scope of the definition of trade secrets under 21 O.S. § 1732. The Legislature did so by specifically including, "customer lists" and "business records" as examples of potential trade secrets protected by 21 O.S. § 1732, joining the other existing categories including formulas, patterns, compilations, programs, devices, methods, techniques and processes.
Of course, the inclusion of these new terms does not automatically qualify customers lists for trade secret status. Employers must still meet the other elements of a trade secret before enjoying the protections afforded by this legislative amendment. However, by explicitly adding customer lists to the examples of potential trade secrets, the Legislature is signaling a clear shift towards protecting these lists from theft.
In light of this legislative change, employers would be well advised to take advantage of this policy shift by reviewing their current policies and procedures to ensure that their policies regarding protection of trade secrets and other confidential information are rigorous and strictly enforced. Moreover, it would be a good idea to add customer lists to the categories of information protected as trade secrets of the company.
The bottom line is that while the Legislature has made it easier to prosecute those who abscond with a company's trade secrets, including customer lists, it is still up to employers to properly protect the customer lists as trade secrets. Doing so safeguards information that can be as vital as a soft drink formula, or the secret to a magician's trickery.