The conversion of a trade secret is actionable if:
(a) the information involved actually constitutes a trade secret; and
(b) the use constitutes a breach of a confidential relationship or is otherwise improper.
Van Products Company v. General Welding and Fabricating Company, 213 A.2d 769 (Pa.
1965); Den-Tal-Ez, Inc. v. Siemens Capital Corp., 566 A.2d 1214, 1227-29 (Pa. Super. 1989).
(i) Customer lists as trade secrets.
As a matter of general Pennsylvania law, customer lists constitute trade secrets. General
Business Services, Inc. v. Rouse, 495 F.Supp. 526, 529 (E.D. Pa. 1980) (citing Morgan's Home
Equipment, 136 A.2d at 842). The manner in which the list is converted (i.e., by taking a physical
list or in the employee's memory, or both) is not meaningful. Van Products, 213 A.2d at 777.
Also not meaningful is the fact that the employee converting the list was responsible for its
compilation. Id. What will deprive the list of trade secret status is that its content can be readily
obtained through some independent source. General Business Services, 495 F.Supp. at 530. In
order to be readily obtainable through some other source it is necessary that: (1) the content be, in
fact, obtainable in significant part; and (2) that it be "freely" or "easily" obtainable without great
difficulty. Id.
General Business Services is instructive. The customer list in that case consisted of the
names, addresses (with zip codes), and phone numbers of the plaintiff's franchisees. The
defendant was provided the list to facilitate his delivery to franchisees of certain product on behalf
of the plaintiff. The defendant retained the list after his relationship with the plaintiff ended
(presumably for the purpose of doing business with the franchisees directly). The defendant
contended that since the franchisees were required by the franchise agreement to maintain listings
in area telephone directories, the information on the list was "readily obtainable." The court
found that the defendant's argument failed on both parts of the test.
First, the court observed that the list of franchisees that defendant was actually able to assemble using area telephone directories was neither complete nor current. In addition, telephone directories did not provide a full mailing address. Accordingly, defendant failed the first part of the exception, i.e., that the information was "obtainable" in significant part. Secondly, the court determined that the information was not "freely" or "easily" obtainable. The defendant had spent several days worth of work to come up with its incomplete list. The Court determined that that kind of effort was greater than what could be fairly described as being "easily or readily obtainable without great difficulty."
(ii) Use of a list constituting a breach of a confidential relationship.
Granting an employee access to a trade secret in the performance of that employee's
duties creates a confidential relationship as a matter of law. See, e.g., Felmlee v. Lockett, 351
A.2d 273, 278 (Pa. 1976) (observing that "the trust and confidence upon which legal relief is
predicated stems from the instance of the employer's turning over to the employee the pre-existing trade secret[; i]t is then that a pledge of secrecy is impliedly extracted form the employee,
a pledge which carries with him even beyond the ties of his employment relationship.")
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