In The Age of Social Media, Are Customer Lists A Trade Secret?

In The Age of Social Media, Are Customer Lists A Trade Secret?

October 25, 2018 Business Insurance and Risk Management, The Beacon Blog 0 Comments

The traditional view that a company’s customer list is a trade secret has been challenged by the growth of social media. The counter arguments are that customers’ information is publicly available and information in social media profiles is potentially mobile.

Some courts have ruled customer lists are not protected because they can be replicated by reviewing publically available information. What was formerly found in telephone directories can now be seen through various forums on the Internet. If employees use social media to connect with customers and prospects,  they may take that information with them if they change jobs.

On the other hand, at least one court has found that social media may enhance a company’s argument that its list is a trade secret. In Christou v. Beatport, LLC (reported in http://news.acca.com/accacomm/issues/2018-09-24.html) a Colorado court found that social media profiles were comparable to a data base. A California court in Cellular Accessories For Less, Inc. v. Trinitas, LLC ruled it was a question of fact whether LinkedIn connections were trade secrets.

According to a bulletin of the Association of Corporate Counsel this is a developing area of law. The more information a company adds to its customer list, the more it will likely be considered a trade secret. Companies should be proactive in developing social media policies and identify protected information in employment agreements.




About the Author

Harry Cylinder

Harry Cylinder, CPCU, ARM has spent nearly fifty years in the insurance industry, the majority of the time as a consultant. He has been employed by The Beacon Group of Companies since 2008, specializing in the review and analysis of property and casualty coverage forms. Mr. Cylinder has been reviewing policy forms as they have evolved over the past decades. In 2008 he published an article in the CPCU Journal which was the first description of cyber insurance coverage for a general insurance audience. Since that time he has regularly written on cyber and other topics for The Beacon Companies’ blog.