## Facts

- American Family used a centralized computerized database containing customer information and tools for filtering and identifying sales opportunities.
- Former American Family agents operated under agency contracts requiring them to submit business through the company system and not use or disclose confidential, proprietary, or trade secret database information except in the ordinary course of business with the company.
- Agents could access database information only for customers they served, including customers they originated and approximately 2,000 policies reassigned to them by American Family.
- After termination, the agents solicited business using a separate customer list (Exhibit 34) containing 1,847 names, most of which also appeared in American Family’s database and likely overlapped with reassigned customers.
- American Family sued for breach of contract and trade secret misappropriation, alleging the agents downloaded and used database information to compete post-termination.
- A magistrate judge granted a preliminary injunction barring the agents from (1) using “any information downloaded” from the database, including Exhibit 34 names, and (2) “servicing” American Family’s customers.
- The agents brought an interlocutory appeal challenging the injunction’s breadth and vagueness under Wisconsin law.

## Issues

1. Under Wisconsin law, to what extent may an insurer use contract and trade secret law to restrict former agents from soliciting or servicing customers whose names or data appear in the insurer’s database, including customers originally developed by the agents?
2. Did the preliminary injunction improperly function as an overbroad or vague restraint by prohibiting use of “any” downloaded database information and barring the agents from servicing the insurer’s customers?

## Decision

- The Seventh Circuit modified the preliminary injunction, narrowing its scope.
- The court rejected an interpretation that would bar the agents from soliciting anyone merely because the person’s name appeared in the insurer’s database.
- The court allowed injunctive protection for actual trade secret interests tied to the database (including nonpublic compilations, customers assigned by the company, and value-added analytical features), while permitting lawful competition using information obtained independently of improper database use.

## Legal Principles

- A customer-information system or compilation may qualify as a trade secret when it derives independent economic value from not being generally known and is subject to reasonable secrecy measures, including access controls and confidentiality obligations.
- Customer names or identities that are generally known or independently obtainable are not automatically trade secrets; protection may lie in nonpublic groupings and “value added” functions (such as sorting, profiling, or filtering).
- Contractual confidentiality provisions should not be construed to create an implicit noncompetition restriction broader than what the parties expressly agreed to, particularly where state policy limits broad post-termination restraints.
- Preliminary injunctive relief in trade secret disputes must be tailored to prevent misappropriation and avoid vague commands that bar lawful competitive conduct.

## Conclusion

The Seventh Circuit held that American Family could obtain preliminary injunctive relief to prevent former agents from using confidential, nonpublic database-derived trade secret information, but the injunction had to be narrowed so it did not operate as a blanket prohibition on soliciting or servicing customers whose names appeared in the company’s database.


Am. Fam. Mut. Ins. Co. v. Roth, 485 F.3d 930 (7th Cir. 2007)