## Facts

- Leo Silfen, Inc. sold building maintenance supplies and related products to industrial and commercial customers, reselling items obtained from independent suppliers.
- Maurice Cream worked for the company for nearly two decades and was responsible for developing a chemical supply division, including recruiting sales staff and pursuing customers.
- The company acquired many customers through extensive mass mailings using prospect lists obtained from mailing houses, ultimately accumulating about 15,000 customers.
- The company kept customer files containing detailed purchasing and relationship information and limited salesmen’s access to their own accounts; it also used confidentiality obligations for employees.
- After Cream was discharged, he formed a competing business and solicited some of the company’s customers.
- Cream contended the customers he contacted were well-known businesses at publicly advertised locations and easily identifiable as users of such supplies.

## Issues

1. Whether an employer’s customer list and related customer data qualify as a protectable trade secret when the customers are readily ascertainable in the trade.
2. Whether an injunction may bar a former employee from soliciting the employer’s customers absent an express noncompetition agreement and absent proof of copying or wrongful use of confidential materials.

## Decision

- The Court of Appeals of New York reversed and dismissed the complaint.
- The court held the plaintiffs did not establish trade secret protection for the customer list on these facts.
- The court found no proof of physical appropriation or copying of customer records, nor wrongful disclosure or use of a trade secret.
- The broad injunction prohibiting defendants from doing business with any of plaintiffs’ customers was improper.

## Legal Principles

- A customer list is not a trade secret if the customers are known or readily ascertainable in the trade as likely users of the employer’s products and operate at publicly advertised locations.
- Investment of time and money in compiling customer identities does not, by itself, convert readily obtainable customer information into a trade secret.
- Trade secret relief generally requires both (a) information not readily ascertainable and maintained with a substantial element of secrecy and (b) proof of wrongful taking, copying, or misuse of the confidential compilation.
- In the absence of an enforceable restrictive covenant, a former employee may compete and solicit customers using general knowledge and recollection, so long as confidential materials are not wrongfully taken or used.

## Conclusion

The court rejected trade secret protection for a customer list largely composed of readily identifiable businesses and refused to restrain competition where the employer failed to prove copying or wrongful use of confidential customer files.


Leo Silfen, Inc. v. Cream, 29 N.Y.2d 387, 278 N.E.2d 636 (N.Y. 1972)