## Facts

- Saturn Systems, Inc. operated a debt-collection business and developed a proprietary, password-protected website/database containing detailed client and debtor information, including status reports and debtor notes (e.g., negotiations, collection efforts, and personal/financial data).
- Saturn limited access to the database through unique client usernames/passwords and provided credentials to sales agents only as needed for assigned accounts.
- Saturn hired Delbert J. Militare as an independent-contractor sales agent under a written Sales Agent Agreement that included confidentiality obligations, a post-termination nonsolicitation restriction, and a prevailing-party attorney-fee provision.
- After Saturn terminated Militare, he joined a competitor and solicited a Saturn client (Premier Members Federal Credit Union).
- Saturn investigated and determined that after termination Militare accessed 15 client accounts and viewed 72 confidential webpages on Saturn’s website without authorization.
- Saturn retained a technical expert who testified regarding the access evidence.
- After a bench trial, the district court found Militare liable for misappropriation of trade secrets and breach of contract, awarded $525 in investigation costs, and awarded more than $70,000 in attorney fees and costs.

## Issues

1. Whether Saturn’s client and debtor information contained in its password-protected website/database qualified as a trade secret under the Colorado Uniform Trade Secrets Act (CUTSA).
2. Whether Militare misappropriated trade secrets by accessing Saturn’s system after termination and using the information to compete.
3. Whether Militare breached contractual confidentiality and nonsolicitation provisions by accessing confidential information and soliciting a Saturn client.
4. Whether the nonsolicitation provision was enforceable under Colorado law as a measure to protect trade secrets.
5. Whether Saturn could recover investigation expenses as damages caused by the misappropriation and breach.
6. Whether the trial court abused its discretion by admitting the expert testimony on unauthorized access.
7. Whether the attorney-fee award was proper under the contract, including entitlement to fees incurred on appeal.

## Decision

- The Court of Appeals affirmed the judgment finding misappropriation of trade secrets and breach of contract.
- The court held Saturn’s database information constituted protectable trade secrets and that Militare’s post-termination access and competitive use supported misappropriation liability.
- The court upheld the nonsolicitation clause as enforceable to protect trade secrets and concluded Militare breached it by soliciting a Saturn client.
- The court affirmed the $525 award for investigation costs as recoverable damages.
- The court found no abuse of discretion in admitting the expert testimony regarding access logs and unauthorized use.
- The court affirmed the trial-level attorney-fee and cost award under the agreement and remanded for determination of reasonable attorney fees and costs incurred on appeal.

## Legal Principles

- Information may qualify as a trade secret under CUTSA when it derives independent economic value from not being generally known and the holder takes reasonable measures to maintain secrecy; password protection, limited credential distribution, and contractual confidentiality may satisfy reasonable-secrecy efforts.
- Unauthorized post-termination acquisition or use of confidential business information obtained through a duty of confidentiality can constitute misappropriation.
- Under Colorado law, restrictive covenants are generally disfavored, but a narrowly drawn nonsolicitation restriction may be enforceable when aimed at protecting trade secrets rather than broadly restraining competition.
- Investigation expenses incurred to identify and quantify unauthorized access may be recoverable as damages when they are a direct and foreseeable result of the wrongful conduct.
- Admission of technical expert testimony regarding system access is reviewed for abuse of discretion; such testimony is permissible when it assists the factfinder.
- A contractual prevailing-party fee-shifting clause supports awards of reasonable attorney fees and costs at trial and, when appropriate, on appeal.

## Conclusion

The court upheld liability where a former sales agent used post-termination access to a password-protected client/debtor database to compete and solicit a client, concluding the database was a trade secret, the nonsolicitation clause was enforceable to protect those secrets, investigation costs were recoverable, and the prevailing party was entitled to contractual attorney fees including fees on appeal.


Saturn Systems, Inc. v. Militare, 252 P.3d 516 (Colo. App. 2011)