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JPEsq, Attorney
Category: Legal
Satisfied Customers: 5106
Experience:  Experience as general attorney, in house counsel, SSDI, Family Law attorney, and law professor
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The following situation arises under NJ law. Client

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The following situation arises under NJ law.

Client is a salesperson for a company that manufactures certain scientific testing materials. She is the main salesperson. Salary plus commission. She has no written employment contract, no restrictive covenant, no non-compete.

There is a dispute over the employer not paying her proper commissions, and she either quits, or is fired (depending on your perspective).

While she was at the company, on both company time, and on her own time, she compiled an extensive database (essentially a contacts list) of actual and prospective purchasers of the company's product, and of actual and prospective vendors to the company. The information is all publicly available, but it required her effort to put it together.

Given the above facts, is there any reason why she cannot retain and use her contacts list at any new employment? (She presently is thinking about forming her own company and competing with her former employer.)

The real question here is whether the client list qualifies as a "trade secret" so as to get protection under the Uniform Trade Secrets Act. Client lists typically do qualify, but the determining factor is whether the company has taken reasonable steps to keep the information confidential.

The list itself, the actual list, may be company property. The former employee compiled this list as part of her job, and at least partially while on the clock, which indicates that it was part of her job to do so. Because of that, there is an argument that the company owns this list and by taking it with her, the salesperson is stealing company property.

That said, the former employee did compile some of this in her free time, and it may not have been an explicit part of her job. The former employer may not even know it exists. Furthermore, the information may be readily available, which would indicate it is not a trade secret.

The botXXXXX XXXXXne is that the list may or may not be protected, depending on how easily obtainable the information is and how well the company protected it. There is no definitive answer here, but you indicate that she could re-create the list from public data... in which case it is most likely NOT protected by the UTSA, and she would be free to use it to compete with her former employer.

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