Silfen v. Cream, 29 N.Y.2d 387 (1972)
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Customer lists are not trade secrets when the customers are readily ascertainable outside the employer’s business as prospective users or consumers of the employer’s services or products.
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Summary
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Silfen and Formula 33 Corporation sued Cream and Real Estate Maintenance Chemical Specialty Corporation, seeking damages and an injunction to prevent Cream from soliciting Silfen’s customers after Cream was discharged. The New York Court of Appeals reversed the lower court’s decision, holding that Silfen’s customer list was not a trade secret because the customers were readily ascertainable. The court emphasized that trade secret protection is unwarranted where customers are likely, if not known, users of the employer’s merchandise engaged in business at advertised locations. The investment in accumulating the list was merely canvassing an obvious market.
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Facts
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Silfen and Formula 33 sell building maintenance supplies. Cream was hired to develop Silfen’s cleaning and maintenance chemical supply division. He built a customer base of 15,000 through mailings. Silfen kept detailed files on each customer, including information about their purchasing agents and specific needs. Post-1961, employment agreements restricted salesmen from appropriating or disclosing customer list information. Cream was later discharged and started a competing business, soliciting some of Silfen’s customers. Silfen sued, claiming Cream used copied customer files. Plaintiffs abandoned their claim that Cream copied customer files. Cream admitted soliciting 47 of Silfen’s 1,100 customers, claiming the customer names came from publicly available commercial lists.
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Procedural History
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The trial court concluded that the customer list was a trade secret and enjoined the defendants from doing business with any of the plaintiffs’ customers. The Appellate Division affirmed the trial court’s decision. The New York Court of Appeals reversed the judgment and dismissed the complaint.
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Issue(s)
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Whether a company’s customer list constitutes a trade secret, warranting protection from solicitation by a former employee, when the customers are readily ascertainable outside the employer’s business.
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Holding
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No, because the customers solicited by the defendant were openly engaged in business at advertised locations and their names and addresses could readily be found by those engaged in the trade.
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Court’s Reasoning
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The court reasoned that trade secret protection is not warranted when customers are readily ascertainable as prospective users of the employer’s services. The court distinguished this case from Town & Country House & Home Serv. v. Newbery, where the customers were not easily identifiable and required significant screening. In this case, the court found that Silfen’s customers were