Friday, December 30, 2005, 12/30/2005 04:53:00 PM

Does A Trade Secret Lose Trade Secret Status if Those That Want It Can Remember It In Their Head?

By Todd
We are often asked whether a former employee is entitled to utilize information that they can remember in their heads when they finally leave employment with the company. Apparently, the United States District Court for the District of Minnesota was asked the same question in a case called Ad Associates, Inc. v. Coast to Coast Classifieds, 2005 WL 3372968 (D. Minn., December 12, 2005) and in the pertinent part of its order denying the former employer's motion for injunctive relief that court said: "the customer names Brennan remembered and to whom she sent letters after finding corresponding contact information do not qualify as trade secrets under Minnesota law. Brennan was never told by Reinhart or anyone else at Ad Associates that customer names were confidential. In addition, Ad Associates cannot credibly argue that Brennan should have erased her memory before going into business for herself."

We don't presume to know this court but - was the former employer really claiming that their former employee should "erase their memory before going into business" or was the former employer essentially arguing that inasmuch as the former employee committed alleged trade secrets to memory she shouldn't be able to use that information? We think the employer was arguing the latter and that the court clearly didn't like the former employer's arguments and ascribed to it the former. That being said, we believe that this "if you can memorize it, you can use it" line of reasoning is HOGWASH. This court is not the first one to suggest memorization of non-public data gives the former employee a built-in misappropriation defense but, for the life of us, we don't know where this argument or line of reasoning comes from.

We would like to be clear - there is nothing in the Uniform Trade Secrets Act or any of its iterations in the various states that suggests "if you can memorize it, you won't be misappropriating it." One could imagine a human with a good memory might remember a good bit of information even the most aggressive skeptic would concede is a trade secret. What is likely going on, however, in the cases where courts suggest this baseless "memory is okay"doctrine is that the information in question ISN'T EVEN A TRADE SECRET AT ALL and the court is just piling on with this faulty additional "an employee doesn't need to unremember things" line of reasoning. In the cited quote from the case above, the court should have just stopped with " . . . do not qualify as a trade secrets under Minnesota law. " All would've been well and it was probably the right result. This being said, we admit - we were neither elected nor appointed as judges and therefore don't get the important call on this one . . . but that's why we have a blog.

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