Companies seeking to establish trade secretion protection over a customer list must take steps to protect the list and be able to demonstrate that the list has value by not being known to competitors. At times, courts will construe these requirements strictly against the company.

A recent decision by a federal judge in Seattle construed the requirements for protecting customer lists as trade secrets with unprecedented rigor, denying a company's motion for summary judgment and granting it instead — on her own motion — to the defendants.

The decision rejected secrecy measures that effectively protected the lists because they were legally required by HIPAA. The decision held that the customer list did not have value because the company did not use it for marketing, despite its use by departing employees to solicit customers who would otherwise have been unknown to them.

While this decision does not represent the mainstream of trade secret law on customer lists, it can serve as a reminder of the requirements to establish a trade secret. It can also serve as a cautionary tale that current trends favoring free movement of employees versus non-compete agreements may influence trade secret decisions.