Course No. 9200-704 (& 804)-801
ID No. 85737 & 85736
Time: W 6:30 - 9:30 p.m.
Room Across from 231D (IP Alcove)
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Steenhoven v. College Life Insurance Company of America460 N.E.2d 973 (Ind. App. 1984)
Ratliff, J., writing by designation. Shields, J., concurs. Miller, J. (by designation), concurs. [*973]
ON PETITION FOR REHEARINGOn appeal, this court reversed a portion of the grant of a preliminary injunction issued by the Tippecanoe Superior Court. That court enjoined appellant John Steenhoven from contacting past or present clients regarding replacement of College Life insurance policies and from actually attempting to induce such replacement. Steenhoven was also required to return certain materials to College Life. While upholding the court's order requiring the return of College Life's materials, this court reversed the preliminary injunction as to contacting clients or inducing replacements. College Life now petitions for rehearing, arguing as its single issue that because policyholder lists are not readily [*974] ascertainable from the policyholders themselves,(1) such lists must be trade secrets within the meaning of the Uniform Trade Secrets Act. Although we agree with College Life's premise that policyholder lists are not readily ascertainable from the policyholders themselves, we are, nevertheless, unable to conclude that the policyholder list in the instant case is a trade secret under the act.
Appellee correctly notes that "actual or threatened misappropriation [of a trade secret] may be enjoined." Ind. Code § 24-2-3-3 (1982). Misappropriation includes the "use of a trade secret of another without express or implied consent by a person who . . . . at the time of . . . . use, knew or had reason to know that his knowledge of the trade secret was . . . . acquired under circumstances giving rise to a duty to . . . . limit its use . . . ." Ind. Code § 24-2-3-2(2)(B)(ii) (1982).(2) As we noted in our prior opinion, a trade secret encompasses
"(1) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and
"(2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy."
Ind. Code § 24-2-3-2. College Life contends that policyholder lists are compilations within the meaning of the act. Even if we accept appellee's contention, however, we do not reach the conclusion that the policyholder list is a trade secret.
In order to be considered a trade secret under the act, the information at issue must be imbued with a certain "independent economic value . . . . from not being generally known." Id. No such inherent independent value can be ascribed to this list of policyholders' names and addresses,(3) even if such list is placed in the hands of a rival insurance organization.(4) Alone it is effectively worthless.(5) Lacking independent [*975] economic value in the hands of another, we cannot say that such a list would constitute a trade secret within the meaning of the Uniform Trade Secrets Act. Accordingly, appellee's petition for rehearing is denied.(6)
1. [court's footnote 1] Our prior opinion
in this case held that certain policyholder information could not be considered
a trade secret under the Uniform Trade Secrets Act because such information
was readily ascertainable from the policyholders themselves.
3. [court's footnote 4] Steenhoven dealt
with, and had knowledge of, only a small portion of College Life's total
customer listnamely, those College Life policyholders he himself
serviced in the Lafayette, Indiana area.
4. [court's footnote 5] Appellee argues that
our decision "effectively deprives every policyholder list or customer
list of ‘trade secret' status under the Uniform Act in Indiana." We
refuse to paint with such a broad brush, however. Rather, we merely
conclude that, in the instant case, we do not consider the policyholder
list to be a trade secret within the meaning of the act.
5. [court's footnote 6] College Life contends
that the policyholder list assumes some potential value when viewed together
with certain policyholder information. In our prior opinion, we
concluded that such policyholder information could not be considered a
trade secret pursuant to the act because it was readily ascertainable
from the policyholders themselves. We also note that College Life
had acknowledged such information was readily available from other sources.
This is the same information that could be extracted from the policyholder
in a blind replacement attempt. Since the blind attempt would result
in the same information being compiled as would an approach based upon
the customer listi.e., that the policyholder was a College
Life policyholder whose policy provided for certain specific coverages
at certain priceswe fail to see how a combination of the readily
available policyholder information and the policyholder list would be
imbued with such independent economic value as to constitute a trade secret
under the act.
6. [court's footnote 7] The real thrust of
appellee's argument is not that Steenhoven disclosed College Life's customer
list (at least as concerns his limited knowledge thereof), but rather,
that Steenhoven used such list to benefit economically. College
Life seemingly seeks not to protect a trade secret, but rather, to prevent
competition by its former agent. Insofar as College Life attempts
to merely restrain Steenhoven's competition, we believe the Uniform Trade
Secrets Act to be an improper vehicle therefor. The fact that Steenhoven
possesses certain knowledge acquired within the course of his employment
does not mandate that, upon his departure, Steenhoven must wipe clean
the slate of his memory. Rather, it is clear from the language of
the act that the Uniform Trade Secrets Act was promulgated by the legislature
to prevent the abusive and destructive usurpation of certain economically-imbued
business knowledge commonly referred to as trade secrets. We do
not believe the legislature ever intended the statute's provisions to
act as a blanket post facto restraint on trade. If College
Life had desired to prevent competition by its former agents based upon
the agents' acquired knowledge, it could have done so contractually via
the provisions of a covenant not to compete. Having forgone that
possibility, we believe it misguided to attempt to stem such competition
by arguing, in essence, that properly-acquired knowledge of the employer's
business is automatically made a trade secret pursuant to the act, without
regard to the nature of the information, simply because it can be compiled
into a table or a list.