Has a competitor gotten hold of your list? No matter how valuable your list is, copyright law probably won't help you - but trade-secret law just might

Folio: The Magazine for Magazine Management, May 1, 1995 by Jessica R. Friedman

No matter how valuable your list is, copyright law probably won't help you - but trade-secret law just might.

Your fulfillment house gives a copy of your list to a competitor, whom we'll call X, without your consent. X does a mailing based on your list, which you find out about because you've seeded it. How can you stop X from using the list again?

Your first thought might be to instruct your lawyer to seek a preliminary injunction - a court order prohibiting X from continuing to use the list - on the ground of copyright infringement. You may be surprised to learn that this probably will not get you anywhere. No matter how much time and effort it took you to compile the list, and no matter how valuable it is in its current form, the list most likely is entitled to very little, if any, copyright protection. Why? Because the names, addresses and statistical data that appear on your list are merely facts. Copyright law does not protect facts per se, and the protection it gives to "compilations" of facts is, as the United States Supreme Court has said, "very thin."

A copyright registration for a "factual compilation" protects only any original "selection, coordination or arrangement" of the information in the list. If your list has one or more of these characteristics. you may be able to prevent someone else from duplicating those characteristics in his or her list. But it is not copyright infringement for someone who has been given a copy of your list to use the underlying actual information. Even if you have managed to obtain a copyright registration for your list, it will not enable you to stop X from using the data itself, which, obviously, is your main concern.

But don't despair. You may be able to get a court order that prohibits X from continuing to use the list on the ground that he has misappropriated a trade secret. The laws that govern trade secrets differ from state to state, but certain general principles apply. First, when X acquired the list, he must have known, or should have known, that the list was considered a trade secret. Second, X must have gotten the fist as a result of a breach of a duty to you that arose out of a confidential relationship (ie., one in which the parties have special legal duties to each other,. such as the duty that an agent owes to his principal or the duty that a trustee owes to the beneficiaries of the trust).

These conditions may sound obvious and easy to prove in a given case. In our hypothetical, for example, it seems reasonable to assume that anyone who gets a copy of a list from a fulfillment house - or from anyone other than the list's owner or broker - knows or should know that it is someone else's proprietary information. But it is possible (albeit unlikely) that X had a good reason to believe the fulfillment house was authorized to give him the list. If that's the case, and X made a substantial investment - such as a major direct-mail campaign - before being notified that the list was a trade secret, a court might not enjoin X from continuing to use the list or hold him liable for the use already made.

More important, whether your fist will be considered a trade secret will depend at least in part on whether you treated it as confidential information. Of course you do - or do you? In fact, owners of confidential information do not always take the precautions that entitle that information to such treatment.

What can you do to try to ensure that your fist will be treated as a trade secret in this kind of situation? As our hypothetical indicates, whenever you share your list with third parties - such as your fulfillment house, your list broker or a company that is considering acquiring your company or entering into a joint venture with you - you need to identify the list as confidential. A written agreement should expressly state that the list is confidential and that the other party is not permitted to make copies of the list or to use it for any purpose other than the purpose for which you are giving it to them. If you are not starting out with a list per se, you should provide that you will own the information contained in any list that may result from your joint efforts (and that such information is confidential). You should also provide that upon termination of the contract or discussions, the other party will immediately return all copies of the list in its possession and delete the list from its computers. An agreement with a list broker or list manager should also provide that you have the right to refuse rental of your list to any party at any time and to examine all material that will be mailed to any party renting the list.

It is just as important to take similar precautions in-house. Even if you don't keep a copy of your entire list in the office, there will be occasions when your staff uses it, or part of it, to do a telemarketing campaign or a direct mailing. All your employees, especially any who will be involved in compiling or using the list, should sign confidentiality agreements that refer to the list. Any part of your list that you keep or use, even temporarily, in any form, and any documents relating to it, should be clearly labeled "confidential." Access should be limited to people who absolutely need to use the list for any given project; and requests for the list from whoever has custody of it should be made only through a designated staff member, such as the circulation director or the fulfillment manager.