Are Client Lists Intellectual Property?

What Is A Client List?

A client list is simply a list of all of your customers, with details about your relationship with them, as well as their contact information. They are used for many different reasons, including for marketing purposes, to gain new business, and to build operational efficiency.

Client lists are very valuable to businesses, and it can leave people in a difficult situation if an employee leaves the business and takes a copy of the client list with them. Whether they are passing it on to their new company or using it for themselves, perhaps to start their own business, it’s very frustrating. In this situation, business owners often wonder whether there is anything they can do and whether the law protects them. In short, they want to know, are client lists intellectual property, and can they take action?

Are Client Lists Intellectual Property?

Protection of client lists under intellectual property law can be tricky. There is no blanket protection and whether they are considered intellectual property all depends on the nature of the business, the information on the client list, and how that information is used. 

In some cases, client lists are protected as trade secrets. Trade secrets are legally protected, and it is illegal to use or disclose them without the consent of the owner. However, to be considered a trade secret, the information must meet certain criteria. It must be confidential, it must provide a company with commercial advantage or value, it must not be easily discoverable by others, and the owner must take measures to protect its secrecy. 

Some trade secrets are clearly eligible for protection. For example, a revolutionary manufacturing process used to create a product is protected because the success of the business depends on that secretive knowledge. As soon as competitors are able to replicate the manufacturing process, the value of the business is affected. However, it is not so clear-cut with client lists. 

In some cases, client lists will be considered trade secrets, and therefore intellectual property. This means that if they are used against your will by another party, you have legal protection in place. But there is a chance that your client list will not meet the specific criteria of a trade secret, so will not be protected. A lot of the information already exists in the public domain, so general details like names and phone numbers are unlikely to be protected. On the other hand, if you have spent a long time developing relationships with customers and you have detailed information about them, this is likely to be seen as vital to the success of the business, so may be considered a trade secret. 

The way that client lists are accessed also has a big impact. For example, if an employee memorizes client names and numbers but never actually takes a physical copy of the list from your business, you don’t have much of a case. It is for this reason that businesses put confidentiality agreements in place to protect themselves in this scenario. 

How To Make Your Client List Eligible For Trade Secret Protection

As a business owner, if you would like to make your client list eligible for trade secret protection, you must take precautions to keep it confidential. You can do this by having confidentiality agreements in place with all employees and contractors, as well as customers. Make sure it is not circulated outside the business and it is only shown to specific employees that need direct access to it.

When building a client list, add detailed information that is specific to your relationship with your clients. Unless it goes beyond basic contact information, it will not be considered your intellectual property.

It is also important to provide evidence of the time and resources that went into developing the client list in the first place. Keeping records of phone calls and emails, or details of networking events, can all help to prove that the client list is an important asset that you invested in. You also need to be able to demonstrate how the client list has improved the business and why you are reliant on it for your success. It is this kind of evidence that you will be asked to produce if you try to make a claim under intellectual property law, so make sure you collect as much as possible. 

As long as you do all of these things, your client list should be classed as a trade secret, meaning that it has protection under intellectual property law.