Thank You For Submiting Feedback!
Under the Colorado Uniform Trade Secrets Act, Colo. Rev. Stat. §§ 7-74-101 to 7-74-110 (2010), "misappropriation" is defined in part as the acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means. Colo. Rev. Stat. § 7-74-102(2)(a) (2010). "Improper means" includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means. Colo. Rev. Stat. § 7-74-102(1) (2010). There is no requirement that there be actual use or commercial implementation of the misappropriated trade secret for damages to accrue. Misappropriation consists only of the improper disclosure or acquisition of the trade secret.
Plaintiff Saturn Systems, Inc. (“saturn”) spent significant time and money to develop a proprietary website to provide its clients access to its database of client and debtor information. Thus, Saturn would assign each client a unique username and password that can be used to log in to the website and view real-time information related to that client's account. Because of the confidential nature of the information that can be accessed via its website, Saturn would only release the usernames and passwords to the client and, if needed, to the sales agent assigned to that client's account. Defendant, Delbert J. Militare, was hired by Saturn for a sales agent position. As a Saturn sales agent, Militare was provided access to and was taught how to use the confidential database on the Saturn website. Militare’s employment with Saturn was terminated. Subsequently, an investigation revealed that Militare repeatedly accessed fifteen client accounts, including the debtor notes associated with those accounts, subsequent to his termination from Saturn. Consequently, Saturn filed the present action, alleging claims of misappropriation of trade secrets and breach of contract and seeking damages and injunctive relief. The trial court ruled in favor of Saturn, finding Militare liable for misappropriation of Saturn's trade secrets and breach of the nondisclosure and nonsolicitation clauses set forth in the confidentiality provision of the Agreement. Militare appealed, arguing that the trial court erred by finding that he misappropriated Saturn's trade secrets because there was insufficient evidence to show that Saturn possessed valid trade secrets, and Militare misappropriated Saturn's trade secrets.
Under the circumstances, could defendant Militare be held liable for misappropriation of trade secrets?
The Court concluded that there was sufficient evidence to show that Saturn possessed valid trade secrets under Colorado's Trade Secrets Act, and that Militare misappropriated Saturn’s trade secrets. Sufficient evidence supported the finding that client and debtor information stored within Saturn’s proprietary database qualified as trade secrets. Militare had unauthorized access of Saturn’s client accounts subsequent to his termination. Militare confirmed at trial that he accessed confidential information on Saturn’s website after his sales agent agreement was terminated. Accordingly, judgment and order for costs and attorney fees were affirmed, and case was remanded with directions.