A California appellate court recently confirmed that compilations of non-confidential business information may constitute protectible trade secrets. In San Jose Construction, Inc. v. S.B.C.C., Inc., a dispute between two Bay Area general contractors, the plaintiff's ("SJC") former employee disclosed the contents of five project folders to his new employer ("SB"). SJC sued SB, claiming that the project folders contained information related to bidding, estimating and cost processes, project management systems, preferred vendors and subcontractors, design build parameters, costs and other information, and that the compilation of this information in project folders constituted protectible trade secrets. SJC further alleged it invested substantial time and money to develop this project/customer data, and that the information permitted SJC to develop further business and provide services more effectively and economically than its competitors.
A trial court dismissed SJC's claims on the grounds that (1) the materials could not contain trade secrets because they had been generated by or disclosed to third parties and SB already used the same subcontractors, and (2) the information had no economic value.
The appellate court reversed and sent the matter back for trial. It found "the overall compilation of the correspondence involving architects, SJC, and project owners; descriptions of the proposed scope of each project, measurements for each project building, and detailed cost estimates" to be a protectible trade secret. The compilation involved a substantial investment of thousands of dollars in time and resources—far more than merely contacting names on a list and soliciting bids. Moreover, SJC proved the projects were time-sensitive, making its completed and accepted proposals even more valuable. On these facts, the court held that a jury should be allowed to determine whether SJC's information constituted a protectible trade secret.
This decision provides important guidance to businesses regarding trade secret protection.