Justo González Quoted in "First Circuit Ruling Strengthens Trade Secret Protections for Insurers"

Related Practice: Intellectual Property

Justo González was recently quoted in the Law360 article "1st Circ. Ruling Bolsters Insurer Trade Secret Protections."

In a recent decision by the First Circuit, two former Allstate agents found themselves on the wrong side of the law when they were accused of misappropriating trade secrets for their own gain. The case, which involved the use of spreadsheets containing sensitive customer information, has significant implications for the insurance industry and beyond. The Massachusetts district court ruled in favor of Allstate, finding that the agents had violated federal and state trade secrets laws. The First Circuit's recent decision upheld this ruling, setting a precedent that could impact future cases involving trade secrets.

Key Takeaways

Protection of Client Lists: The First Circuit's decision has garnered attention from trade secrets experts, who see it as a strong endorsement of protecting client lists as trade secrets. The case highlights the importance of exclusive agency agreements in determining the confidentiality and value of information contained in such lists.

Judicial vs. Jury Determination: Traditionally, whether information qualifies as a trade secret is often left for trial and determined by a jury. However, in this case, the judges made the determination themselves, emphasizing the confidential nature and economic value of the data.

Contract Language Matters: The First Circuit's decision heavily relied on the specific language in Allstate's exclusive agency agreements, which designated certain information as confidential. This meticulous definition of confidential information played a crucial role in the court's ruling.

Due Diligence Is Crucial: While contract language is important, experts stress that insurers and other companies must go beyond it to safeguard their trade secrets. Implementing measures to protect information, restrict access, and remove data from departing employees are vital steps.

"Justo González of Stokes Lawrence said that while the district court used additional findings outside the agreement, it was helped by the contract's detailed outlining of specific information as confidential, such as premium rates and renewal dates. That intricate client information has great value to competitors, he said.

"The way that Allstate compiled its information here made it a fairly easy call for the trial court and for the First Circuit on appeal," González said. "It wasn't just the list of customers; it was the keys to the kingdom in terms of knowing who to reach out to and when to continue selling insurance.""