First Circuit Holds Compilation of Public Record Data Is a Protectable Trade Secret

At a Glance

• The First Circuit held, in Allstate Ins. Co. v. Fougere, 79 F.4th 172, 189 (1st Cir. 2023), that data derived in part from publicly available sources qualifies as a trade secret “when it would have been immensely difficult to collect and compile it in the form in which it appeared in the compilation.”
• Owners of such information would be wise to learn from the plaintiff’s agreements, which specifically identified its customer spreadsheets as protected.

Summary

Allstate filed suit against two former insurance agents and another insurance agency for trade secret misappropriation under the federal Defend Trade Secrets Act (DTSA) and Massachusetts law. Allstate claimed that its former agents retained spreadsheets containing data about thousands of Allstate customers, including names, mailing addresses, phone numbers, email addresses, renewal dates, types of insurance policies and premiums paid by insurance customers.

The district court granted summary judgment for Allstate, ruling that the spreadsheets constituted trade secrets and finding the former agents liable for misappropriation. On appeal, the former agents argued the spreadsheets could not qualify as protectable trade secrets because they were acquired from publicly available third-party sources such as the Massachusetts Registry of Motor Vehicles and Lexis/Nexis.

In affirming the lower court, the First Circuit explained that “matters of public knowledge or of general knowledge in an industry” cannot generally constitute a trade secret. However, while “the publicly accessible nature” of a claimed trade secret should inform a court’s trade secret analysis, “it is not dispositive.” Ultimately, the court held that “the inclusion of some information in compilations which could have been obtained from public sources does not mean the compilations were not trade secrets, and that trade secrets may be found, even as to that information, when it would have been immensely difficult to collect and compile it in the form in which it appeared in the compilation.”

The court’s analysis placed particular emphasis on the fact that certain data in the spreadsheets, such as premium amounts, “would not have been known outside of Allstate” and “could only be recreated at immense difficulty.” Furthermore, the agents’ agreements with Allstate directly identified customer lists as confidential and trade secret information.

Key Takeaways

The First Circuit’s decision is consistent with other courts that treat compilations of otherwise publicly available information as trade secrets, provided that other elements of a trade secret are met. See, e.g., AvidAir Helicopter Supply, Inc. v. Rolls-Royce Corp., 663 F.3d 966 (8th Cir. 2011). Additionally, the ruling reinforces the benefit of identifying trade secrets in contracts, when possible. Although a contract does not by itself prove the existence of a trade secret, it can be particularly persuasive in demonstrating that a company places economic value in certain kinds of information.