Is the list of downline distributors a trade secret
Posted: Wed Apr 23, 2025 6:04 am
It is common for MLMs to declare downline distributor lists to be trade secrets, thereby prohibiting their use for purposes other than the company's business. If the information is truly a trade secret, a court will prohibit third parties from using it.
However, simply declaring the information to be a trade secret is not enough to make the downline distributor list subject to trade secret protection. The list must meet certain requirements.
Although state laws vary in their requirements for determining viber data the protection of trade secrets, most states follow the Model Trade Secrets Act, which defines a trade secret as:
Information that …
(i) provides an independent economic benefit, actual or potential, from being generally unknown to and not readily and reasonably obtainable by others who could benefit economically from its disclosure or use, and
(ii) is the subject of efforts reasonable under the circumstances to maintain its secrecy.
Uniform Trade Secrets Act.
The downline list obviously has economic value to the MLM company’s competitors because it can be used as a list of potential customers and experienced salespeople. But that fact alone is not sufficient to classify the information as a secret. Two other key questions arise
However, simply declaring the information to be a trade secret is not enough to make the downline distributor list subject to trade secret protection. The list must meet certain requirements.
Although state laws vary in their requirements for determining viber data the protection of trade secrets, most states follow the Model Trade Secrets Act, which defines a trade secret as:
Information that …
(i) provides an independent economic benefit, actual or potential, from being generally unknown to and not readily and reasonably obtainable by others who could benefit economically from its disclosure or use, and
(ii) is the subject of efforts reasonable under the circumstances to maintain its secrecy.
Uniform Trade Secrets Act.
The downline list obviously has economic value to the MLM company’s competitors because it can be used as a list of potential customers and experienced salespeople. But that fact alone is not sufficient to classify the information as a secret. Two other key questions arise