Fred Graces violated the Georgia Trade Secret Act of 1990 by acquiring confidential client information and financial data through improper means.

In Georgia, the Georgia Trade Secret Act of 1990 specifies that in order to claim misappropriation of trade secrets, the plaintiff must prove that they possessed a trade secret and that the opposing party misappropriated it. This information is detailed in Ga. Code Ann. § 10-1-760. (Penalty Kick Mgmt. v. Coca-Cola Co., 164 F. Supp. 2d 1376 (N.D. Ga. 2001)).

A. Spotless Auto's client and pricing list constitutes a trade secret because it is not commonly known and has economic value from not being generally known to the public, and Spotless Auto makes reasonable efforts to keep the information secret.

Trade secrets are defined as "information, without regard to form, including, but not limited to ... financial data ... or a list of actual or potential customers or suppliers which is not commonly known or available to the public and which information: (a) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy." Ga. Code Ann. § 10-1-761 (4).

Spotless Auto's customer list and financial data have economic value that is not commonly known to the public. This satisfies the first element that must be established to prove that the information is a trade secret, as per Ga. Code Ann. § 10-1-761 (4)(A).

Tangible customer and supplier lists belong to the employer and are protected as trade secrets, per Degiorgio v. Megabyte Int'l, 468 S.E. 2d 367, 369 (Ga. 1996). However, knowledge about customer information that employees hold is not the property of the employer, per Avnet, Inc. v. Wyle Laboratories, 437 S.E. 2d 302, 304 (Ga. 1993). Furthermore, a customer list that is readily available by other means may not be considered a trade secret, as per Leo Publ’ns v. Reid, 458 S.E. 2d 651 (Ga. 1995).

In Degiorgio v. Megabyte Int'l, a former employee sent a one-page fax with a list of the company's customers and vendors to their competitor, and the court held that the tangible list was not readily ascertainable from any other source and thus warranted protection as a trade secret. However, in Avnet, former employees went to work for a competitor and took with them the knowledge they had about their former business's practices, patterns, client identities and information, suppliers' identity, and financial data. The court held that the information was not a trade secret as knowledge about customer information is not the property of the employer.

The protection of customer lists, suppliers, and financial information is essential as a trade secret. Tangible lists, such as what was seen in the Degiorgio court case, require protection from any unauthorized use. The court in Degorgio held that tangible lists that cannot be easily obtained elsewhere are eligible for protection under trade secret laws. In the same way, Mr. Graves sent an email from his workplace account to his personal email containing the company's customer database and pricing database, making it likely that the information will be deemed confidential and eligible for protection under trade secret laws.

On the other hand, an employee's acquired knowledge of their employer's business practices is not eligible for protection. In Avnet, former employees left with knowledge of the business's clients, practices, and financial information. The court didn't protect that knowledge since it belonged to the former employees and not the employer.  Mr. Graves sent himself copies of the customer and pricing lists rather than his knowledge about the company. Hence, it is unlikely the court will see this case like Avnet.

Regarding customer lists, if they can be obtained easily by proper means, they won't merit a trade secret.  The Leo court case compiled a list of advertising clients, their contact information, products, services, and pricing information. The court held that the list was easily obtainable from phone directories, internet sources, and expert advice. However, Spotless Auto's customer list and financial data were kept in a secure database and inaccessible through proper means.

Finally, reasonable efforts to maintain secrecy must be established for a plaintiff's claim to be valid. Maintaining confidentiality is implied in the employment contract, and confidentiality agreements are not always necessary. A court might consider certain factors, such as password protection and access limitations, when determining reasonable precautions. In the Bacon case, the business readily allowed access to customer lists, posing a threat to confidentiality as any employee could gain access. Similarly, in the current case, it's unlikely that password protection and access limitations were enforced by the business to maintain confidentiality.

In the case of an employer taking reasonable measures to maintain confidentiality, the lack of an explicit confidentiality agreement would not matter, as it is assumed that employees will not reveal trade secrets as part of their employment contract. This interpretation was upheld in the case of Avnet, where a former employee obtained lists containing information on actual customers through the employer's business records. The employer had required employees with access to these records to sign confidentiality agreements, demonstrating that reasonable efforts had been made to keep the information secret.

To determine reasonable precautions, a court may consider various factors, such as password restrictions and limitations on access to confidential information. In Bacon, employees had easy access to customer lists on computers that were not password protected, rendering the precautions taken inadequate. However, Spotless Auto employs password and username protections on their databases, and restricts access to only certain employees in designated areas. Consequently, a court may view Spotless Auto's measures more favorably than those taken in Bacon.

Merely instructing employees to maintain confidentiality without taking further action may not suffice. In Smith, the employer only gave verbal instructions to keep certain information confidential, which the court deemed insufficient. Spotless Auto, on the other hand, instructs employees on the confidentiality of client and pricing information during their hiring process and has a confidentiality clause in their employee handbook, indicating that adequate measures have been taken to maintain secrecy.

Even without an explicit confidentiality agreement, if an employer can demonstrate that they have taken reasonable measures to maintain secrecy, an employee who divulges trade secrets to competitors violates their implied employment contract. Spotless Auto limits employee access to databases and has confidentiality measures in place, even though they do not require employees to sign confidentiality agreements. A court is likely to recognize the reasonable efforts taken by Spotless Auto.

Overall, it is clear that Spotless Auto has taken reasonable precautions to maintain the secrecy of their customer and pricing lists, with limited employee access to databases, password protection, and confidentiality policies in place. As this information holds economic value and is not widely known, it constitutes a trade secret. Finally, Mr. Graves' acquisition of this information through improper means breached his duty to maintain it a secret, and therefore he misappropriated it.

Acquiring confidential information through improper means is one way of misappropriating it. Improper means include breaching or inducing a breach of a confidential relationship or other duty to maintain secrecy or limit use, through electronic or other means (Ga. Code Ann. § 10-1-761 (1)). If an employer makes reasonable efforts to maintain secrecy and an employee takes information generated by the employer, it could be seen as an improper act (Avnet, 437 S.E. 2d at 303). Similarly, an employee has a duty not to reveal trade secrets to a competitor, even in the absence of an express agreement (Am. Bldgs. Co. v. Pascoe Bldg. Sys., 392 S.E. 2d 860,864 (Ga. 1993)). However, an employee is allowed to use information concerning the business that is retained in their memory (Avnet, 437 S.E. 2d at 305).

In Avnet, a former employee obtained a list of customer information from their former employers, which was considered as improper sharing of the confidential information generated by the employer (Avnet, 437 S.E. 2d at 303). An employee has a duty to not reveal trade secrets to competitors, even in the absence of an express agreement (Am. Bldgs., 392 S.E. 2d at 864). In Am. Bldgs., former employees were given the responsibility to work for a competitor with knowledge of confidential information that was not allowed to be shared regarding the physical features of their former employer’s products (Id.).

An employee has the right to utilize the information retained in their memory, as per Avnet (437 S.E. 2d at 305). In Avnet, a former employer used a list of the former employer’s customers, business practices, and financial data, which was considered as the information retained in the employee's memory (Id at 303). While the court held that the information was not the personal knowledge of the employee because the lists were tangible. For determining the improper means, courts look at the source of information obtained as per Avnet (437 S.E. 2d at 305).

Furthermore, an employee has a responsibility to the employer when it comes to not divulging trade secrets. In Am. Bldgs., former employees went to Auto Tech with knowledge of Spotless Auto’s customers and pricing schemes. Additionally, Spotless Auto’s handbook includes a confidentiality clause emphasizing non-disclosure of confidential information without express written consent, which Mr. Graves, the employee in question, had agreed to adhere to. This security protocol was the same as in Am. Bldgs where a court held that an employee may not reveal trade secrets.

Lastly, an employee has the right to use information retained in their memory about their former employer. However, as observed in Avnet, if an employee uses the information retrieved from tangible lists rather than their personal memory, it could be considered an act of misappropriation (437 S.E. 2d at 305). In this case, Mr. Graves' use of Spotless Auto’s customers and financial data in tangible lists would likely be seen as an improper acquisition of confidential information.

In summary, it can be deduced that Mr. Graves breached the Georgia Trade Secret Act of 1990 as he illicitly procured vital client data and financial information from Spotless Auto.