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Until recently, only one published case had been decided under the Arizona Trade Secrets Act. Tracer Research Corp. v. National Environmental Services Co., 843 F.Supp. 568 (D. Ariz. 1993), subsequent appeal, 42 F.3d 1292 (9^th Cir. 1994), cert. dismissed, 515 U.S. 1187 (1995). This case recognized that in determining whether a trade secret exists the court may consider; (1) the degree of secrecy surrounding the process both inside and outside the plaintiff¹s business; (2) the plaintiff¹s effort to develop the process and to preserve its secrecy; (3) the value of the information to the plaintiff and its competitors; and (4) the difficulty with which the information could be duplicated by others.

Prior to adoption of the Uniform Trade Secrets Act, Arizona courts had applied trade secret protection to a variety of information, ranging from customer lists (Prudential Insurance Company of America v. Pochiro, 153 Ariz. 368, 736 P.2d 1180 (App. 1987)) to the formula for a cleaning solution (Morton v. Rogers, 20 Ariz. Appeals 581, 514 P.2d 752 (1973)). Information disclosed through advertising material, published articles and speeches, plant tours, or an examination of the product itself is generally not protected. Motorola, Inc. v. Fairchild Camera & Instrument Corporation, 366 F.Supp. 1173 (D. Ariz. 1973). Employee covenants are often used to protect trade secrets from disclosure. See Valley Medical Specialists v. Farber, 298 Ariz. Adv. Rep. 34 (June 18, 1999).

In Enterprise Leasing Company of Phoenix v. Ehmke, 309 Ariz. Adv. Rep. 16 (December 2, 1999) the Court of Appeals held that Enterprise Leasing Company was entitled to an injunction against disclosure of financial records and other documents by its former employee Rich Ehmke. Mr. Ehmke had been employed by Enterprise Leasing Company for only eight months; however, he had access to financial records, operating plans, expansion plans and information concerning market strategy and training methods. His employment agreement contained non-competition and non-disclosure covenants.

When Mr. Ehmke left he took over thirty documents Enterprise Leasing Company considered proprietary. Shortly thereafter, he formed a rental car consulting firm in competition with Enterprise. Ultimately, he went to work for a competitor (Premium Car Rental) as VP of the Western U.S.

The Court held that the information taken by Mr. Ehmke was a trade secret. The definition of a trade secret is "expansive" and "may consist of a combination of elements even though each individual component may be a matter of common knowledge." Financial information "such as profit and loss figures, break even points and sales revenue" is entitled to trade secret protection "so long as there is no public disclosure." Therefore an injunction can prevent disclosure of this financial information for an indefinite period. In addition, the Enterprise customer service worksheet taken by Mr. Ehmke "reflects a substantial market research investment by Enterprise delineating several factors helpful to managing a successful branch office" and is also entitled to protection.

The court held that Enterprise made reasonable efforts to maintain the confidentiality of the information, including the use of a confidentiality provision in the employment agreement and employee policy handbook. "These measures demonstrate adequate safeguards to protect the financial documents and the worksheet."

The court recognized that trade secret law does not prevent a former employee from using general knowledge and skill on behalf of a new employer. The confidential information misappropriated by Mr. Ehmke, however, went beyond general knowledge in the industry. The court concluded Ehmke had notice of the confidentiality of the information and used improper means to misappropriate, disclose and utilize Enterprise¹s trade secrets in his own business endeavors.

By extending trade secret protection even to somewhat dated financial information, the Court of Appeals sends a clear message that trade secrets (especially when supported by confidentiality provisions in the employment contract) will be protected to encourage innovation and discourage unfair business practices.