An FDI company terminates its southern regional distributor for missing targets. Three weeks later, its sales team learns that many large customers received pitches from that same former distributor, now acting for a competitor, at prices lower by exactly the discount margin the maker once applied to each account. The sales director asks: can this be stopped, is a customer list really a trade secret, and how are damages claimed?
Governing legal framework
A customer list counts as a trade secret when it meets Article 84 of the IP Law (consolidated text 67/VBHN-VPQH 2026): not common knowledge, conferring a business advantage, and kept by the owner under necessary measures. A list of mere publicly searchable company names is weak; a list with decision-maker contacts, agreed prices, credit limits and purchase history is information accumulated from investment with clear value. Using that list to pitch for a competitor infringes the trade secret under Article 127 and is unfair competition under Article 45(3) of the Competition Law 23/2018/QH14. Damages, contractual or not, follow the Civil Code 2015: actual loss, lost profits and reasonable costs of prevention and remediation.
Applying the rules in practice
The legal battle sits on two proof questions. First, did the maker really treat the list as secret: was the customer file access-controlled, marked confidential, handed to the distributor under a confidentiality clause and reclaimed at termination — if it once circulated by unconditional email, the secrecy argument collapses. Second, did the former distributor use that very list: the pattern of undercutting by exactly each account discount margin, an approach sequence matching the list, and pitch documents containing data existing only in the maker system are strong circumstantial evidence. So the first step is not a threatening letter, but fixing evidence through customers and pitch materials, before the other side erases traces after being warned.
On damages, the maker should pick a main front: a civil suit at the court of the former distributor residence or where the loss occurred, seeking cessation, destruction of list copies and compensation; in parallel, a complaint to the competition authority for administrative sanction under Decree 75/2019/ND-CP can pressure a quick stop. Loss is computed on proven lost sales at taken customers multiplied by the actual profit margin, plus reasonable investigation and legal costs. If the old distribution contract pre-agreed a damages amount for misuse of customer data, recovery is far simpler than proving loss from scratch.
Recommended sequence of actions
- Quietly fix evidence first: pitch documents, emails, confirmations from approached customers, pricing patterns.
- Reconcile internally: the list version handed over, the confidentiality clause and the termination return record.
- Send a cessation and copy-destruction demand invoking Article 127 of the IP Law and the contract clause.
- File the civil damages suit, plus a competition complaint if administrative pressure is needed; meanwhile the sales team defends key accounts.
FAQs
What can be done when a former distributor uses our customer list to pitch customers?
Start by fixing evidence before any confrontation: ask customers to keep the former distributor quotations and pitch emails, and record how the approach pattern matches the handed-over list. Then send a formal demand to stop using the list and destroy copies, invoking Article 127 of the IP Law, the confidentiality clause of the terminated distribution agreement and Article 45(3) of the Competition Law 23/2018. If they do not stop, sue in court for cessation and damages, and optionally file a parallel competition complaint for administrative sanction.
Is a customer list treated as a trade secret?
Conditionally yes. A list is protected when it meets Article 84 of the IP Law: not easily obtainable public information, conferring a business advantage, and kept by the owner with necessary measures such as access control, confidential marking and handover under a confidentiality duty. A list with agreed prices, credit limits, decision-makers and transaction history almost always qualifies; a list of mere names from a public portal does not. A court looks at how the company treated the list throughout, not only at assertions made once a dispute erupts.
How are damages calculated?
Under the Civil Code 2015, damages cover actual loss and lost profit: in practice, lost sales at customers taken by the former distributor over the provable period, multiplied by the maker actual gross margin for that customer group, plus reasonable prevention costs such as investigation and counsel fees. If the distribution contract pre-agreed a fixed amount for post-termination use of customer data, that agreed amount applies instead of item-by-item proof. The maker should prepare per-customer sales ledgers so the court has a basis for computation.
This article has been quality-reviewed by the FLAW AI Legal Council