Plaintiff Ice Sculpture Designs, Inc. ("Ice Sculpture") moves for leave to enter a default judgment against the Defendants and for the entry of a permanent injunction against the Defendant.

Ice Sculpture is engaged in the designing, creating, marketing and selling of ice sculptures in the New York tri-state area.

Defendant C.E. Yoder ("Yoder") was employed by Ice Sculpture as a carver from 1998 until June 2005. As a carver, Yoder carved blocks of ice into ice sculptures.

On or about June 24, 2005, Yoder stopped showing up for work at Ice Sculpture. Yoder is alleged to have begun a business using the name Icebreakers. Ice Sculpture alleges Icebreakers is a competing business.

Ice Sculpture alleges that prior to leaving Yoder obtained access to its computer and obtained Ice Sculptor's customer list and financial information which it claims is confidential and proprietary. Ice Sculpture asserts this information is protected by a password.

Ice Sculpture also alleges the Yoder would not have needed this information in connection with his employment. Yoder did not have and was never provided with the password that gave access to Ice Sculpture's computer. Ice Sculpture does not know how or from whom Yoder obtained the password or access to this information.

Ice Sculpture claims Yoder began soliciting business for its customers. He also put out and disseminated promotional material for Icebreakers in which it is asserted that the ice sculptures actually created by Ice Sculpture were created by Icebreakers.

Ice Breakers began this action by filing a summons and complaint and by moving by order to show cause seeking a temporary restraining order and a preliminary injunction enjoining Yoder and Icebreakers from (1) soliciting business using information and records taken from Plaintiff, (2) distributing or disseminating advertising material representing that Ice Sculptures work was that of Yoder or Icebreakers, (3) distributing or disseminating any advertisement containing photographs or work done by or for Ice Sculpture and (4) distributing or disseminating any advertisements which represent work of the Ice Sculpture that of Yoder or Icebreakers.

The order to show cause was returnable before this Court on November 16, 2005 at 2:30 PM. Defendants did not appear in opposition to the order to show cause.

By order dated December 30, 2005, this Court granted a preliminary injunction enjoining the Defendants during the pendency of this action from (1) soliciting business using information or records taken from Plaintiff or using such information in any way; (2) distributing or disseminating advertising containing photographs of work done by or for the Plaintiff and (3) distributing or disseminating advertisements which indicated that Plaintiff's work was work of the Defendant.

The order further directed Yoder and Icebreakers to appear for a deposition on January 19, 2006 and produce certain material.

On January 9, 2006, Plaintiff filed an amended summons and amended complaint. The amended summons and amended complaint were served upon Yoder and Icebreakers on January 9, 2006. [*3]

Yoder appeared for deposition on January 19, 2006 as directed by this Court in its December 30, 2005 order.

After the deposition was held, Plaintiff's attorney and Yoder entered into negotiations regarding the settlement of this action. On April 7, 2006, Ice Sculpture's attorney forwarded a proposed settlement agreement and general release to Yoder. These documents have never been signed.

The amended complaint alleges nine causes of action. The first through seventh causes of action seek compensatory and punitive damages. The eighth and ninth causes of action seek a permanent injunction.

The eighth cause of action seeks to enjoin Defendants from (1) using Plaintiffs confidential information, (2) from making false statements that are damaging to Plaintiff, (3) to identify all parties to whom Defendant had disseminated false or misleading advertising or promotional material and (4) enjoining the Defendant from soliciting business from Plaintiff's customers for a period of two years.

The ninth cause of action seeks to enjoin Defendants from engaging in acts that violate General Business Law §349.

Ice Sculpture moves for leave to enter a default judgment. In the papers submitted in support of the motion, Plaintiff waives an inquest on its money damage causes of action. Ice Sculpture seeks only to have the provisions of the preliminary injunction made permanent.

CPLR 3215 permits a party to obtain a default judgment against a Defendant who defaults in appearance. An application for leave to enter a default judgment must be supported by proof of service of the summons and complaint, an affidavit made by a person with actual knowledge of the facts surrounding the claim and proof of the default. CPLR 3215(f). See, Siegel, New York Practice 4th §295. The party seeking a default judgment must establish the existence of a prima facie cause of action against the defaulting party. Joosten v. Gale, 129 AD2d 531 (1st Dept. 1987).

Yoder was duly served with the amended summons and complaint. His time to appear answer or move has expired and has not been extended. He is in default.

However, issues of fact exist regarding whether and to what extent the Court should make the terms of the preliminary injunction permanent.

A permanent injunction is a drastic remedy that will be issued only where Plaintiff demonstrates it will suffer irreparable harm in the absence of injunctive relief. Icy Splash Food & Beverage v. Henckel, 14 AD3d 595 (2nd Dept. 2005). Irreparable harm

means injury for which money damages would be insufficient. See, Klein, Wagner & Morris, v. Lawrence A. Klein, P.C., 186 AD2d 631 (2nd Dept.1992).

In the absence of a restrictive covenant, a former employee may establish a competing business unless trade secrets or fraudulent methods are used in the establishment of the [*4]competing business. NCN Company, Inc. v. Cavanagh, 215 AD2d 737 (2nd Dept. 1995); and Walter Karl, Inc. v. Wood, 137 AD2d 22 (1st Dept. 1988). One may establish a competing business before leaving one's current employment without breaching one's duty to one's current employer provided that the employee does not improperly use the employer's time, facilities or trade secrets. Wallack Freight Line, Inc. v. Next Day Express, Inc., 273 AD2d 462 (2nd Dept. 2000).

A former employee may solicit business from his or her former employer's customers through the use of the former employer's customer list unless the customer list is a trade secret or the former employee engaged in wrongful conduct such as taking or copying the employer's files or using confidential information. Eastern Business Systems, Inc. v. Specialty Business Solutions, LLC, 292 AD2d 336 (2nd Dept. 2002); and Amana Express International, Inc. v. Pier-Air International, Ltd., 211 AD2d 606 (2nd Dept. 1995). Likewise, trade secret protection will not attach to customer lists where the identity of such customers can be ascertained from outside sources unless the employee stole or memorized the customer list. WMW Machinery Co., Inc. v. Koerber AG, 240 AD2d 400 (2nd Dept. 1997).

In this case, the Court believes a hearing is required to determine whether Yoder Ice Sculpture's customer list is confidential information and whether Yoder misappropriated it.

A trade secret or confidential information includes a compilation of information which is used in one's business and which gives the possessor of the information a competitive advantage over one's competitor's who do not possess this information. Ashland Management Inc. v. Janien, 82 NY2d 395 (1993); and Eagle Comtronics, Inc. v. Pico, Inc., 89 AD2d 803, (4th Dept. 1982). In determining whether information is a trade secret, the Court should consider:

"(1) the extent to which the information is known outside of [the] business;

(2) the extent to which it is known by employees and others involved in

[the] business; (3) the extent of measures taken by [the business] to

guard the secrecy of the information; (4) the value of the information

to [the business] and [its] competitors; (5) the amount of effort and money

expended by [the business] in developing the information; (6) the ease or

difficulty with which the information could be properly acquired or

duplicated by others" Restatement of Torts, §757, comment b.

See also, Ashland Management, Inc. v. Janien, supra; and Eagle Comtronics, Inc. v. Pico, Inc., supra.

Ice Sculpture concedes that the entities that would use ice sculptures, such as

caterers or trade shows, are well known. Ice Sculpture asserts its customer list should be considered confidential because it contains the names of the contact person at its customers. The names of the contact persons would not be readily known or publicly available.

Ice Sculpture also asserts its customer list is confidential because it is kept on a computer and protected by a password. The fact that the information is maintained on a computer with password protection does not conclusively establish the material is [*5]confidential. See, Hair Say, Ltd. v. Salon Opus, Inc., 6 Misc 3d 1041(A) (Sup.Ct. Nassau Co. 2005).

The real issue, which is not properly addressed in the papers, is what efforts did Ice Sculpture take to keep its customer list and the information contained therein secret. Ice Sculpture does not indicate how many employees it had when Yoder was in its employ, how many had knowledge of the password or how many had access to the computer. Ice Sculpture also does not indicate whether copies of its customer list were maintained in print form or who had access to those lists. Ice Sculpture does not indicate to what extent the names of its customers or the other information contained in the customer list was generally known by its employees. Most importantly, Ice Sculpture does not establish that Yoder actually had or used Ice Sculpture's customer list or pricing information while in its employ.

The allegations in the amended complaint and the affidavit submitted in support of the motion for a preliminary injunction upon which Ice Sculpture relied allege only "upon information and belief" that Yoder possessed and used the customer list and pricing information.

Although Yoder did not appear in this action, he did appear for deposition January 19, 2006. Ice Sculpture did not attach any of the transcript of Yoder's deposition in support of this motion. It is logical to assure that Yoder was questioned about his access to and possession of Ice Sculpture customer list and pricing information via computer or otherwise. The absence of Yoder's deposition transcript or, at least, relevant portions thereof is problematic.

The issue of whether Yoder misappropriated this information is largely dependent upon the effort Ice Sculpture made to safeguard it.

Before the Court permanently enjoins Yoder from using such information, Ice Sculpture is required to establish the Yoder actually possesses that information it seeks to enjoin him from using.

Yoder, however, should be permanently enjoined from distributing or disseminating any advertising which contains or represents that work of Ice Sculpture is work of Yoder or Icebreakers. The ice sculptures created by Yoder during his employment with Ice Sculpture remain the property of Ice Sculpture. See, Cahill v. Regan, 4 AD2d 328 (2nd Dept. 1957), aff'd., 5 NY2d 292 (1959). Yoder and Icebreakers were enjoined from engaging in this activity by the preliminary injunction. The provisions of the preliminary injunction shall remain in full force and effect pending the hearing and determination of the other issues raised.

Additionally, Plaintiffs name Icebreakers as a Defendant in this action. Plaintiffs have never established what type of business entity Icebreakers is. In order to issue an properly enforceable injunction, the Court must be advised of whether Icebreakers is a corporation, limited liability company, an assumed name of Yoder or otherwise. [*6]

Accordingly, it is,

ORDERED, that Plaintiff's motion for leave to enter a default judgment against the Defendants is granted to the extent of setting this matter down for a hearing on March 15, 2007 at 9:30 a.m to determine the extent to which the court should issue a permanent injunction; and it is further,

ORDERED, that counsel for the Plaintiff shall serve upon the Defendants by certified mail, return receipt requested and regular mail with certificate of mailing and file with the Clerk of the Court a copy of this Order, a Notice of Inquest and Note of issue and pay all of the appropriate fees for the filing thereof on or before February 28, 2007.

This constitutes the decision and Order of the Court.

Dated: Mineola, NY____________________________

February 5, 2007Hon. LEONARD B. AUSTIN, J.S.C.