Employment and Labor Relations Lawyer & Attorney : Porter Wright's Employer Law Report : Employment Litigation, Non-Compete, Trade Secrets

In Ohio, courts have the discretion to redraw an overly broad non-competition agreement so that its restrictions are no greater than are needed to protect the employer's legitimate business interests. As a result, Ohio employers often cavalierly draft the terms of their employee non-competition agreements as broadly as possible, believing the worst case scenario is that a court will rein in and “re-draft” the terms if necessary to make them reasonable and enforceable. Unfortunately, a federal district court in Illinois and the Seventh Circuit court of appeals clearly were unwilling to endorse this somewhat common Ohio employment practice despite analyzing a non-competition agreement’s enforceability under Ohio law pursuant to the agreement’s choice of law provision.   

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In a unanimous decision debunking the common misunderstanding that former employees can use information they retain through memory (as opposed to information contained in materials pilfered from former employers) without violating trade secret law, the Ohio Supreme Court ruled that a company’s confidential customer list is a protected trade secret even if a former employee accesses it strictly from memory.

In Al Minor & Assoc., Inc. v. Martin, 2008-Ohio-292, Martin, a pension analyst, signed neither a non-competition nor a non-solicitation agreement during his employment with Al Minor. When he resigned to establish a competing business, Martin contacted and successfully solicited 15 clients using information that he memorized while working for Al Minor. Al Minor sued Martin for misappropriating its trade secret client information. Following trial, Martin was ordered to pay nearly $26,000 in damages to Al Minor, representing lost earnings from former clients successfully solicited by Martin. Although Martin appealed, the Franklin County Court of Appeals upheld the trial court’s decision. Martin then appealed to the Ohio Supreme Court where his arguments in support of his actions were once more rejected.

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If a Franklin County Court of Appeals decision is upheld, Ohio employers may reap the benefits of even greater protection against former employees who engage in competing business endeavors. For this reason, the Ohio Supreme Court’s ruling will be closely watched by employers and employees alike.

“In the absence of a no-compete agreement between an employer and its former employee, does the employee's compilation from memory and competitive use of a list of his former employer's customers constitute a violation of Ohio's Uniform Trade Secrets Act?” That is how the Ohio Supreme Court framed the issue pending before it in Al Minor & Associates, Inc. v. Robert E. Martin, a case in which the Court held oral argument on November 6, 2007. The case has been briefed and argued – all that awaits now is the Court’s decision.

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