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.
The court of appeals held that competitive use of a former employer’s trade secret – in this case, what is being called a “client list” – in subsequent employment was a misappropriation of that trade secret whether taken from a written document or from memory. The court, however, certified that its ruling was in conflict with a decision of the Cuyahoga County Court of Appeals in a 1985 case, Michael Shore & Co. v. Greenwald. The Supreme Court agreed to resolve this conflict by accepting the appeal of the Martin case.
The case arose because Mr. Martin, who had no non-competition agreement withAl Minor & Associates (AMA), started his own competitive company and began soliciting some of his former clients. Nothing in the court of appeals’ decision suggests that Mr. Martin did anything other than use his recollection of the clients with whom he worked at AMA – as opposed to printed client lists or e-mail address books – to get his new business up and running. As such, AMA’s claim that the mere identity of its clients constitutes a trade secret seems a bit far fetched, but the court of appeals disagreed, creating what in most cases would be a non-solicitation prohibition of an indefinite term. Because AMA was seeking only damages and not injunctive relief, however, the court of appeals declined to address this issue.
A lot is riding on the outcome. It seems that the Ohio Supreme Court must hold that trade secrets are deserving of protection whether the former employee copied documents, captured the trade secrets on a zip drive, or memorized them. Otherwise, highly confidential information would be subject to what, in essence, is theft simply because there was no actual copying involved. On the other hand, a ruling in favor of AMA easily could open the door to the creation of de facto non-competition/non-solicitation agreements for which neither employers nor employees bargained. We’ll keep an eye on this matter and let you know when a decision is released.