The Supreme Court of Ohio unanimously ruled last week that a former employee's use of memorized trade secret information violates Ohio's Trade Secrets Act. This ruling, in Al Minor & Associates, Inc. v. Martin, confirms that trade secret information is protected by Ohio's Trade Secrets Act, regardless of the manner in which it is stored – whether on paper, in a computer, in one's memory or in any other medium.
The former employee in this case had worked without a written employment contract or noncompete agreement as a pension analyst for an actuarial firm. After forming his own company, he resigned his employment and, without taking any documents containing confidential client information, successfully solicited some of his former firm's clients using client information he memorized. The actuarial firm, which maintained a confidential client list, claimed that the former employee had violated Ohio's Trade Secrets Act by using confidential client information to solicit clients.
The lower courts, which ruled in favor of the actuarial firm, determined that the firm's client list qualified as a protected trade secret after considering Ohio's six-factor test: (1) the extent to which the information is known outside the business; (2) the extent to which it is known inside the business; (3) the precautions taken to guard the secrecy of the information; (4) the savings effected and the value in having the information as against competitors; (5) the amount of effort or money expended in obtaining and developing the information; and (6) the amount of time and expense it would take for others to acquire and duplicate the information. The Supreme Court of Ohio accepted this determination and limited its review to whether the memorized nature of the client list affected the trade secret status of this information.
After examining statutory language, the legislature's intent and case law from other states, the Supreme Court concluded that trade secret information does not lose its character as a trade secret simply because it has been memorized. The Court noted that this is the majority view among the more than 40 other states that, like Ohio, have adopted the Uniform Trade Secrets Act. Based on this analysis, the Court concluded that the former employee's use of a memorized client list constituted a trade secret violation of Ohio's Trade Secrets Act.
Although the decision in Al Minor & Associates, Inc. v. Martin recognizes that the protection of Ohio's Trade Secrets Act extends to memorized trade secrets, employers should not have a false sense of security or be lulled into complacency in protecting trade secrets. It remains important to identify confidential information and to maximize protection of this information through documentation, appropriate policies that protect confidentiality and, as needed, noncompete, confidentiality and nonsolicitation agreements. Employers should protect themselves when hiring new employees from using trade secrets, memorized or otherwise, that belong to their new employees' former companies.