Ohio Rules That Trade Secrets Can’t Be Memorized

Interesting ruling coming out of Ohio. The ruling is reported on by Forbes.com here.

Key excerpts:

“The Supreme Court of Ohio today ruled that use of protected trade secret information by a former employee who had memorized it during his employment violated the state’s trade secrets law.”

“…protected trade secret information does not lose its character as a trade secret under the Uniform Trade Secrets Act (UTSA), R.C. 1333.61(D), merely because a former employee memorized it rather than writing it down or copying it in some other tangible medium.”

“…the determination of whether a client list constitutes a trade secret pursuant to R.C. 1333.61(D) does not depend on whether it has been memorized by a former employee. … It is the information that is protected by the UTSA, regardless of the manner, mode, or form in which it is stored – whether on paper, in a computer, in one’s memory, or in any other medium.”

The facts are as follows:

“The case involved a dispute between Al Minor & Associates, a company providing third-party pension administration services to client companies, and a former employee, Robert Martin of Columbus. Martin, who worked for Minor as a pension analyst, was an at-will employee and was not bound by any formal non-competition or trade secrets agreement. Martin resigned in 2003 and opened his own pension analyst business. He began soliciting clients including a number of companies that he recalled from memory as being current or former clients of Minor. ”

It will be interesting to see how many jurisdictions follow this unanimous ruling of the Ohio Supreme Court.

I can see arguments on both sides. On one hand, it can be argued that an employee who has cultivated relationships with clients should have the right to contact those clients, if he can do so from memory, when he has left for another employer. On the other hand, there needs to be some reasonable protection for businesses when a former employee can contact a customer and have a competitive advantage because of the employee’s knowledge of the prices and terms the customer has with the former employer, even if derived from memory. Incidentally, California’s Uniform Trade Secrets Act reads similarly to the Ohio Act. I will have more to say on this subject later.

By the way, notice that this was yet another case of a former employee’s misappropriation of the trade secrets of his former employer. Food for thought.