Intellectual Property Law

Trade Secrets Can Be All In Your Mind

By Sheppard Mullin

In Al Minor & Associates, Inc. v. Martin, 117 Ohio St.3d 58, 2008-Ohio-292, the Ohio Supreme Court recently held that memorizing information, including specifically client lists, constitutes trade secret misappropriation. The court found that neither the Uniform Trade Secret Act nor the Ohio legislature "intended to distinguish between information that has been reduced to some tangible form and some information that has been memorized."

In this case, the defendant, while still an employee of plaintiff, organized a competing business. When he resigned, he did not take any paper or electronic documents, but he did apparently memorize portions of plaintiff's customer lists. Ultimately, defendant successfully solicited 15 customers away from plaintiff. Plaintiff sued for trade secret misappropriation and was awarded judgment in the amount of $25,000.

The Ohio Supreme Court upheld the judgment, explaining that" "Information that constitutes a trade secret . . . does not lose its character as a trade secret if it has been memorized. 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."

While it is premature to tell whether this case signals the beginning of a new nationwide trend, this decision should give companies pause regarding both: (a) what to do when they hire new employees from competing companies; and (b) what to do when prior employees leave to work for a competitor.

Full post as published by Intellectual Property Law on April 29, 2008 (boomark / email).