Memorizing a company’s trade secrets is as wrong as stealing a box of confidential documents from the office or copying them on a computer disk for personal use.
That’s what the Ohio Supreme Court recently held in a case that labor and employment attorneys believe will give employers a further boost in protecting trade secrets.
The ruling also comes at a crucial time, noted lawyers, who are expecting a rise in trade secret litigation as the economy dips and leaves company secrets more vulnerable to theft by the unemployed.
In the Ohio case, a pension analyst was accused of memorizing his employer’s client list and taking 15 clients with him when he left his job to start his own company.
The employer � a firm that designs and administers pension plans � claimed that the employee’s action was a trade secret violation. The employee held that the information tucked away in his head was not protected by the state’s trade secret law. He argued further that he had never signed any noncompete or nondisclosure agreements when he left the business.
The court sided with the employer, holding that a trade secret is a trade secret � “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.” Al Minor & Assoc. v. Martin, No 2008-292 (Ohio).
“This comes at a beneficial time � at least for employers. It gives them one more arrow in their quiver to protect their intellectual property rights,” said Theodore Shiells, a trade secrets litigator at the Carr IP law firm in Dallas.
Barry A. Waller of Fry, Waller & McCann in Columbus, Ohio, who represented the employer in Al Minor, said his case involved one simple theory.
“If someone memorized the secret formula for Coca-Cola, and went out and opened up a plant, I certainly believe the courts would stop it,” said Waller, who made that argument before the Ohio Supreme Court. “The client list in this case was determined to be a trade secret, and it was entitled to full protection under the Uniform Trade Secret Act.”
The employee’s attorney, Samuel Lillard of the Columbus office of Harrisburg, Pa.-based McNees Wallace & Nurick, said his client never stole anything, bribed anyone or engaged in any culpable conduct.
“He was simply trying to start his own business. He didn’t do anything wrong, ” said Lillard, noting that his client took nothing physical with him when he left his job. “ He even left his Rolodex at the business to avoid any impropriety. He left with nothing but his brain, and they sued him because he contacted customers using information in his brain.”
Lillard fears the ruling will have a chilling effect on employees.
“When you say his memory is a trade secret, you’re restricting his ability to compete,” Lillard said. “Our country has always recognized that the apprentice goes and works with the master, and at some point he quits and starts his own business. And going out and immediately competing with everyone else, including the former employer, is recognized. And that’s all he did.”