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Keeping a (trade) secret: Your memory loss is required

On February 6, 2008, the Ohio Supreme Court unanimously held in Al Minor & Associates, Inc. v. Martin that a confidential client list does not lose its character as a trade secret merely because a former employee used his memory of the list rather than a document or some other tangible source.

In the Al Minor case, Robert Martin was hired as a pension analyst by Al Minor & Associates (AMA) in 1998. AMA is an actuarial firm that designs and administers retirement plans and employs several pension analysts who work with approximately 500 clients. Al Minor, Jr. founded AMA in 1983, serves as AMA’s president and sole shareholder, and developed AMA’s clientele, of which the firm maintains a confidential list. Minor did not require Martin to sign either an employment contract or a noncompete agreement.

In 2002, while still employed by AMA, Martin organized his own company with the purpose of providing the same type of services as AMA. In 2003, he resigned from AMA and, without taking any documents containing confidential client information, successfully solicited 15 AMA clients with information from his memory.

Upon learning of Martin’s competing business and the solicitation of AMA’s clients, AMA filed suit against him claiming that he had violated Ohio’s Trade Secrets Act by using confidential client information to solicit those clients. Martin asserted that a client list memorized by a former employee cannot be the basis of a trade secret violation and that a finding against him would overly restrict his right to compete in business against AMA. He also argued that AMA should not have the right to control the use of his memory and that AMA had the opportunity to protect its confidential information by way of an employment contract, but it did not do so.

In its decision, the Ohio Supreme Court rejected Martin’s arguments and held that Martin had misappropriated AMA’s client list in violation of the Uniform Trade Secrets Act (UTSA). The court noted that more than 40 states, including Ohio, have adopted the UTSA in substantially similar form, and the majority position is that memorized information can be the basis for a trade secret violation. The court further held that neither R.C. 1333.61(D) nor any other provision of the UTSA suggests that, for purposes of trade secret protection, the Ohio General Assembly intended to distinguish between information that has been recorded in some tangible form and information that has been memorized.

The court also evaluated the six-factor test for determining whether information constitutes a trade secret pursuant to R.C. 1333.61(D) adopted in State ex rel. The Plain Dealer v. Ohio Dep’t of Ins. (1997).

After its evaluation, the court held that nothing in that six-factor test indicates that the determination of whether a client list constitutes a trade secret depends on whether it was capable of being memorized or had been memorized.

Finally, it is important to note that the Al Minor decision did not impose liability carte blanche on every item memorized by a former employee. The court recognized the fairly obvious notion that every employee will have memories casually retained from the ordinary course of employment and cautioned that the UTSA does not apply to the use of memorized information that is not a trade secret pursuant to R.C. 1333.61(D).

  • Partner

    Phil is a partner and former co-chair of the Labor and Employment Department. He represents employers in defending against employment-related claims in both federal and state courts. He represents clients involving covenants not ...

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