Michael D. Moberly May 30, 2008
The Ohio Supreme Court ruled (February, 2008) that the use of protected trade secret information by a former employee who had memorized it during his employment violated the state’s trade secret law. (Al Minor & Assoc., Inc. v. Martin, Slip Opinion No. 2008-Ohio-292).
The Court held that the use of trade secret information does not lose its character as a trade secret (under USTA) merely because a former employee memorized it rather than writing it down or copying it in some other tangible medium.
For professionals charged with protecting and monitoring trade secrets and other proprietary information and know how, this ruling draws attention to many issues, three of which are:
1. Elevates the necessity for literally unraveling the origins and ownership of ideas and initiatives as part of due diligence, especially mergers and acquisitions, venture capital investments in early stage companies, corporate-university research alliances, etc., in which intangible assets, intellectual property, proprietary know how and competitive advantages are always in play and part of the deal.
2. Elevates the importance of conducting thorough employee exit interviews, especially for employees who have access to and/or hold proprietary – competitive advantage information (trade secrets).
3. Elevates the importance of (credence given to) non-disclosure agreements and non-compete clauses in employment contracts insofar as ensuring those agreements are routinely reviewed and updtated with specific ‘follow-up’ procedures.
In summary, the Ohio Supreme Court said it is the information that is protected by the USTA, 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.
To be sure, this ruling will have significant impact on how we set about to ‘protect, preserve, and monitor the use and value of (valuable) proprietary information.