Misappropriation of Trade Secrets

           What do you do when you believe that a former has taken confidential information and has now gone to work for a competitor?  Many employees have employment agreements that contain covenants not to compete.  However they are seen as a restraint on trade and are disfavored by the Courts.  Ohio has adopted the Uniform Trade Secrets Act.  This allows the Court to restrain unfair competition resulting from the theft of trade secrets.

The Uniform Trade Secrets Act defines trade secrets at R.C. 133.61(D).  Trade secret is defined as information, including the whole or any portion or phase of any scientific or technical information, design, process, procedure, formula, pattern, compilation, program, device, method, technique, or improvement, or any business information or plans, financial information, or listing of names, addresses, or telephone numbers, that satisfies both of the following: 
(1) It derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use.
(2) It is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

             Many commentators and judicial opinions discuss the difficult task of demonstrating that the New Employer either knew that the trade secrets were misappropriated, or that the New Employer used the trade secrets.  An equally difficult task is demonstrating damages caused by the misappropriated trade secrets.

            After a four day jury trial the decision was handed down that the employee was exposed to trade secrets, that the employee misappropriated trade secrets, but that the New Employer was not liable under the Uniform Trade Secrets Act.  It is believed that the Former Employer was unable to persuade the jury that the New Employer knew that the information was misappropriated, that the New Employer used the misappropriated trade secrets, or that there was an economic benefit to the New Employer.  The Former Employer apparently was left without a recourse for the misappropriation of its trade secrets.

            The jury did find the Former Employee had violated the Uniform Trade Secrets Act by misappropriating trade secrets of the Former Employer.  The Court thereafter conducted a hearing on the appropriate remedy.  The argument made by the Former Employer was that damages are awarded to remedy past harms, but injunctive relief is granted in order to prevent future harms.  This actual or threatened harm caused by misappropriation of trade secrets may be enjoined pursuant to R.C. 1333.62.  Case law supporting this proposition states that when a trade secret is misappropriated, a threat of actual harm is presumed.  Proctor & Gamble Co. v. Stoneham (2000), 140 Ohio App.3d 260. 

             Ohio appellate decisions also supported the issuance of injunctive relief against the employee even though the New Employer was not found liable.  In Avery Dennison Corporation vs. Transact Technologies, Inc. (Ohio App. 11th Dist.), 2013-Ohio-4551, the trial court granted injunctive relief against the former employee, but found that the Plaintiff did not establish use of the trade secrets by Defendant new current employer.  In Columbus Steel Castings Co. v. Alliance Castings Co., L.L.C. (Ohio App. 10th Dist.), 2011-Ohio-6826, the trial court granted injunctive relief after the jury found a misappropriation of trade secrets, but awarded zero damages to the former employer. 

              In this case, the Former Employer was awarded injunctive relief against the employee.  The employee is restrained from engaging in the industrial waste brokerage business with Mahoning County, Ohio for a period of 18 months.  In addition, the employee may not communicate in any fashion with the Former Employer's customers regarding the waste brokering business for a period of 6 months.  The Mahoning County Court of Common Pleas rendered the injunctive relief in Case No. 2014 CV 1896 Poseidon Environmental Services, Inc. vs. Nu Way Industrial Waste Management, LLC.