"You’ll never work in this town again!" Retained memory is a trade secret.

Can workplace information retained in a person’s memory constitute a trade secret?  Until recently the answer was no, with courts applying trade secret protection to documents removed from an employer but not to those recreated from a former employee’s memory.  However, the Ohio Supreme Court recently reversed this rule in Al Minor & Assoc., Inc. v. Martin, holding that retained memory can constitute a trade secret deserving of protection.  The issue at stake was one of statutory interpretation, as the relevant provision defines a trade secret using words such as “information”, “procedure”, and “method” but does not distinguish between physical information and that reproduced from memory.

The decision is commendable on its face because there is a sound argument to be made that there should be no legal difference between two identical documents, one taken from an employer and the other exactly recreated from the memory of the employer’s document.  However, the decision engages important application and policy concerns worth discussing.

The Al Minor decision has moved the law away from a bright line test, whether the document was literally removed from the employer, to much less stable ground.  In cases of retained memory, courts will now have the unenviable task of determining on a case-by-case basis whether the information in question should rightly be considered a trade secret, or rather the personal abilities of an employee that should not be the subject of protection.  As Glahn and Shilling correctly note, “the knowledge and skills a former employee develops while employed are often so intertwined with the employer’s trade secret that it is difficult to differentiate between the secret and the knowledge and skills related to it.”[1]   Considering that the knowledge and skills people acquire are as varied as the jobs they perform, there is potential for an endless stream of litigation over the practices and nuances particular to each industry.

Any ruling in this area must strike a delicate balance between directly competing policy interests.  The protection of employers’ confidential business information necessarily runs against the ability of individuals to freely seek employment in the market.  Coupled with the doctrine of inevitable disclosure, this ruling provides a powerful tool for employers to seek injunctive relief against former employees seeking to work in the same industry.  In PepsiCo, Inc. v. Redmond , it was held that a claim of trade secret misappropriation may succeed if it can be demonstrated that the defendant’s new employment will inevitably lead him to rely on the plaintiff’s trade secrets. [2]  The Court noted that unless the defendant possessed an uncanny ability to compartmentalize information, he would necessarily make decisions by relying on his knowledge of trade secrets. [3]   Perhaps the Al Minor decision has swung the pendulum too far in favour of employers.  Usually an idle threat, the phrase “You’ll never work in this town again!” may have gained a whole new relevance.

[1] Glahn, Wilbur A. and Cameron G. Shilling. “The Cutting Edge of Trade Secrets–How Far Should the Law Go To Prevent Misappropriation by Memory and Inevitable Disclosure.” http://library.findlaw.com/2002/Dec/12/132434.html
[2] PepsiCo, Inc. v. Redmond, 54 F.3d 1262 (7th Cir. 1995).
[3] Ibid.