Trade Secrets: It's All in Your Head
Most employees know that their employers will become --- how can we put this delicately? --- "annoyed" if written customer lists are used to woo away customers when the employment relationship ends. But what happens when a former employee does not physically take a written list, but can recreate all or part of it from memory?
That's the question recently considered by the Supreme Court of Ohio in Al Minor & Associates, Inc. v. Martin. The case was considered under both the Uniform Trade Secrets Act and another Ohio statute. The short answer is that memorized information can be the basis of a claim that a trade secret has been violated.
It's worth noting that New Jersey is among a small minority of states that has not adopted the Uniform Trade Secrets Act. New Jersey relies upon common law trade secret protection. So what's a trade secret in NJ? It's something that is (a) secret, (b) valuable, and (c) confers a competitive advantage in the marketplace. There's nothing in NJ's definition of a trade secret that would exempt memorized information from trade secret protection. One federal district judge recently assumed (without deciding the issue) that this would be the case.
It's also worth remembering that in NJ, customer lists of service businesses generally are protectable as trade secrets. Customer lists of manufacturing and retail business, on the other hand, generally are not. As with much of unfair competition law, however, the applicability of particular legal concepts is highly fact sensitive, and the wise business person will not rely upon broad "rules" for guidance in a specific situation.
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Non-competes Impermissible for In-house Lawyers
Non-compete agreements cannot restrict corporate in-house attorneys from subsequent employment. That's the recent ruling of the New Jersey Supreme Court Advisory Committee on Professional Ethics in its Opinion 708. While non-competes are generally enforceable in most business settings, they are invalid as to attorneys because they unduly limit the freedom of clients to select counsel of their choice. Non-competes also have been held to infringe upon a lawyer's professional autonomy. Now it is clear that they affect not just lawyers in traditional private practice, but also those who work for corporations.
The opinion is consistent with most state courts that have ruled on similar cases, so New Jersey is squarely with the majority on this issue.
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