Agreements Are Not Enough: Reasonable Efforts Needed

Agreements Are Not Enough: Reasonable Efforts Needed

By Amy L. DeLuca, Esq.

Many employers, including construction contractors and material suppliers, attempt to protect their business by having their employees sign non-competition, non-solicitation, non-disclosure, and/or confidentiality agreements. Recently, courts appear to be more closely scrutinizing such agreements and rendering rulings that are more advantageous to employees. To overcome this trend, employers have wisely started to focus on enforcing the confidentiality and trade secrets provisions of such agreements, rather than the general non-competition clauses. While cases such as these are always very fact specific, one point is clear: successful enforcement of confidentiality and trade secret provisions requires more than simply having the employee sign an agreement. The employer must make reasonable efforts to ensure the information is kept secret.

Under Ohio law, information is protected only if it is subject to “efforts that are reasonable under the circumstances to maintain its secrecy.” In PatientPoint Network Solutions, LLC v. Contextmedia, Inc., the Southern District of Ohio ruled that the employer failed to take the steps necessary to protect its trade secrets when it failed to have an employee sign a non-disclosure agreement until fourteen months after he started working for the company, there was no evidence other employees were required to sign confidentiality agreements and the company failed to make any written demand that the employee return company-issued electronics or other proprietary information for more than six months after his termination.

What this decision emphasizes is that employers must establish procedures and protocols to ensure that their proprietary information is actually protected. Evaluating who has access to such information and making sure those employees are subject to a confidentiality/non-disclosure agreement should be the first step.