A trade secrets plaintiff can now secure both a damages award for misappropriation of trade secrets and a permanent injunction to prevent further injury under Ohio’s version of the Uniform Trade Secret Act. In Litigation Management, Inc. v. Bourgeois, 2011 Ohio 2794 (June 9, 2011), the Court of Appeals for the Eighth Appellate District in Ohio (Cuyahoga County) has provided trade secret plaintiffs in Ohio with a powerful tool to protect their intellectual property. (For additional details on this case, I recommend the Trading Secrets Blog).
The plaintiff, LMI, provided litigation support specializing in analyzing medical records; it brought the case against several former employees who formed a competitor, Excelas. It appears that LMI discovered that its former employees had breached their non-competes and non-solicitation agreements after the expiration of those agreements (the opinion is less than clear on this point). As a result, LMI sued them and Excelas for money damages in the form of lost sales, arguing that the defendants misappropriated its pricing strategy and other trade secrets to secure those sales. At the close of evidence, the trial court found the agreements to be enforceable and enforced them in the “Greater Cleveland Metropolitan Area.” After the jury awarded damages for the lost sales in that geographic area, LMI then moved the trial court to enforce the agreements in the form of a permanent injunction. The trial court denied that request, reasoning that the plaintiff had already received an adequate remedy at law in the form of money damages and, therefore, an injunction was unnecessary.
The Eighth District Court of Appeals disagreed, noting that the damages award only remedied the plaintiff’s past damages, not its future damages. The Eighth District recognized that “injunctions concern the prevention of future harm, not compensation for, or punishment of, past harm” (Opinion at Para. 18). Without an injunction, the defendants would continue to have the benefit of the trade secrets post-trial and would continue to use them against the plaintiff.
In another noteworthy holding, the Eighth District found that the jury’s verdict created a rebuttable presumption of irreparable harm resulting from the loss of the proprietary information. As a result, it found that the defendant now bears the burden of proving that the injunction should not issue in this situation.
The take-away? This ruling greatly benefits a company which either discovers the misappropriation long after the misconduct has begun or could not secure an injunction at the outset of the case. Indeed, the Eighth District’s creation of a rebuttable presumption favoring a permanent injunction should provide that plaintiff with the ability to get that post-trial relief, a substantial weapon against the defendant found to have misappropriated trade secrets.