Non-Compete and Non-Disclosure Agreement Litigation
In the modern business landscape, the protection of proprietary information and the retention of competitive advantages are paramount. In Ohio, these interests are primarily protected through restrictive covenants, such as non-compete agreements and non-disclosure agreements (NDAs). However, these agreements often become the subject of intense litigation when an employee departs or a business relationship dissolves.
Non-Compete Agreements: The “Reasonableness” Standard
In Ohio, non-compete agreements are not automatically enforceable. Instead, they are governed by a standard of "reasonableness" established by the Ohio Supreme Court in the landmark case of Raimonde v. Van Vlerah, 42 Ohio St.2d 21 (1975).
To be enforceable, a non-compete must meet three specific criteria:
● Protection of a Legitimate Interest: The restraint must be no broader than what is necessary to protect the employer's legitimate business interests (such as trade secrets or customer relationships).
● No Undue Hardship: The agreement must not impose an undue hardship on the former employee's ability to earn a living.
● No Harm to the Public: The restriction must not be injurious to the public interest.
Judicial Modification vs. Invalidation
Under the Raimonde decision, Ohio courts have the power to "blue-pencil" or modify an overly broad agreement to make it reasonable. However, recent trends, such as the decision in Kross Acquisition Co. v. Groundworks Ohio, LLC (2024), show that courts may choose to invalidate an entire agreement if it is found to be excessively restrictive, rather than attempting to fix it.
Non-Disclosure Agreements (NDAs) and Trade Secrets
Non-Disclosure Agreements (NDA) are primarily used to protect "trade secrets" under the Ohio Uniform Trade Secrets Act (OUTSA), R.C. 1333.61 et seq.
What Qualifies as a Trade Secret?
Under Ohio law, information qualifies as a trade secret if:
● It derives independent economic value from not being generally known or readily ascertainable.
● The owner has taken "reasonable measures" to maintain its secrecy.
In Hanneman Family Funeral Home v. Orians (2023), the Ohio Supreme Court clarified that information that is already public record or readily ascertainable cannot be protected as a trade secret, regardless of an NDA.
The “Dual-Track” Strategy: Contract vs. Statute
A major development for Ohio litigants came in Metron Nutraceuticals v. Cook (2024). The Sixth Circuit Court of Appeals clarified that a breach-of-contract claim based on an NDA is not preempted by OUTSA. This means a business can sue for both statutory trade secret misappropriation and breach of contract simultaneously—providing a powerful dual-track approach to litigation.
Common Defenses in Restrictive Covenant Litigation
Litigation regarding non-competes and NDAs often involves several key defenses, including:
● Lack of Consideration: For an agreement to be valid, the employee must receive something of value in exchange (e.g., a job offer or a promotion).
● Prior Breach by Employer: If the employer breached the employment contract first (e.g., failing to pay commissions), the restrictive covenant may be unenforceable.
● Overbreadth: Agreements that cover too much territory or last for too many years are frequently struck down or narrowed by the courts.
● Public Interest: If the enforcement of the agreement would limit the public's access to essential services (common in medical or specialized engineering fields), a court may refuse to enforce it.
How We Can Help
At Braden Blumenstiel Legal Advocates Group, LLC, we specialize in helping businesses and individuals navigate the high-stakes world of employment and commercial litigation. Whether you are drafting a new agreement to withstand judicial scrutiny or defending against an overreaching non-compete, we provide the dedicated advocacy needed to protect your future.
If you are involved in a dispute regarding a non-compete or non-disclosure agreement, contact us at 614-508-1677 or 1-888-343-9796 or fill out our online form today.
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