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Ohio State redacts details of Nationwide, Lids contracts, citing ‘trade secrets’

May 14, 2014

young.1693@osu.edu
The total and annual guaranteed minimum payments are some of the items redacted in the version of OSU's contract with Lids Sports Group sent to The Lantern. Credit: Screenshot of contract

The total and annual minimum guaranteed payments are some of the items redacted in the version of OSU’s contract with Lids Sports Group provided to The Lantern.
Credit: Screenshot of contract

Ohio State signed a pair of multimillion-dollar contracts in March, but unlike similar deals with industry titans Nike and Coca-Cola, the university isn’t releasing most of the financial details of the new agreements.

OSU entered a 10-year, $17.1 million contract with Columbus-based Nationwide Insurance March 1 that named the company the “official insurance sponsor for the university community.” Eleven days later, OSU signed another 10-year agreement, this time worth $12.05 million and with Indianapolis-based Hat World Inc., doing business as Lids Sports Group, which designated Lids the “official headwear retailer of OSU.”

Both sets of contracts – which were obtained by The Lantern through public records requests – spell out the respective agreements, setting limits for where Lids can operate and boundaries for how many mailings Nationwide can send OSU community members.

What is conspicuously missing, however, is the majority of the financial or even numerical details in each. The signing royalty, guaranteed annual minimum royalty and maximum number of mailings that can be sent are some of the items  redacted in the Nationwide contract. OSU’s records office blacked out the nonrefundable minimum guaranteed payment, renewal term and incentive and the amount Lids must spend on advertising each year in the Lids agreement.

OSU’s contract with Lids states neither party will disclose “any confidential or proprietary information,” including trade secrets, information related to business operations and strategies and information about pricing and marketing, for five years.

The Nationwide agreement includes a section on confidentiality as well, prohibiting both parties from disclosing information “specifically identified as confidential or proprietary.” It goes on to state the amount of royalties Nationwide is set to pay is considered confidential information.

When OSU sends public records requests via email, the sender typically includes the legal language that explains why and how the information is being kept from the public eye. OSU spokesman Gary Lewis provided roughly identical legal information in emails with both of the contracts.

One of the acts Lewis cited was R.C. 149.43(A)(1)(v) of the Ohio Public Records Act, which states public record means records kept by public offices, not including those records that are prohibited to be released by state or federal law.

According to Ohio Uniform Trade Secrets Act, R.C. 1333.61, trade secret records include information that has economic value by not being generally known or readily available to people who would benefit from knowing otherwise, and information that is “reasonable under the circumstances to maintain its secrecy.”

When asked why the redactions in the Nationwide and Lids contracts appeared to have been handled differently from other OSU private contracts, such as ones with Huntington Bank and Nike Inc., Lewis said the information redacted varies contract to contract.

“We perform our due diligence by reviewing all contracts for exempt trade secret information before release. The analysis is necessarily contract-specific because the terms of each contract are negotiated individually (that is, there is not a one-size-fits-all form contract),” Lewis said in an email Monday.

He added that releasing trade secrets without authorization is illegal.

“It constitutes ‘misappropriation,’ which is a violation of Ohio’s Uniform Trade Secrets Act. Contracts may also include business trade secrets of OSU that the university is permitted to protect under the law,” Lewis said.

Guy Rub, an assistant professor at OSU Moritz College of Law whose area of expertise is contracts, said there can be several reasons for keeping information secret. Because Rub had not looked through the contracts, he spoke in general terms about the incentives for redacting information.

“For example, minimum royalties, maybe they want to compete with a different institute and each one of them is offering different terms,” Rub said. “You want to have some competitive advantage over others.

“Also it could be in the interest of the other party in the contract, so Nationwide maybe doesn’t want everybody to know how much money they’re giving exactly or how much money they’re supposed to get, so it might be Nationwide’s request or Nationwide’s interest that Ohio State University is trying to protect.”

Rub said OSU might care about those details getting out for three reasons.

“Reason No. 1, the contract might say that they have to keep those secrets … if the contract says that, then by letting that information out, they are breaching, they are in breach of the contract, they can be sued for it,” he said. “Option No. 2, it might be in their best interest to keep it a secret because they might say, ‘I don’t want my competitors to have that information about me.’

“Option No. 3 is to say, even if it’s not protecting my interest and it’s protecting Nationwide’s interest, or wherever is the other party, then even if Nationwide didn’t put it in the contract, we want to keep our partner happy even if we are not contractually obliged to do so, so they will want to interact with us in the future.”

Rub said it’s common to see two organizations with a long-term relationship care for one another’s interests even if not contractually obliged.

“Keeping the other side happy is a good business practice,” he said.

OSU has another apparel deal as well – it was announced in November 2012 that OSU had entered a 10-year, $97 million agreement with two apparel and retail businesses, J. America Sportswear and Fanatics Inc., to exclusively produce and sell university apparel. The contract with J. America, which is based out of Webberville, Mich., is worth $85 million and is set to last 10 years, but OSU decided not to pursue the partnership with Fanatics Inc., and as such, no agreement with that company was finalized.

OSU is also party to contracts with companies including Huntington Bank, Nike, Coca-Cola Inc. and QIC Global Infrastructure. All of the contracts together are worth more than $800 million.

Rub said the contracts with Nationwide and Lids might have more and different information redacted than the other agreements because the companies might have requested it, whereas other companies didn’t.

“Maybe the other party asked for it now, Nationwide, whereas Nike didn’t ask in the past,” he said. “That’s an option.”


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