Case Title: Am. Chem. Soc'y v. Leadscope, Inc.

Citation: 2012-Ohio-4193

Docket Number: 2010-1335

State: ohio

Court: Ohio Supreme Court

Date: 2012-09-18T00:00:00Z

Document:
[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
Am. Chem. Soc. v. Leadscope, Inc., Slip Opinion No. 2012-Ohio-4193.] 
 
 
 
NOTICE 
This slip opinion is subject to formal revision before it is published in 
an advance sheet of the Ohio Official Reports.  Readers are requested 
to promptly notify the Reporter of Decisions, Supreme Court of Ohio, 
65 South Front Street, Columbus, Ohio 43215, of any typographical or 
other formal errors in the opinion, in order that corrections may be 
made before the opinion is published. 
 
SLIP OPINION NO. 2012-OHIO-4193 
AMERICAN CHEMICAL SOCIETY, APPELLANT, v. LEADSCOPE, INC., ET AL., 
APPELLEES. 
[Until this opinion appears in the Ohio Official Reports advance sheets, 
it may be cited as Am. Chem. Soc. v. Leadscope, Inc., 
Slip Opinion No. 2012-Ohio-4193.] 
Unfair competition—An unfair-competition claim based on legal action must 
show both that the litigation was objectively baseless and that it was 
intended to injure the plaintiff’s ability to be competitive, but verdict for 
Leadscope on this claim stands—Defamation—As a matter of law, 
American Chemical Society did not defame Leadscope and its 
employees—Judgment upholding defamation verdict reversed. 
(No. 2010-1335—Submitted September 7, 2011—Decided  
September 18, 2012.) 
APPEAL from the Court of Appeals for Franklin County,  
No. 08AP-1026, 2010-Ohio-2725. 
__________________ 
 
SUPREME COURT OF OHIO 
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SYLLABUS OF THE COURT 
1.  To successfully establish an unfair competition claim based upon legal action, 
a party must show that the legal action is objectively baseless and that the 
opposing party had the subjective intent to injure the party’s ability to be 
competitive. 
2.  In determining whether a statement is defamatory as a matter of law, a court 
must review the totality of the circumstances and read the statement in the 
context of the entire publication to determine whether a reasonable reader 
would interpret it as defamatory. 
3.  A client is vicariously liable for its attorney’s defamatory statements only if 
the client authorized or ratified the statements. 
__________________ 
O’CONNOR, C.J. 
RELEVANT BACKGROUND 
Facts 
{¶ 1} Appellant, American Chemical Society (“ACS”), is a nonprofit 
corporation chartered by Congress that promotes the advancement of professional 
chemists and the chemical sciences through publications, meetings, education, 
and other activities throughout the world.  36 U.S.C. 20502. 
{¶ 2} ACS’s largest division, Chemical Abstracts Service (“Chemical 
Abstracts” or “CAS”), is in Columbus, Ohio.  Chemical Abstracts produces 
comprehensive databases of chemical information that include more than 20 
million abstracts of chemistry-related literature and patents.  The databases of 
chemical compounds and chemical reactions are accessed by scientists and 
researchers.  Robert Massie is president of Chemical Abstracts; he reports to the 
executive director of ACS. 
{¶ 3} Appellees Paul E. Blower Jr., Ph.D., Glenn J. Myatt, Ph.D., and 
Wayne P. Johnson were employed by Chemical Abstracts.  During their 
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employment, Blower and Myatt worked to develop a software tool named 
CAPathfinder (“PathFinder”) that was intended to improve the ability of 
researchers to access and organize the voluminous information available in ACS’s 
databases. 
{¶ 4} Chemical Abstracts suspended the PathFinder project in 1997 to the 
disappointment of Blower and Myatt, who believed the software product had 
potential.  Blower, Myatt, and Johnson soon resigned from Chemical Abstracts to 
start their own business, Leadscope, Inc., to develop a software product to aid in 
exploring and displaying chemical compounds.  Massie personally expressed 
concern to his colleagues that Blower, Myatt, and Johnson may have appropriated 
a software code or other intellectual property developed while working on 
comparable projects at ACS. 
{¶ 5} ACS learned in January 2001 that Leadscope had applied for a 
patent.  When ACS discovered appellees’ patent-application materials, ACS 
formed a working group to analyze them, referred the matter to the legal 
department, and retained outside counsel.  Leadscope received a United States 
patent for its software in November 2001. 
{¶ 6} In early 2002, the ACS Governing Board for Publishing and the 
ACS board of directors approved legal action against Leadscope if ACS and 
Leadscope could not reach an amicable resolution.  On April 11, 2002, Michael 
Dennis, CAS’s legal administration manager, called Leadscope’s chief financial 
officer, Michael Conley, to set up a meeting on April 15.  At the meeting, Dennis 
presented Conley with a draft complaint alleging misappropriation of ACS’s 
intellectual property and a letter stating that the complaint would be filed if the 
parties could not resolve the matter immediately.  At this point, Leadscope was 
operating on venture capital and was attempting to secure new funding to meet 
payroll by the end of the month. 
SUPREME COURT OF OHIO 
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{¶ 7} The parties then engaged in discussions over the next two weeks, 
with ACS demanding $1 million and ownership of the Leadscope patent.  After 
the parties failed to reach a resolution, ACS filed a federal lawsuit against 
Leadscope, Blower, Myatt, and Johnson (collectively, “Leadscope”) on May 1, 
2002.  On the same date, Dennis and another manager circulated an internal 
memorandum to “All Staff” at ACS about the lawsuit.  The memorandum stated: 
 
Re:  Communication re: Legal Matter 
The nonprofit American Chemical Society has filed a legal 
complaint against Leadscope, Inc., and its founders, who sought and 
received a patent for technology indistinguishable from a project on 
which they worked while employees of the Society’s Chemical 
Abstracts Service in the mid-1990s. 
The Society is a leader in publishing scientific journals and 
databases that are indispensable to chemists around the globe, and is 
acting to protect its intellectual property and proprietary 
information. 
Staff members are not authorized to comment on this matter.  
It is important that you refrain from communicating and/or 
commenting about this subject to any individual while the legal 
process is being pursued. 
 
{¶ 8} Ten days later, a statement was published in Columbus’s Business 
First newspaper.  The article quoted ACS’s outside counsel as follows: “Our 
motivation in filing suit is to acquire back the protected information that they took 
from us.”  The article described both the allegations in the complaint and 
Leadscope’s response, including a statement from Myatt that the lawsuit “has no 
merit” and a quote from Leadscope’s counsel that “[t]he timing of this lawsuit 
January Term, 2012 
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[days before Leadscope was to close a venture-capital deal] speaks volumes as to 
its invalidity.” 
Procedural History 
{¶ 9} ACS filed a complaint in the United States District Court for the 
Southern District of Ohio on May 1, 2002.  Leadscope moved to dismiss the 
federal complaint for lack of diversity jurisdiction.  ACS then voluntarily 
dismissed its lawsuit and refiled it in the Franklin County Court of Common Pleas 
in July 2002. 
{¶ 10} The complaint alleged claims for breach of employment 
agreements, misappropriation of trade secrets, unfair competition, breach of 
fiduciary duty and the duty of loyalty, and conversion, and for violation of ACS’s 
implied license under shop right.  Leadscope responded by denying all claims and 
filing counterclaims alleging defamation, tortious interference with business 
relations, unfair competition, violation of the Ohio Deceptive Practices Act, 
intimidation and extortion, and violation of the Ohio Pattern of Corrupt Activities 
statute. 
{¶ 11} Jury trial began on February 4, 2008, and lasted eight weeks.  After 
the evidence had been presented to the jury, both sides moved for a directed 
verdict.  ACS specifically moved for a directed verdict on Leadscope’s unfair 
competition claim, arguing that Leadscope “must prove by a preponderance of the 
evidence that the ACS litigation was not founded upon good faith.”  ACS then 
defined “good faith” to mean that “ACS has no evidentiary support for its claims, 
one; two, [ACS] know[s it has] no evidentiary support for [its] claims.”  The trial 
court denied ACS’s motion as well as Leadscope’s motion for a directed verdict. 
{¶ 12} The parties then met with the judge regarding jury instructions.  
During these conferences, ACS objected to submitting to the jury certain 
instructions on many of Leadscope’s counterclaims, including the unfair 
competition instruction.  ACS asserted that it had an absolute privilege to make its 
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accusations against Leadscope unless those claims were objectively baseless, and 
that the accusations could not have been objectively baseless because the trial 
court had allowed the jury to decide their validity.  ACS also addressed the legal 
viability of Leadscope’s defamation counterclaim, asserting that ACS had a 
qualified privilege to make its statements to its employees and the media because 
the comments were related to litigation.  The trial court made some changes based 
on those objections. 
{¶ 13} ACS also filed written objections to the jury instructions and 
submitted the following proposed jury instructions on Leadscope’s unfair 
competition allegation: 
 
Unfair competition.  Count Three of defendants’ 
counterclaim seeks damages from ACS for unfair competition by 
way of malicious litigation.  You cannot find that ACS engaged in 
unfair competition by malicious litigation unless LeadScope 
proves each of the following basic requirements of that tort by a 
preponderance of the evidence: 
(1) That LeadScope was a competitor of ACS and 
that LeadScope and ACS were producing and selling the 
same commodities; and 
(2) That ACS filed its lawsuit in bad faith and 
without probable cause, meaning that ACS’s lawsuit had no 
basis and ACS knew that the lawsuit had no basis; and 
(3) That ACS filed its lawsuit maliciously for the 
purpose of harassing and injuring LeadScope; and 
(4) That LeadScope was injured as a proximate 
result of ACS’s lawsuit. 
 
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7 
 
{¶ 14} The trial court overruled ACS’s objections and instructed the jury 
in accordance with the March 21, 2008 jury instructions as follows: 
 
 
Malicious Litigation 
 
In Ohio, unfair competition may consist of malicious acts by 
way of litigation in court that is not founded in good faith, but is for 
the purpose of harassing and injuring a rival producing and selling 
the same commodities.  It is the law that the pursuit of one 
competitor by another, either in court or out of court, for the 
purpose of injuring his business, is prohibited. 
If you find by the greater weight of the evidence that Plaintiff has 
committed malicious acts by way of litigation in the courts, or if 
you find litigation was not founded upon good faith, but was 
instituted with the intent and purpose of harassing and injuring a 
rival engaged in the same business you should find for the 
Defendants on their counterclaim of unfair competition in an 
amount that would fairly compensate Defendants for the damage 
suffered by reason thereof. 
 
{¶ 15} The jury returned verdicts against ACS on its claims for breach of 
contract and misappropriation of trade secrets.  ACS prevailed on two of 
Leadscope’s counterclaims, but the jury returned verdicts in favor of Leadscope 
on its counterclaims for defamation, tortious interference, and unfair competition.  
Leadscope was awarded a total of $26.5 million in compensatory and punitive 
damages, plus attorney fees.  The trial court overruled ACS’s postverdict motions 
for judgment notwithstanding the verdict, new trial, and remittitur. 
{¶ 16} ACS appealed to the Tenth District Court of Appeals, setting forth 
six assignments of error.  Leadscope filed a conditional cross-appeal. The court of 
SUPREME COURT OF OHIO 
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appeals affirmed the judgment of the trial court “in all respects” and therefore 
held that Leadscope’s assignment of error was moot.  Am. Chem. Soc. v. 
Leadscope, 10th Dist. No. 08AP-1026, 2010-Ohio-2725, ¶ 101-102.  Specifically, 
the Tenth District held that “the trial court did not err in denying ACS’s motion 
for judgment notwithstanding the verdict on the unfair competition claim.”  Id. at 
¶ 45.  The appellate court held that in Ohio, “malicious litigation [is] a basis for an 
unfair competition claim” and that the bad faith standard, not an “objectively 
baseless” standard, “is better suited to the nature of” such a claim.  Id. at ¶ 29, 31. 
{¶ 17} The Tenth District also held that “[t]he trial court did not err in 
overruling ACS’s motion for judgment notwithstanding the verdict on 
Leadscope’s counterclaim for defamation or in refusing to reduce the amount of 
damages pursuant to ACS’s motion for remittitur.”  Id. at ¶ 64.  The appellate 
court held that the trial court correctly concluded that ACS’s statements were not 
absolutely privileged and that the statements “exceed[ed] a mere statement that 
the parties disputed ownership of the intellectual property incorporated in 
Leadscope’s products.”  Id. at ¶ 56-57.  The appellate court also held that there 
was “sufficient evidence upon which the jury could find by clear and convincing 
evidence that ACS had published the statements in the memorandum and the 
Business First article with actual malice”—that is, “ ‘with knowledge that the 
statements are false or acting with reckless disregard as to their truth or falsity.’ ”  
Id. at ¶ 59-61, quoting Jacobs v. Frank, 60 Ohio St.3d 111, 116, 573 N.E.2d 609 
(1991).  The Tenth District also held as an initial matter that “ACS never objected 
to the trial court’s instruction on general damages and waived any objections to 
the jury’s considering of this issue.”1  Id. at ¶ 64.  Further, the appellate court held 
                                                          
 
1 This determination is contrary to the evidence of ACS’s objections to proposed jury instructions, 
which specifically state, “You may award general damages for these statements * * *.”  ACS’s 
objections and proposed instructions were filed with the trial court prior to the issuance of the jury 
instructions.   
January Term, 2012 
9 
 
that “the damages the jury awarded for both special and general damages were 
properly supported in the noted evidence.”  Id. 
{¶ 18} We accepted the cause as a discretionary appeal.  Am. Chem. Soc. 
v. Leadscope, Inc., 126 Ohio St.3d 1615, 2010-Ohio-5101, 935 N.E.2d 854.  
There are four propositions of law before us:  
 
(1) A party has a constitutional right to petition the courts 
for a redress of grievances and cannot be found liable for 
“malicious litigation” or “wrongful” interference unless a lawsuit is 
objectively baseless. 
(2) As a matter of Ohio common law, a claim of malicious 
litigation requires both the lack of an objective basis and subjective 
“bad faith” or malice. 
 (3) A party may not be found liable for defamation, or to 
have acted with actual malice, where it makes limited statements 
that accurately describe a public lawsuit and that have an objective 
basis in fact. 
(4) Damages for defamation must be based upon harm 
caused by the defamatory statements, as distinct from harm caused 
by a public lawsuit or other proceeding. 
 
(Emphasis sic.) 
{¶ 19} For the reasons that follow, we uphold the appellate court’s 
decision finding that the trial court did not err in denying ACS’s motion for 
judgment notwithstanding the verdict on the unfair competition claim.  But we 
hold that when a party alleges a claim for unfair competition, the party must show 
that the legal action is objectively baseless and that the opposing party had the 
subjective intent to injure the party’s ability to be competitive. 
SUPREME COURT OF OHIO 
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{¶ 20} The jury instructions here did not meet that test, but instead 
focused solely on whether ACS brought the lawsuit in good faith—that is to say, 
the instructions focused on ACS’s action to harass and injure Leadscope and not 
on the objective legitimacy of ACS’s claims.  However, upon a thorough review 
of the evidence presented by Leadscope and the evidence presented by ACS, we 
find that even if the jury had been instructed on the proper standard of law, the 
jury could not reasonably have made any other determination.  We therefore 
affirm the judgment of the court of appeals regarding Leadscope’s unfair 
competition claim. 
{¶ 21} We reverse the appellate court’s decision finding that the trial court 
did not err in overruling ACS’s motion for judgment notwithstanding the verdict 
on Leadscope’s counterclaim for defamation.  We hold that when reviewed under 
the totality of the circumstances and in the context of the entire publications, 
ACS’s statements in the internal memorandum and its attorney’s statements in 
Business First are not defamatory as a matter of law.  We further hold that a client 
is vicariously liable for its attorney’s defamatory statements only if the client 
authorized or ratified the statements. 
ANALYSIS 
I. LEADSCOPE’S UNFAIR COMPETITION CLAIM 
A. The “objectively baseless” element is a necessary element to prove an  
unfair competition claim by way of malicious litigation 
{¶ 22} One of the most fundamental and protected rights of our judicial 
system is the ability of citizens to access the courts.  This right is preserved in 
both the First Amendment to the United States Constitution and Article I, Section 
16 to the Ohio Constitution.  The First Amendment provides that “Congress shall 
make no law * * * abridging * * * the right of the people * ** to petition the 
Government for a redress of grievances.”  Article I, Section 16 to the Ohio 
Constitution reads:  “All courts shall be open, and every person, for an injury 
January Term, 2012 
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done him in his land, goods, person, or reputation, shall have remedy by due 
course of law, and shall have justice administered without denial or delay.” 
{¶ 23} Although the courthouse doors are open to all litigants, both the 
United States Supreme Court and this court have set limitations on the right to 
redress claims that are brought as a sham, to vex and annoy, or in an attempt to 
interfere directly with a competitor’s business relationships. In Professional Real 
Estate Investors, Inc. v. Columbia Pictures Industries, Inc., 508 U.S. 49, 56, 113 
S.Ct. 1920, 123 L.Ed.2d 611 (1993), the Supreme Court recognized this limitation 
and held that the First Amendment right to access the courthouse does not extend 
to sham litigation.  We too have recognized the limitation to the right to seek 
redress by holding:  “Despite the paramount importance placed on the ability to 
access the courts for redress of injuries, the right is not absolute.”  Greer-Burger 
v. Temesi, 116 Ohio St.3d 324, 2007-Ohio-6442, 879 N.E.2d 174, ¶ 11. 
{¶ 24} Notwithstanding the limitations on claims brought as a sham, there 
was no clarity regarding what constituted “sham litigation” until Professional 
Real Estate Investors.  In that case, Columbia Pictures sued Professional Real 
Estate Investors, Inc., “a resort hotel[,] * * * for alleged copyright infringement 
through the rental of videodiscs for viewing in hotel rooms.”  Professional Real 
Estate Investors at 51-52.  Professional Real Estate Investors “counterclaimed, 
charging Columbia [Pictures] with violations of * * * the Sherman Act * * * and 
various state-law infractions.”  Id. at 52.  Specifically, Professional Real Estate 
Investors “alleged that Columbia’s copyright action was a mere sham that cloaked 
underlying acts of monopolization and conspiracy to restrain trade.”  Id. 
{¶ 25} For the first time, the Supreme Court delineated a two-part 
definition of “sham litigation”: 
 
First, the lawsuit must be objectively baseless in the sense that no 
reasonable litigant could realistically expect success on the merits.  
SUPREME COURT OF OHIO 
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If an objective litigant could conclude that the suit is reasonably 
calculated to elicit a favorable outcome, the suit is immunized 
under [E. RR. Presidents Conference v.] Noerr [Motor Freight, 
Inc., 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961) (“Noerr-
Pennington Doctrine”)] and an antitrust claim premised on the 
sham exception must fail.  Only if challenged litigation is 
objectively meritless may a court examine the litigant’s subjective 
motivation.  Under this second part of our definition of sham, the 
court should focus on whether the baseless lawsuit conceals “an 
attempt to interfere directly with the business relationships of a 
competitor,” Noerr, supra, 365 U.S. at 144[, 81 S.Ct. at 533 
(emphasis added), through the “use [of] the governmental 
process—as opposed to the outcome of that process—as an 
anticompetitive 
weapon,” 
[Columbia 
v.] 
Omni 
[Outdoor 
Advertising, Inc., 499 U.S. [365], 380, 111 S.Ct. [1344, 113 
L.Ed.2d 382 (1991)] (emphasis in original).” 
 
(Footnote omitted.)  Id. at 60-61. 
{¶ 26} In crafting its definition, the Supreme Court specifically rejected “a 
purely subjective definition of ‘sham.’ ”  Professional Real Estate Investors, 508 
U.S. at 60, 113 S.Ct. 1920, 123 L.Ed.2d 611.  “Our decisions therefore establish 
that the legality of objectively reasonable petitioning ‘directed toward obtaining 
governmental action’ is ‘not at all affected by any anticompetitive purpose [the 
actor] may have had.’ ”  Id. at 59.  Indeed, the court held that it has “repeatedly 
reaffirmed that evidence of anticompetitive intent or purpose alone cannot 
transform otherwise legitimate activity into a sham.”  Id., citing Fed. Trade 
Comm. v. Superior Court Trial Lawyers Assn., 493 U.S. 411, 424, 110 S.Ct. 768, 
107 L.Ed.2d 851 (1990); Natl. Assn. for the Advancement of Colored People v. 
January Term, 2012 
13 
 
Claiborne Hardware Co., 458 U.S. 886, 913-914, 102 S.Ct. 3409, 73 L.Ed.2d 
1215 (1982).  The court also held that “even an ‘improperly motivated’ lawsuit 
may not be enjoined under the National Labor Relations Act as an unfair labor 
practice unless such litigation is ‘baseless.’ ”  Id., quoting Bill Johnson’s 
Restaurants, Inc. v. Natl. Labor Relations Bd., 461 U.S. 731, 743-744, 103 S.Ct. 
2161, 76 L.Ed.2d 277 (1983). 
{¶ 27} It is clear that sham litigation “contains an indispensable objective 
component” and, therefore, does not “turn[] on subjective intent alone.”  Id. at 58, 
59; see also Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492, 500, 
108 S.Ct. 1931, 100 L.Ed.2d 497 (1988), fn. 4 (private unethical action that is not 
genuinely aimed at procuring favorable government action is a sham as opposed 
to a valid effort to influence government action); Otter Tail Power Co. v. United 
States, 410 U.S. 366, 380, 93 S.Ct. 1022, 35 L.Ed.2d 359 (1973) (describing a 
sham as “evidenced by repetitive lawsuits carrying the hallmark of insubstantial 
claims”).  Thus, when courts are analyzing a claim for sham litigation, they must 
not focus solely on a party’s subjective intent, but must also determine whether 
the party’s lawsuit is objectively baseless. 
{¶ 28} In Greer-Burger, 116 Ohio St.3d 324, 2007-Ohio-6442, 879 
N.E.2d 174, we followed and quoted the United States Supreme Court’s definition 
of “sham litigation” as set forth in Professional Real Estate Investors.  Id. at ¶ 11.  
In Greer-Burger, an employee had filed a sexual-harassment suit against her 
employer.  Id. at ¶ 2.  After a trial, the jury found in favor of the employer.  Id.  In 
turn, the employer filed suit against the employee and alleged, among other 
things, malicious prosecution.  Id.  The employer argued that he had incurred 
significant attorney fees and costs by defending against the employee’s lawsuit.  
Id. 
{¶ 29} In response to the employer’s lawsuit, the employee “filed a sworn-
charge affidavit with the Ohio Civil Rights Commission (“OCRC”)” and argued 
SUPREME COURT OF OHIO 
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that the employer’s “lawsuit was a prohibited retaliatory violation.”  Id. at ¶ 3.  
OCRC issued an order prohibiting the employer from proceeding with his lawsuit.  
Id. at ¶ 6.  The employer appealed to the trial court, which affirmed the OCRC’s 
order.  Id. at ¶ 7.  The Eighth District affirmed as well.  Id. at ¶ 8. 
{¶ 30} We reversed and held, “[E]ven assuming arguendo that [the 
employee] has established a prima facie case of retaliation, [the employer] must 
be afforded an opportunity to show that there is an objective basis for his 
lawsuit.”  (Emphasis added.)  Id. at ¶ 15. We further held: 
 
[A]n employer [should have] the opportunity to demonstrate that 
the suit is not objectively baseless.  In determining whether the 
employer’s 
action 
has 
an 
objective 
basis, 
the 
OCRC 
administrative-law judge should review the employer’s lawsuit 
pursuant to the standard for rendering summary judgment.  Thus, 
an employer needs to “show[] his lawsuit raises genuine issues of 
material fact.”  [Bill Johnson’s, 461 U.S.] at 746, 103 S.Ct. 2161, 
76 L.Ed.2d 277.  If the employer satisfies this standard, the suit 
does not fall under the definition of sham litigation.  The suit, 
therefore, shall proceed in court while the proceedings before the 
OCRC shall be stayed. 
 
Id. at ¶ 16. 
{¶ 31} Based upon our own precedent and that of the Supreme Court, 
courts should not focus solely on a party’s subjective intent, i.e., good or bad 
faith, when analyzing an unfair competition claim by way of malicious litigation, 
as the court of appeals in this case held.2 
                                                          
 
2 We recognize that the “sham litigation” definition set forth in Professional Real Estate Investors 
was created within the context of federal antitrust law.  However, we find its rationale to be 
January Term, 2012 
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{¶ 32} In this case, the Tenth District Court of Appeals cited Henry 
Gehring Co. v. McCue, 23 Ohio App. 281, 154 N.E. 171 (8th Dist.1926), as “the 
seminal Ohio case adopting malicious litigation as a basis for the tort of unfair 
competition.”  Am. Chem. Soc., 2010-Ohio-2725, ¶ 30.  This was true, however, 
until our decision in Greer-Burger in December 2007, a mere two months before 
the trial commenced in this case. 
{¶ 33} In Henry Gehring, the plaintiff alleged that the defendant’s conduct 
was “of such persistent and continuous nature as has resulted in damage to the 
[plaintiff] in the production and sale of its wares at common law.”  Henry 
Gehring at 283.  The defendant argued that the allegations stated in the petition 
did not constitute a cause of action in state court.  Id. at 282. 
{¶ 34} The Eighth District held:  
 
There is well-established authority for the holding that the 
pursuit of one competitor by another, either in court or out of court, 
for the purpose of injuring him in his business, may result in 
recovery under sufficient proof.  There are numerous cases of 
successful recoveries because of malicious acts by way of 
litigation in the courts, where it appears that the litigation was not 
founded upon good faith, but was instituted with the intent and 
purpose of harassing and injuring a rival producing and selling the 
same commodity. 
 
                                                                                                                                                               
identical to the issue in the present case, i.e., maintaining access to the courthouse.  Moreover, 
applying the Professional Real Estate Investors test to lawsuits outside the context of federal 
antitrust law is not a new concept for this court.  See Greer-Burger v. Temesi, 116 Ohio St.3d 324, 
2007-Ohio-6442, 879 N.E.2d 174.  In Greer-Burger, an employer retaliation case, we first adopted 
the test in Professional Real Estate Investors.  Id. at ¶ 11.  Therefore, the analysis in Professional 
Real Estate Investors is not limited to the confines of federal antitrust law, but is applicable to 
cases involving unfair competition claims based upon malicious litigation. 
SUPREME COURT OF OHIO 
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Id. at 283-284. 
 
{¶ 35} Using Henry Gehring as a guidepost, the Tenth District held that 
“the bad faith standard is better suited to the nature of the malicious litigation 
claim than is the ‘objectively baseless’ standard.”  Am. Chem. Soc., 2010-Ohio-
2725, ¶ 31.  Consequently, the Tenth District held that “the trial court properly 
instructed the jury that litigation not founded in good faith, but brought for the 
purpose of harassing and injuring a rival who was producing and selling the same 
commodities, could support Leadscope’s unfair competition claim.”  (Emphasis 
added.)  Id.  Thus, the appellate court held that “the trial court did not err in 
denying ACS’s motion for judgment notwithstanding the verdict on the unfair 
competition claim * * *.”  Id. at ¶ 45. 
{¶ 36} We disagree with the Tenth District’s conclusion that the “bad 
faith” standard is the appropriate standard for an unfair competition claim by way 
of malicious litigation.  In being presented with this standard, the jury was 
improperly instructed to focus solely on ACS’s subjective intent.  This flawed 
instruction did not direct the jury to consider whether the lawsuit was objectively 
baseless, contrary to the case law on this issue under Greer-Burger and 
Professional Real Estate Investors. 
{¶ 37} We hold that to successfully establish an unfair competition claim 
based upon legal action, a party must show that the legal action is objectively 
baseless and that the opposing party had the subjective intent to injure the party’s 
ability to be competitive. Here, the jury instructions were inadequate because they 
did not include the “objectively baseless” element necessary to meet the two-part 
test for an unfair competition claim. 
{¶ 38} Even though we hold that the trial court failed to properly instruct 
the jury on Leadscope’s unfair competition claim, we find it necessary to address 
Leadscope’s assertion that ACS waived its claim of Noerr-Pennington immunity 
January Term, 2012 
17 
 
because immunity is an affirmative defense that must be pleaded in an answer or 
it is waived under Civ.R. 8(C) (“Affirmative defenses”).3  ACS did not assert 
Noerr-Pennington immunity by name.  Leadscope argues that pursuant to Civ.R. 
8(C), ACS waived Noerr-Pennington immunity because it did not expressly raise 
it until ACS filed its motion for judgment notwithstanding verdict.4  See Civ.R. 
8(C) (“a party shall set forth affirmatively * * * any other matter constituting an 
avoidance or affirmative defense”). 
{¶ 39} ACS counters that it did not waive Noerr-Pennington immunity, 
because it argued repeatedly for a directed verdict on the unfair competition and 
tortious interference claims.  ACS further submits that it also argued that it was 
entitled to Noerr-Pennington immunity when ACS filed its objections to the trial 
court’s jury instructions on March 24, 2008.  ACS argues that it is not required to 
specifically use the words “Noerr Pennington” or “First Amendment” and that its 
objections to the jury instructions preserved its argument for Noerr-Pennington 
immunity on appeal.  The second and third paragraphs of its proposed jury 
                                                          
 
3 Noerr-Pennington immunity is a “doctrine [that] originated in the anti-trust context as the 
proposition that ‘joint efforts to influence public officials do not violate the antitrust laws even 
though intended to eliminate competition.  Such conduct is not illegal, either standing alone or as 
part of a broader scheme itself violative of the Sherman Act.’ ”  WE, Inc. v. Philadelphia, Dept. of 
Licenses & Inspections, 174 F.3d 322, 326 (3d. Cir.1999), quoting United Mine Workers of Am. v. 
Pennington, 381 U.S. 657, 670, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965); see also Noerr, 365 U.S. 
127, 81 S.Ct. 523, 5 L.Ed.2d 464.  The United States Supreme Court has held, “Those who 
petition government for redress are generally immune from antitrust liability.”  Professional Real 
Estate Investors, 508 U.S. at 56, 113 S.Ct. 1920, 123 L.Ed.2d 611.  This type of immunity from 
antitrust liability is otherwise known as Noerr-Pennington immunity. 
 
4 Many courts have held that Noerr-Pennington immunity should be raised as an affirmative 
defense.  See Bayou Fleet, Inc. v. Alexander, 234 F.3d 852, 860 (5th Cir.2000); Acoustic Sys., Inc. 
v. Wenger Corp., 207 F.3d 287 (5th Cir.2000); North Carolina Elec. Membership Corp. v. 
Carolina Power & Light Co., 666 F.2d 50, 52 (4th Cir.1981).  Even so, as the Fifth Circuit in 
Bayou Fleet explained, the general rule of waiver does not apply when the defense is raised later 
but does not result in unfair surprise or “if it is raised at a ‘pragmatically sufficient time, and the 
plaintiff was not prejudiced in its ability to respond.’ ”  Id. at 860, quoting Chambers v. Johnson, 
197 F.3d 732, 735 (5th Cir.1999). 
 
SUPREME COURT OF OHIO 
18 
 
instruction, it claims, invoked the Noerr-Pennington doctrine and the correct 
standard of law to provide immunity on Leadscope’s unfair competition claim. 
{¶ 40} The parties’ focus on the waiver issue is a red herring in this case.  
Here, ACS filed a lawsuit against Leadscope.  Leadscope then counterclaimed, 
alleging, among other claims, unfair competition.  As the counterclaimant, 
Leadscope had the burden of proving its claim for unfair competition, regardless 
of whether ACS did or did not plead Noerr-Pennington immunity as an 
affirmative defense.  In Professional Real Estate Investors, the Supreme Court 
held: 
 
[E]ven a plaintiff who defeats the defendant’s claim to Noerr[-
Pennington] immunity by demonstrating both the objective and the 
subjective components of a sham must still prove a substantive 
antitrust violation.  Proof of a sham merely deprives the defendant 
of immunity; it does not relieve the plaintiff of the obligation to 
establish all other elements of his claim. 
 
Professional Real Estate Investors, 508 U.S. at 61, 113 S.Ct. 1920, 123 L.Ed.2d 
611.  Therefore, the burden remained on Leadscope to prove its unfair 
competition claim.  Noerr-Pennington immunity is a shield from liability, and 
Leadscope cannot escape its burden of proving its own claim by wielding the 
Noerr-Pennington doctrine as a sword. 
{¶ 41} Furthermore, independent of the question of ACS’s preservation of 
an affirmative defense is the question whether the trial court appropriately 
instructed the jury as to the standard for finding an unfair competition claim by 
way of malicious litigation.  That is the question we were asked to address when 
we accepted the cause for discretionary review, and that is the question we have 
answered. 
January Term, 2012 
19 
 
B. Although the jury should have been instructed on the 
“objectively baseless” standard, there is overwhelming 
evidence to support the jury’s verdict against ACS 
{¶ 42} Today we hold that the “objectively baseless” standard is the 
correct standard for an unfair competition claim based upon malicious litigation 
and, therefore, the trial court should have instructed the jury to apply that 
standard.  Here, the trial court improperly instructed the jury to apply a “bad 
faith” standard.  In affirming the use of the “bad faith” standard, the appellate 
court reviewed the evidence presented to the jury and held, “The jury, as trier of 
fact, was entitled to draw permissible inferences from the chronology, course, and 
scope of litigation ACS undertook and to conclude ACS’s civil action constituted 
malicious litigation.” 
{¶ 43} We, too, find it necessary to highlight certain evidence that was 
presented by ACS and Leadscope. 
ACS’s Evidence 
{¶ 44} ACS claimed that Leadscope misappropriated PathFinder.  The 
jury was instructed that to constitute misappropriation, the information at issue 
must be a trade secret.  The jury was also instructed that a trade secret is 
information that “is the subject of efforts that are reasonable under the 
circumstances to maintain its secrecy.” Although ACS never expressly argued to 
the jury what trade secret Leadscope allegedly took, the PathFinder source code 
was the only “secret” property.  Indeed, the majority of the evidence adduced by 
ACS was focused on PathFinder’s source code. 
{¶ 45} ACS’s President Massie had testified at deposition that “the source 
code is * * * an extraordinarily important and central tangible item in the sense 
that it’s reduced to some medium.”  He had also testified that he was most 
interested in the source code because “[t]hat is, after all, what this entire problem 
is about:  Who created this product?”  Michael Petras, a senior engineer at ACS 
SUPREME COURT OF OHIO 
20 
 
and one of the code writers of PathFinder, testified that there was “no doubt” that 
the source code for Pathfinder was confidential. 
{¶ 46} The source code was so important to ACS that it was part of its 
negotiations with Leadscope before this litigation.  Michael Dennis, CAS’s legal-
department manager, testified: 
 
A.  We talked about the PathFinder source code and the 
entire PathFinder project, and we had conversations about how we 
believed, Pete [Roche] and I, that Leadscope had the enjoyment of 
the PathFinder software or source code and that as part of the 
settlement or resolution of this, that Leadscope should provide CAS 
with any enhancements that they had made to that software. 
Q.  And when you pointed out that you thought they had the 
benefit of the PathFinder source code, what did these people say? 
A.  They never corrected us. 
Q.  Did they ever deny having the PathFinder source code? 
A.  No.  Which left us with the impression that they had 
copied some form of the PathFinder software. 
 
{¶ 47} But the jury heard testimony from ACS’s own expert that the 
source codes for PathFinder and the Leadscope patent were not the same.  Dr. 
Sudhakar Yalamanchili testified that “he did not find any” verbatim copying of 
any source code from PathFinder that was used in Leadscope.  Dr. Martin Rinard, 
Leadscope’s expert, confirmed Dr. Yalamanchili’s conclusion that the source 
codes were not identical.  He “looked at every line of source code and both source 
code bases” and concluded that Leadscope’s source code was not copied from the 
PathFinder source code. 
January Term, 2012 
21 
 
{¶ 48} The source code was the only part of PathFinder that was 
considered highly confidential.  The functionality of PathFinder was not 
proprietary information.  Petras conceded that other than the source code, 
documents were not subject to security procedures for the purpose of protecting 
confidentiality.  In fact, Petras testified that the functionality of PathFinder was 
not secret and was described to the public in articles and in scientific 
presentations.  The functionality of the PathFinder project was disclosed to 
customers through sales presentations, without the protection of nondisclosure 
agreements.  And Lou O’Korn, head of ACS’s research department, testified that 
there were other products in the field that had the capabilities of the Leadscope 
patent and PathFinder.  The functionality of Pathfinder was unequivocally not a 
secret. 
{¶ 49} ACS did not provide sufficient evidence to the jury supporting its 
claim for misappropriation or that it had a patent on PathFinder.  ACS’s only 
secret was the source code, and expert testimony revealed that the source codes 
for PathFinder and Leadscope were not the same.  The lack of sufficient evidence 
of misappropriation is astonishing, especially considering the length of this trial 
and the extensive nature of the discovery spanning nearly six years. 
{¶ 50} But the lack of evidence is even more problematic for ACS’s 
defense of Leadscope’s  counterclaim alleging that ACS filed the lawsuit solely to 
injure Leadscope’s competitiveness.  ACS never specified any information to 
support its basis for filing the lawsuit.  President Massie testified that he formed a 
working group to investigate the patent.  However, the jury never heard testimony 
about the results of the committee or how it reached its determination that 
Leadscope had misappropriated the PathFinder product. 
{¶ 51} Instead, there were extensive discussions out of the presence of the 
jury between counsel and the judge regarding Leadscope’s motion in limine 
seeking to introduce evidence of conclusions of the working group.  ACS 
SUPREME COURT OF OHIO 
22 
 
successfully sought its exclusion on the basis that the information was protected 
by work-product and attorney-client privilege.  Thus, the jury never heard 
testimony on the information ACS had when it filed its lawsuit to support its 
claims for misappropriation against Leadscope.  This is relevant because in 
defending the counterclaim involving unfair competition predicated upon legal 
action, ACS was required to show that when the lawsuit was filed, it had an 
objective basis and was not filed simply to injure Leadscope’s ability to be 
competitive. 
{¶ 52} The evidence that ACS did present to the jury failed to establish 
that it possessed anything more than speculation at the time it filed its lawsuit that 
PathFinder had been misappropriated by Leadscope.  ACS’s own experts and 
internal technical staff would not state that Leadscope had stolen ACS’s trade 
secrets.  Although the experts and internal technical staff identified similarities in 
the patented information, no testimony established that Leadscope took ACS’s 
proprietary information.  Instead, ACS focused its arguments on the similarities 
between the source code and “operational flows.”  ACS relied on those 
similarities as proof that Leadscope misappropriated PathFinder. 
{¶ 53} Dr. Yalamanchili’s testimony could not provide any insight as to 
what information ACS relied upon in filing its claims against Leadscope, given 
that he was not retained by ACS until 2007, five years after the lawsuit was filed.  
Dr. Yalamanchili testified that the “operational flow” of the two programs was 
“identical.”  But Dr. Yalamanchili never clearly defined “operational flow” or 
why identical “operational flows” supported ACS’s claim of misappropriation.  
The jury never heard testimony from Dr. Yalamanchili or any other ACS expert 
that the operational flow constituted proprietary information.  Dr. Yalamanchili 
even admitted he did not review any other software projects beyond PathFinder 
and Leadscope’s patent to determine whether other programs had the same 
operational flow. 
January Term, 2012 
23 
 
{¶ 54} But Dr. Yalamanchili also testified that the Leadscope patent and 
PathFinder were different in several ways. He testified that there was no evidence 
that the PathFinder source codes were the same as Leadscope’s.  Additionally, the 
two programs were written in different programming languages.  Dr. 
Yalamanchili also testified that the algorithms of PathFinder and Leadscope were 
not identical.  Thus, ACS’s own expert failed to make a convincing case that 
Leadscope misappropriated ACS’s intellectual property. 
{¶ 55} Further damaging to its case, ACS’s own information technology 
employees, such as Robert Swann, could not equivocally state that Leadscope had 
misappropriated PathFinder:   
 
 
Q.  And you were asked your opinion regarding whether 
Drs. Blower and Myatt and Mr. Johnson developed Leadscope on 
their own or whether it was Chemical Abstracts’ technology? 
 
A.  On several occasions. 
 
Q.  And in, in fact—well, what was your response to such 
questions? 
 
A.  Honestly don’t know.  I could not tell you if they did or 
did not. 
 
{¶ 56} President Massie also testified that ACS did not bring a lawsuit 
before Leadscope filed a patent application because it could not tell what, if any, 
information had been misappropriated: 
 
 
Q.  And if I understand correctly, your testimony earlier, it 
was, you were not—that [Robert Swann] advised you we couldn’t 
tell without seeing code or independent development, essentially; is 
that fair to say? 
SUPREME COURT OF OHIO 
24 
 
 
A. I don’t know what you mean by “independent 
development.”  But I would agree with you that I said to him not 
only my concerns, but there were a lot of concerns within CAS, a 
lot of management was talking about this product and worrying 
about whether anything was taken from us.  So I did ask Mr. 
Swann, what do you think, what do you people in technology think.  
He said, we can’t tell from the outside whether this has our 
information in it. 
* * * 
 
Q.  In terms of what you were told at that point in time in 
April—or in August of—fall of 1999, we can see the screen of the 
Leadscope project in a fleeting way, perhaps at a meeting; but we 
don’t know if that source code was our source code unless the guys 
came over and sat down and said, here’s what we did; or if they 
had given us proof they did their work from scratch and didn’t do 
our work, et cetera. 
* * * 
 
A.  I believe that’s what I said in an explanation to you of 
what do we mean we didn’t know, and I was giving you an example 
of the kinds of things that, had we known, we would have a better 
handle on whether that was our IP. 
 
Q.  And what you wanted to know was the source code or 
proof of independent development? 
 
A.  Those are—those are very good critical examples of 
what we need to know. 
 
 
THE COURT: Is that what you wanted to know? 
 
A.  It’s part of what we wanted to know. 
* * * 
January Term, 2012 
25 
 
 
Q.  Isn’t it fair to say as far as you were concerned the entire 
problem was the source code? 
 
 
A.  No, it’s not. 
 
(Emphasis added.)  
{¶ 57} ACS presented a theory, but offered no concrete evidence that 
Leadscope stole its product.  On the testimony and evidence presented, ACS 
failed to prove that it had any, let alone sufficient, evidence to support its lawsuit.  
The record is replete with ACS’s speculation, surmise, and supposition, but 
wholly lacking of probative evidence from which a rational jury could conclude 
that misappropriation actually occurred.  The jury could reasonably infer, based 
on the paucity of evidence presented, that the lawsuit was objectively baseless 
when filed. 
{¶ 58} Indeed, even during closing arguments, ACS’s counsel repeatedly 
argued that ACS had support for its claims, but failed to identify any evidence it 
relied on to support its allegation of misappropriation: 
 
We gave you that evidence that supports the ACS claims.  We 
gave you that evidence in detail. * * * But for defendants to say 
there is no evidentiary support and that we filed this counterclaim 
with nothing—excuse me, we filed this suit in April of 2002 with 
nothing to support it, it defies common sense. 
 
Not so.  We conclude that ACS failed to specify any evidence it relied upon in 
filing its lawsuit.  It is therefore not surprising that ACS failed to convince the 
jury that Leadscope had misappropriated the PathFinder project.  Leadscope, on 
the other hand, presented persuasive evidence that ACS had an intent to harm its 
business as its motivation in filing the lawsuit. 
SUPREME COURT OF OHIO 
26 
 
Leadscope’s Evidence 
{¶ 59} Leadscope presented evidence that President Massie kept a 
watchful eye on Leadscope’s progress: 
   
Q.  Let’s go to 1999.  In the year 1999, did you start hearing 
something about Leadscope which caused you to start having 
concerns? 
A.  Yes.  There were two things—in—in 1999.  First, people 
were beginning—within CAS were beginning to ask questions 
about the product that they were putting out, and some uneasiness 
about the product.  And the other issue at the time I remember is 
they were starting to hire a fair number of our staff, and that began 
to raise some questions, too. 
Q.  Did you begin to ask questions within your organization 
about whether these defendants had taken any information that they 
should not have? 
A.  Yes.  When someone would say to me, well, we may 
have a problem here, my response was, well, there’s only a problem 
if they took information away, and does anybody know—does 
anybody have an idea or anybody know if there’s any problem with 
the product?  Did they taken any of our code?  Did they take any 
trade secrets? 
Q.  Okay.  In 1999, I’m still in that year, did you raise 
questions with your research group on that subject? 
A.  Yes, I asked—I asked Mr. Swann, who was the—who 
was the head of IT at the time.  I think the title then was director of 
IT, and Lou O’Korn who worked for him, I asked if they thought 
there was a problem with this product. 
January Term, 2012 
27 
 
Q.  And what response were you getting from those 
gentlemen? 
* * * 
A.  They almost always said the same thing, which is, they 
couldn’t tell from the outside if there was a problem with the 
product. 
Q.  What do you mean by that? 
A.  They couldn’t tell by just looking—looking at the 
materials, the—what was public.  They couldn’t tell what was 
underneath the product so they could see if anything of ours was 
taken.  I think they uniformly said to me, we just don’t know. 
 
(Emphasis added.)  
{¶ 60} Lou O’Korn eventually met with the president of Leadscope, and 
O’Korn “was given formal assurances” that Leadscope did not take anything from 
ACS.  But despite these assurances, President Massie’s monitoring of Leadscope 
continued into the next year.  In fact, in 2000 President Massie had a telephone 
conversation with Allen Richon, president of Leadscope, during which he relayed 
his concerns: 
 
A.  * * * I said to him, Allen, we have two concerns here. 
I said, one is this continued unease at CAS about this 
product you guys have and just a feeling this—that maybe 
something was taken from us. 
And I said our second concern is the hiring of CAS staff, 
which we really don’t want to get out of control. * * *  He said, as 
to the product, I can absolutely tell you that this was developed by 
our people, and there’s no intellectual property problem here at all.  
SUPREME COURT OF OHIO 
28 
 
I said, well, okay if that’s your assurance, I said, well, you know, 
we can get on with life and maybe work together.  I said, but you 
need to know that’s a concern of ours. 
 
(Emphasis added.) 
{¶ 61} Yet President Massie did not “get on with life.”  He still monitored 
Leadscope closely.  He visited its website and read its articles, although his team 
continued to tell him that it did not know whether Leadscope took anything:   
 
A.  * * * This would be an ongoing thing where maybe an 
article would cross my desk or someone would come into my office 
and say, this—Leadscope is kind of a worry.  And I—I would then 
ask Bob Swann, you know what do you think we have here and he 
would say, we don’t know. 
 
{¶ 62} When President Massie discovered that Leadscope had filed a 
patent application in 2001, he “formed a separate group within Chemical 
Abstracts to investigate Leadscope, the company, the patent, and also the 
Leadscope product.”  And, soon after the patent application, President Massie’s 
concerns seemed to transmogrify into ill will. 
{¶ 63} In February 2002, in an attempt to abort a visit by Governor Bob 
Taft to Leadscope’s offices, President Massie sent an e-mail to Governor Taft’s 
office.  Governor Taft was a “personal friend” of President Massie.  In his e-mail, 
he wrote, according to his testimony: 
 
Q.  “* * * CAS is about to challenge Leadscope’s patent on 
the ground * * * that it is based in significant part on ‘prior art’ 
January Term, 2012 
29 
 
technology, much of it developed at CAS or in existence already in 
CAS products or elsewhere. 
“* * * 
“There are questions about what the CAS researchers did or 
did not remove from CAS in terms of code * * * work product, 
plans, et cetera.  While I am not at this time suggesting that 
anything illegal was done, CAS is reserving its rights to challenge 
any aspect of Leadscope’s product suite or business activities on 
these grounds.” 
 
{¶ 64} The jury also heard testimony from ACS’s former information 
technology director, Robert Swann, about President Massie’s hostility towards 
Leadscope.  Swann testified that President Massie seemed to take the Leadscope 
situation “very personally” and that he “raised his voice in connection with 
Leadscope.”  President Massie even told Swann that Blower was risking his 
retirement by working with Leadscope.  He also made comments about 
Leadscope’s financial situation, stating that Leadscope was going through its 
money. 
{¶ 65} The jury heard testimony that a committee was formed by 
President Massie to investigate the patent application: 
 
A.  I can absolutely guarantee you that to bring legal action or do 
anything, we had to have something really substantive, and that 
didn’t happen till this patent came out.  And when this patent came 
out, we were all in shock.  I turned the patent over to the general 
counsel, and then the investigation started, and that’s what 
happened. 
 
SUPREME COURT OF OHIO 
30 
 
{¶ 66} Massie never testified about what happened in the committee’s 
investigation.  Swann testified that the allegations that Leadscope took ACS’s 
trade secrets were the conjectures of President Massie.  Therefore, beyond mere 
assertions that the Leadscope patent “looked an awful lot like PathFinder” and 
that it “was [ACS’s] patent,” President Massie offered no explanation as to how 
ACS reached the conclusion that Leadscope misappropriated PathFinder.  ACS 
waited to take any legal action until it could review the patent.  But having 
reviewed it, Massie offered the jury nothing more than his own conclusion that 
Leadscope misappropriated PathFinder from ACS. 
{¶ 67} Once the committee results were turned over to President Massie 
and the two ACS boards approved pursuing legal remedies against Leadscope, 
ACS engaged in heavy-handed negotiation tactics. There was no evidence 
presented to the jury that the two ACS boards reviewed the committee results, and 
the committee results were never entered into evidence for the jury’s 
consideration.  On April 11, 2002, CAS counsel Michael Dennis called Michael 
Conley, Leadscope’s chief financial officer, demanding a meeting. If Leadscope 
did not meet, it would face a complaint with “civil and criminal charges.”  On 
April 15, 2002, Conley met with ACS representatives, during which they 
presented him with a draft complaint, including a letter with their demands.  The 
demands included ownership of Leadscope’s patent, a $1 million payment, and 
Leadscope’s stopping all sales of products incorporating the disputed patent, in 
exchange for avoiding litigation. 
{¶ 68} Conley responded in an April 16, 2002 letter attempting to avoid 
litigation.  He informed ACS that it was in the midst of securing financing and 
that “even threatening of this litigation was going to disrupt [Leadscope’s] 
financing.”  Conley testified, “So, again, it was—it was kind of almost a plea 
from our part of, why are you doing this, and don’t go forward and do this 
January Term, 2012 
31 
 
because this is going to really, you know, mess up our company.”  After 
Leadscope did not agree to ACS’s demands, ACS filed its lawsuit. 
{¶ 69} Leadscope also presented evidence that ACS intended to harm it 
financially by filing a lawsuit.  President Massie was aware of Leadscope’s 
delicate financial situation.  ACS also became aware of potential investments in 
Leadscope and derailed those investments. 
{¶ 70} For example, Curtis Crocker, a venture capitalist with Battelle 
Technology Fund, spoke with Michael Dennis at CAS about making an 
investment in Leadscope and the terms under which the Leadscope founders left 
Chemical Abstracts.  Dennis informed Crocker that ACS had legal issues with 
Leadscope.  After learning about the legal issues, Crocker admitted to Dennis that 
he “was uncomfortable moving forward” with his investment with Leadscope 
until the issues were cleared up.  Furthermore, Conley testified that he had a 
conversation with Dennis that “their even threatening of this litigation was going 
to disrupt [Leadscope’s] financing.”  Therefore, ACS was aware that it was 
having a direct impact on Leadscope’s financing. 
{¶ 71} Leadscope also presented evidence that ACS was attempting to use 
the lawsuit as a way to impede Leadscope’s success and to bankrupt the company 
and Dr. Blower, Dr. Myatt, and Johnson.  For example, after ACS filed suit, 
Leadscope struggled initially to establish its insurer’s duty to advance defense 
costs.  After Leadscope obtained defense via its insurance coverage, ACS 
dismissed that part of the complaint upon which coverage was predicated, leaving 
Leadscope without insurer-funded attorneys and coverage in the event it was held 
liable. 
{¶ 72} Having reviewed the foregoing and other evidence, the Tenth 
District held, “Much of the evidence supported Leadscope’s claims that ACS’s 
unfair competition was rooted in its alleged desire to suppress, by any means 
necessary, Leadscope as a new software competitor.”  Am. Chem. Soc., 2010-
SUPREME COURT OF OHIO 
32 
 
Ohio-2725, ¶ 32.  We agree with the appellate court’s holding inasmuch as 
Leadscope, as the counterclaimant alleging unfair competition, had the burden to 
present evidence to support that claim.  It did just that. 
{¶ 73} Having independently scoured the voluminous record for other 
evidence that could support a finding favorable to ACS, we could not find the 
evidence, in detail or otherwise, upon which ACS relied in bringing its lawsuit.  
We find that there is no sufficient foundation from which a jury could conclude 
that ACS adequately supported its claims.  Therefore, we agree with the appellate 
court that the jury’s verdict in favor of Leadscope should be upheld.  Although the 
jury’s determination was made using the “bad faith” standard, the evidence 
presented was so lacking that even if the “objectively baseless” standard had been 
applied, the outcome would have been the same. 
{¶ 74} We reach our determination with great respect to a jury’s role in 
the judicial process, but we also recognize that a court of last resort may decide 
the merits of a case when it adopts a new legal standard.  That result is proper 
here, given the nature of the claims presented and the fact that a decade has 
elapsed since the lawsuit was filed.  When an appellate court “adopts a new legal 
standard * * * on * * * [some] occasions, it applies the new standard itself and 
decides the merits.”  Casey v. Planned Parenthood of Southeastern Pennsylvania, 
14 F.3d 848, 857 (3d Cir.1994).5  And federal appellate courts have used that 
approach in a wide array of cases, including antitrust claims. 
{¶ 75} In MCI Communications Corp. v. Am. Tel. & Tel., 708 F.2d 1081 
(7th Cir.1982), a federal antitrust case, the Seventh Circuit Court of Appeals held 
that the jury instructions did not reflect the proper standard, but because “there is 
insufficient evidence to support a finding of unlawful pre-announcement under 
                                                          
 
5 Although we recognize that we first adopted the standard in Greer-Burger, which was in the 
context of employee retaliation, we make clear that consistent with its origins, it applies in full for 
claims of unfair competition by way of malicious litigation. 
 
January Term, 2012 
33 
 
the proper legal standard, we need not remand for a new trial on this issue.”  Id. at 
1129, fn. 69. 
{¶ 76} The Ninth Circuit has also followed this approach.  In Beck v. 
Upland, 527 F.3d 853, 857 (9th Cir.2008), the issue was whether the plaintiff’s 
lawsuit alleging retaliatory arrest pursuant to 42 U.S.C. 1983 could go forward to 
trial.  “After the district court’s decision, the United States Supreme Court” issued 
an opinion “clarifying the elements of a constitutional tort under § 1983 for 
retaliatory arrest or prosecution.”  Id.  The federal court of appeals held that when 
a new standard of law is decided in a case, “ ‘the better approach’ ” is to remand 
so that the district court can “apply the appropriate standards.”  Id. at 867, quoting 
In re Exxon Valdez, 270 F.3d 1215, 1241 (9th Cir.2001).  However, the court held: 
 
[B]ecause it has already been four years since [the] arrest and three 
years since this case was filed, considerations of judicial efficiency 
lead us to resolve the matter today.  Justice would not be served by 
subjecting the parties to further pre-trial disputes over immunity 
when the matter can be clearly settled on the present summary 
judgment record. 
 
Id. at 867-868. 
{¶ 77} The principle of fairness requires us in this rare and limited 
instance to reach this holding, and we do so with great caution and reluctance.  
Here, a party, Leadscope, was not only successful in its counterclaim for unfair 
competition, but was also successful in defending against a claim for 
misappropriation.  Because an improper standard was given, some justices would 
require this successful party to retry this case, but a retrial would be costly to the 
parties and judicial resources to only reaffirm what a jury properly concluded 
SUPREME COURT OF OHIO 
34 
 
upon our independent review of the record:  ACS did not establish 
misappropriation, and Leadscope established unfair competition. 
II.  DEFAMATION CLAIM 
A.  ACS is not liable for defamation because its 
statements were not defamatory as a matter of law 
1.  The Internal Memorandum 
 
In Ohio, defamation occurs when a publication contains a 
false statement “made with some degree of fault, reflecting 
injuriously on a person's reputation, or exposing a person to public 
hatred, contempt, ridicule, shame or disgrace, or affecting a person 
adversely in his or her trade, business or profession.” 
 
Jackson v. Columbus, 117 Ohio St.3d 328, 2008-Ohio-1041, 883 N.E.2d 1060, 
¶ 9 quoting A & B-Abell Elevator Co. v. Columbus/Cent. Ohio Bldg. & Const. 
Trades Council, 73 Ohio St.3d 1, 7, 651 N.E.2d 1283 (1995). 
 
To establish defamation, the plaintiff must show (1) that a 
false statement of fact was made, (2) that the statement was 
defamatory, (3) that the statement was published, (4) that the 
plaintiff suffered injury as a proximate result of the publication, and 
(5) that the defendant acted with the requisite degree of fault in 
publishing the statement. 
 
Pollock v. Rashid, 117 Ohio App.3d 361, 368, 690 N.E.2d 903 (1996). 
{¶ 78} “[I]t is for the court to decide as a matter of law whether certain 
statements alleged to be defamatory are actionable or not.”  Yeager v. Local 
January Term, 2012 
35 
 
Union 20, Teamsters, Chauffeurs, Warehousemen & Helpers of Am., 6 Ohio St.3d 
369, 372, 453 N.E.2d 666 (1983). 
{¶ 79} “In determining whether a statement is defamatory as a matter of 
law, a court must review * * * the totality of the circumstances” and by “read[ing] 
the statement[] * * * in the context of the entire [publication] to determine 
whether a [reasonable] reader would interpret [it] as defamatory.”  Mann v. 
Cincinnati Enquirer, 1st Dist. No. C-09074, 2010-Ohio-3963, ¶ 12, citing Scott v. 
News-Herald, 25 Ohio St.3d 243, 253, 496 N.E.2d 699 (1986), and Mendise v. 
Plain Dealer Publishing Co., 69 Ohio App.3d 721, 726, 591 N.E.2d 789 (1990). 
 
[T]he words of the publication should not be considered in 
isolation, but rather within the context of the entire [publication] 
and the thoughts that the [publication] through its structural 
implications and connotations is calculated to convey to the reader 
to whom it is addressed. 
 
Connaughton v. Harte Hanks Communications, Inc., 842 F.2d 825, 840 (6th 
Cir.1988), affirmed, 491 U.S. 657, 109 S.Ct. 2678, 105 L.Ed.2d 562 (1989). 
{¶ 80} Reading ACS’s statements made in the internal memorandum in 
context, we readily conclude that they are not defamatory as a matter of law.  The 
internal memorandum was simply a directive to all employees from CAS’s legal 
administration manager not to speak about the litigation.  It was understandable 
and reasonable for the legal administration manager to disseminate an internal 
memorandum regarding an important legal matter to employees.  In order for the 
directive to be effective, the litigation had to be described in sufficient detail.  
Considering the memorandum as a whole and considering the fact that the 
statements in the memorandum were almost a verbatim recitation of the 
SUPREME COURT OF OHIO 
36 
 
allegations in the complaint, we hold that the statements are not defamatory and 
are not actionable. 
2.  The Business First Article 
{¶ 81} Business First, a newspaper serving the corporate community, 
reported on the filing of the ACS lawsuit and the allegations made by ACS.  The 
article, entitled “LeadScope, its founders sued by former employer,” contained a 
balanced report of both parties’ arguments and defenses.  The alleged defamatory 
statements made by ACS’s outside counsel in the article pertained to ACS’s intent 
in filing the lawsuit:  “Our motivation in filing suit is to acquire back the 
protected information that they took from us.” 
{¶ 82} Business First gave the parties an opportunity to comment on the 
case and, in fact, both parties took advantage of that opportunity.  The first 
sentence of the article states that ACS is “alleging [that Leadscope and its 
founders] used proprietary information to form and operate their business.”  Thus, 
a reasonable reader would understand that ACS’s counsel’s statements were a 
quick summary of the case and ACS’s allegations. 
{¶ 83} For its part, Leadscope stated that the lawsuit “has no merit.”  The 
article also contained extrajudicial statements by Leadscope’s counsel that “[t]he 
timing of this lawsuit speaks volumes as to its invalidity” and Leadscope’s 
intention to file a counterclaim.  Leadscope’s counsel stated that even though 
ACS had been aware of the fact that “Leadscope ha[d] been working up its new 
products for about four or five years [and] ha[d] acquired about $10 million in 
venture capital,” ACS did not “utter[] a peep for four or five years.” 
{¶ 84} From the views presented in the article, the average reader would 
learn that the suit had been filed and could easily understand the gist of the claims 
and defenses from the brief quotes that the parties provided regarding their 
opinions about the lawsuit. 
January Term, 2012 
37 
 
{¶ 85} Moreover, the lawsuit was not under seal, and the complaint was 
available to the public.  The public has a legitimate, constitutionally protected 
interest in judicial proceedings, and the article provided information to educate 
and inform the public about the case. 
{¶ 86} Considering the article as a whole and the fact that the article 
contained a true and accurate summary of the legal proceedings at the time, we 
hold that the statements in the article are, as a matter of law, not defamatory.  
Thus, we must reverse the judgment of the court of appeals to the extent it held 
otherwise. 
{¶ 87} Even though we hold that the statements published in Business 
First are not defamatory as a matter of law, we must also address the significance 
of the fact that ACS was held liable for statements made by its outside counsel to 
the media.  Client liability for an attorney’s statements is an issue of first 
impression for this court. 
{¶ 88} Although we have not confronted the discrete issue here, courts 
outside of Ohio have done so.  The better reasoned opinions hold that a client may 
be vicariously liable for its attorney’s torts only if the client authorized or ratified 
the conduct.  See, e.g., Givens v. Mullikin, 75 S.W.3d 383, 394-396 (Tenn.2002) 
(an insurer and an insured may be held vicariously liable for the tortious acts or 
omissions of an attorney hired to defend the insured if the attorney’s tortious 
actions were directed, commanded, or knowingly authorized by the insurer or by 
the insured); Chisler v. Randall, 124 Kan. 278, 259 P. 687, 690 (Kan.1927) (“The 
client is not responsible for unauthorized defamatory communications made by 
his attorney”); Green Acres Trust v. London, 142 Ariz. 12, 18-19, 688 P.2d 658, 
(Ariz.App.1983), vacated in part on other grounds, 141 Ariz. 609, 688 P.2d 617 
(1984) (a client was not liable for defamation when there was an absence of any 
evidence of either authorization or ratification of the attorneys’ statements); 
Arigno v. Murzin, Conn.Super.Ct. No. CV960474102S, 2001 WL 1265404, *9 
SUPREME COURT OF OHIO 
38 
 
(Oct. 2, 2001) (a client was vicariously liable for an attorney’s statements that 
went beyond reading charges against the opposing party because the client 
apparently authorized the statements). 
{¶ 89} We agree.  Based on the foregoing authority, we hold that a client 
is vicariously liable for its attorney’s defamatory statements only if the client 
authorized or ratified the statements.  To hold otherwise would wreak havoc on 
the bench and bar, as well as clients. 
{¶ 90} We make clear that Ohio law imposes no blanket prohibition on an 
attorney’s communications to the media.  Attorneys and their clients retain a 
panoply of First Amendment rights and are free to speak to the public about their 
claims and defenses provided that they do not exceed the contours of protected 
speech and ethical rules that impose reasonable and necessary limitations on 
attorneys’ extrajudicial statements.  See Prof.Cond.R. 3.6 (“A lawyer who is 
participating or has participated in the investigation or litigation of a matter shall 
not make an extrajudicial statement that the lawyer knows or reasonably should 
know will be disseminated by means of public communication and will have a 
substantial likelihood of materially prejudicing an adjudicative proceeding in the 
matter”).  Thus, while we do not muzzle an attorney representing a party in a 
proceeding, attorneys are not given carte blanche to defame others under the guise 
of litigation. 
{¶ 91} In this case, the jury was given only an instruction on the law of 
defamation.  It was not instructed to determine whether ACS was vicariously 
liable for its attorney’s statements.  And there was no evidence before the jury 
that ACS had endorsed or ratified its counsel’s statements.  Thus, the verdict 
against ACS could not stand even if its attorney’s statements could be held to be 
defamatory. We caution trial courts that, in the future, they must instruct the jury 
regarding client authorization or ratification in cases in which claims for 
January Term, 2012 
39 
 
defamation are predicated on extrajudicial statements made by the client’s 
attorney. 
B.  Damages 
{¶ 92} Because we hold today that ACS’s statements in the internal 
memorandum and Business First were not defamatory as a matter of law, we 
reverse the judgment of the appellate court that upheld the jury’s verdict and the 
jury’s award of damages on the defamation claim. 
III.  CONCLUSION 
{¶ 93} Because we hold that the appropriate standard for an unfair 
competition claim predicated upon malicious litigation is the two-part test set 
forth by the Supreme Court in Professional Real Estate Investors, we hold that the 
trial court and court of appeals applied the wrong standard in deciding whether 
ACS brought its claims in good faith.  The United States Constitution and the 
Ohio Constitution do not necessarily preclude claims grounded simply in bad 
faith.  What is precluded are lawsuits that are objectively baseless and filed with 
the subjective intent to injure the party’s ability to be competitive. 
{¶ 94} In this case, the evidence presented by Leadscope overwhelmingly 
supported the jury’s verdict on Leadscope’s unfair competition counterclaim.  
Meanwhile, ACS’s misappropriation claim was completely devoid of evidence 
that would have supported its claim for misappropriation.  Leadscope’s vast 
evidence, coupled with ACS’s lack of support for its claim, compels us to hold 
that even if the jury had been instructed properly, the result would be the same.  
We therefore affirm the portions of the judgment in favor of defendant Leadscope 
on the misappropriation claim and in favor of the counterclaimant Leadscope on 
its counterclaim. 
{¶ 95} Finally, we hold that ACS’s statements in the internal 
memorandum and its attorney’s statements in Business First are not defamatory as 
a matter of law.  We also hold that a client is vicariously liable for its attorney’s 
SUPREME COURT OF OHIO 
40 
 
defamatory statements only if the client authorized or ratified the statements.  
Therefore, we reverse that part of the judgment of the appellate court that upheld 
the jury’s verdict and the jury’s award of damages on defamation. 
{¶ 96} The cause is remanded to the trial court with orders to vacate its 
judgment for Leadscope on the issue of defamation. 
Judgment affirmed in part 
and reversed in part,  
and cause remanded. 
LANZINGER AND MCGEE BROWN, JJ., concur. 
PFEIFER, J., concurs in part one of the judgment, and dissents in all other 
respects. 
LUNDBERG STRATTON and O’DONNELL, JJ., concur in all syllabus 
paragraphs and in part two of the judgment and the portion of the opinion relating 
thereto, and dissent as to part one of the judgment. 
CUPP, J., concurs in paragraph one of the syllabus and dissents in all other 
respects. 
__________________ 
PFEIFER, J., concurring in part and dissenting in part. 
{¶ 97} I concur in the majority’s judgment affirming the appellate court’s 
judgment on appellees’ unfair-competition claims.  I do not concur in the 
majority’s determination that a legal action must be objectively baseless to form 
the foundation of an unfair-competition claim based upon malicious litigation.  
Further, I dissent from the entirety of the majority’s holding regarding the 
appellees’ defamation claims and would affirm the judgment of the court of 
appeals on those claims. 
 
 
 
January Term, 2012 
41 
 
I 
Defamation 
{¶ 98} The jury carefully considered five separate alleged instances of 
defamation.  Jurors decided that two of those statements were defamatory, that the 
American Chemical Society (“ACS”) had made those statements with malice, and 
that defendants had suffered damages.  The majority seeks to thwart the jury’s 
verdict by imposing its own verdict. 
Publicity as a Weapon 
{¶ 99} On April 11, 2002, Michael Dennis, the senior lawyer at Chemical 
Abstract Service (“CAS”), called Michael Conley, Leadscope’s chief financial 
officer, requesting a meeting—a meeting at which ACS would eventually demand 
Leadscope’s patent and $1 million.  Dennis threatened to bring “both [a] civil and 
criminal complaint” and “fast and furious publicity” if Leadscope refused to meet 
with ACS.  When Leadscope did not accede to ACS’s settlement demands, ACS 
unleashed its destructive, two-pronged strategy—litigation and publicity.  The 
publicity proved the more devastating. 
{¶ 100} A jury spent weeks hearing testimony about Leadscope’s path 
from innovation to devastation.  The jury found that, by far, Leadscope had been 
harmed the most by the publication of defamatory statements made by ACS.  The 
verdicts and interrogatories are attached to this opinion as an appendix.  Even 
though the jury found that Leadscope had proven claims for tortious interference 
and unfair competition, nearly 70 percent of the damages awarded by the jury to 
Leadscope were attributable to the defamatory statements of ACS.  For the 
individual plaintiffs, the jury found that as far as general damages were 
concerned, Blower, Johnson, and Myatt suffered damages equally from the unfair 
competition and the defamation. 
{¶ 101} It should be no surprise that ACS’s comments about Leadscope 
and its founders, especially to the particular audiences it chose, were devastating.  
SUPREME COURT OF OHIO 
42 
 
ACS, a venerable institution chartered by Congress, the world’s largest scientific 
society with over 164,000 members and self-described as “one of the world’s 
leading sources of authoritative scientific information,” accused three of its 
former employees of stealing technology from CAS.  The jury, like ACS, realized 
the import of that type of accusation.  That purveyor of “authoritative scientific 
information” announced to the 1,900 employees of ACS—employees who were 
colleagues, competitors, and potential customers of Leadscope and its founders—
that Leadscope and its founders had “sought and received a patent for technology 
indistinguishable from a project on which they worked while employees of the 
Society’s Chemical Abstracts Service” and that ACS would act “to protect its 
intellectual property and proprietary information.”  ACS then admonished the 
1,900 people that it just notified of the lawsuit to not comment upon it to anyone 
else. 
{¶ 102} Ten days later, ACS ignored its own advice and spoke, through its 
attorney, to Columbus’s Business First, a business-oriented newspaper.  To a 
reporter from the business newspaper of Leadscope’s home town, a town where 
Leadscope had been attempting to raise capital, ACS essentially said that 
Leadscope’s central product was stolen from ACS. 
{¶ 103} ACS, “one of the world’s leading sources of authoritative 
scientific information,” announced to an audience that included the scientific 
world and the financial world that virtually everything that Leadscope was built 
upon was stolen.  A few words to the right audience can be ruinous.  And the jury 
determined that those words were ruinous to Leadscope, Blower, Johnson, and 
Myatt.  The majority has not demonstrated why those jury verdicts should not 
stand. 
Legal Standard 
{¶ 104} The law on defamation is not complicated.  As the majority 
relates, defamation occurs when a publication contains a false statement made 
January Term, 2012 
43 
 
with some degree of fault that reflects injuriously on a person’s reputation or 
affects a person adversely in his trade, business, or profession.  Jackson v. 
Columbus, 117 Ohio St.3d 328, 2008-Ohio-1041, 883 N.E.2d 1060, ¶ 9.  The 
majority, however, finds that the statements made by ACS are not defamatory, 
despite the fact that the claims of Leadscope and the individual defendants were 
not wanting as to any element necessary to prove defamation.  And the majority 
does not assert that any privilege applies to ACS.  In both instances—the 
employee memorandum and the Business First article—the statements made by 
ACS were false, were made with the knowledge that they were false, injured the 
reputations of Leadscope and the individual defendants, and adversely affected 
them in their business. 
A 
Business First Article 
{¶ 105} The jury awarded damages based on a statement from ACS’s 
counsel in the May 11, 2002 edition of Business First. The statement reads, “Our 
motivation in filing suit is to acquire back the protected information that they took 
from us.”  ACS’s counsel demonstrated no equivocation.  He did not claim to be 
quoting the complaint.  He said that the defendants had taken protected 
information from ACS.  That statement was false, ACS knew it was false, and it 
injured Leadscope and the individual defendants.  The majority concocts novel 
legal theories to save ACS from the jury’s verdict. 
1.  ACS Is Not a Newspaper 
{¶ 106} The majority cites four cases involving newspapers as defendants 
in support of its statement that a court must review the statement at issue under 
the totality of the circumstances and within context:  Mann v. Cincinnati 
Enquirer, 1st Dist. No. C-09074, 2010-Ohio-3963, ¶ 12, citing Scott v. News-
Herald, 25 Ohio St.3d 243, 253, 496 N.E.2d 699 (1986); Mendise v. Plain Dealer 
Publishing Co., 69 Ohio App.3d 721, 726, 591 N.E.2d 789 (1990); and 
SUPREME COURT OF OHIO 
44 
 
Connaughton v. Harte Hanks Communications, Inc., 842 F.2d 825, 840 (6th 
Cir.1988), affirmed 491 U.S. 657, 109 S.Ct. 2678, 105 L.Ed.2d 562 (1989).  
Those cases actually say that the court must look to the entire “article”—the 
majority substitutes the word “publication”—to determine whether the statements 
at issue are defamatory.  That is, when a newspaper is being sued for statements 
appearing in an article, the court should look at everything the newspaper 
published in the article in determining whether the statements at issue were 
defamatory.  The newspaper, when it is being sued, gets credit for its attempt to 
balance the allegedly defamatory statements with other material.  In discussing 
context, the court in Scott said: 
  
To evaluate an article’s broader context we must examine 
the type of article and its placement in the newspaper and how 
those factors would influence the reader’s viewpoint on the 
question of fact or opinion. 
 
Scott v. News-Herald, 25 Ohio St. 3d at 253, 496 N.E.2d 699. ACS was not 
making editorial decisions.  It was simply making defamatory statements. 
{¶ 107} The majority cites newspaper cases that simply do not apply to 
ACS. For instance, the majority quotes Connaughton as saying, “[T]he words of 
the publication should not be considered in isolation, but rather within the context 
of the entire [publication] and the thoughts that the [publication] through its 
structural implications and connotations is calculated to convey to the reader to 
whom it is addressed.”  Id. at 840. 
{¶ 108} When one views that quote as part of the entire sentence as it 
appeared in Connaughton, it is clear that the case is discussing the newspaper’s 
entire process in putting a story to print:  
 
January Term, 2012 
45 
 
Other factors to be scrutinized are conversations between 
the editor and/or other management personnel with reporters, or 
the author of the article, concerning the research and development 
of a controversial story; decisions and reasons relating to selective 
interviews 
and 
selective 
investigations; 
the 
manner 
of 
implementing interviews; the importance and veracity of 
information relied upon in developing the article, always mindful 
of the caveat that the words of the publication should not be 
considered in isolation, but rather within the context of the entire 
article and the thoughts that the article through its structural 
implications and connotations is calculated to convey to the reader 
to whom it is addressed. 
 
Id. at 840.  
{¶ 109} Business First is not being sued here.  If it were, Business First 
would get credit for the “balanced report of both parties’ arguments and defenses” 
that the majority claims Business First gave.  ACS, on the other hand, is 
responsible for its lawyer’s words.  Business First reported what ACS’s counsel 
said; ACS does not get the benefit of the nonparty newspaper’s attempt at writing 
a balanced story. 
2. The Defamed Party’s Opportunity to Deny the Defamatory Statement  
Does Not Make the Statement Nondefamatory 
{¶ 110} The majority states that the Business First article “contained a 
balanced report of both parties’ arguments and defenses.” The majority excuses 
ACS’s defamatory statement because it was balanced by Leadscope’s assertion in 
the article that the lawsuit “has no merit.”  This is a novel approach to defamation 
law–if the victim denies the defamatory statement, the defamer is shielded from 
SUPREME COURT OF OHIO 
46 
 
liability because the statement is not defamatory.  Does the majority really mean 
that?   
{¶ 111} It may be the case that the chance to publicly deny the veracity of 
a defamatory statement might affect the amount of damages a plaintiff may 
recover.  But the opportunity to defend one’s good name cannot mean that the 
defamatory statement itself was not defamatory.  It just cannot. 
3. A Statement About Litigation Is Qualifiedly Privileged 
{¶ 112} Parties to a lawsuit are protected from claims of defamation 
related to discussions about that lawsuit—but it is a qualified privilege.  This 
privilege is codified at R.C. 2317.05 and provides that a “fair and impartial 
report” of the allegations made in a lawsuit is protected by a qualified privilege 
that can be overcome by a showing of actual malice.  The fact that a statement 
accurately reports the contents of litigation does not render the statement “not 
defamatory”—it only entitles the speaker to a qualified privilege, which can be 
overcome by a showing of actual malice. 
{¶ 113} The jury was instructed that ACS’s comments in Business First 
were qualifiedly privileged in this case.  The jury was also instructed that actual 
malice occurs “when the [declarant] makes a false statement either with 
knowledge that it is false or with reckless disregard of whether it is false or not.” 
{¶ 114} The jury found that ACS, through its counsel, had made with 
actual malice the statement alleging that defendants had stolen something from 
ACS.  That was enough to overcome the privilege that applies to statements 
regarding litigation in Ohio. 
4. Client Authorization or Ratification 
{¶ 115} The majority’s discussion of a client’s vicarious liability for the 
statements of its attorney is superfluous, given its holding that the statements 
made by ACS’s attorneys were not defamatory.  That discussion is also 
superfluous because it has nothing to do with this case.  ACS makes no claim that 
January Term, 2012 
47 
 
it had not authorized or ratified the statements of its attorney in the Business First 
article.  Instead, it attempted to persuade this court in its briefing that the 
statements were fair commentary on the lawsuit, that the “statements at issue 
* * * stay well within the allegations made in the complaint, and it is in fact 
difficult to envision an ‘accurate summary of the allegations’ that would be more 
restrained.”  Can we not presume that ACS ratified or authorized the statements in 
the complaint?  Should this court reverse a $15 million verdict on a theory not 
raised by the appellant at trial or on appeal, a theory that would have been 
dismissed by the jury out of hand? 
{¶ 116} Ohio attorneys would have nothing to fear from a holding in favor 
of appellees.  Attorneys should note well that they may speak out about a pending 
lawsuit with no threat of liability as long as they do not make a false statement 
either with knowledge that it is false or with reckless disregard of whether it is 
false or not.  They retain an absolute privilege for whatever they file or say in 
court, Willitzter v. McCloud, 6 Ohio St.3d 447, 448-449, 453 N.E.2d 693 (1983), 
but they cannot expect to avoid liability for lying in public just because they first 
have lied in a complaint. 
B 
Memorandum to Employees 
{¶ 117} ACS’s memorandum to all its employees regarding the litigation 
was the second basis upon which the jury found that ACS had defamed the 
defendants.  The memorandum (which reads more like a press release) was sent to 
approximately 1,900 employees around the globe, including Europe and Asia, 
including employees having nothing to do with the case.  It read: 
 
Re:  Communication re: Legal Matter 
The nonprofit American Chemical Society has filed a legal 
complaint against Leadscope, Inc., and its founders, who sought 
SUPREME COURT OF OHIO 
48 
 
and received a patent for technology indistinguishable from a 
project on which they worked while employees of the Society’s 
Chemical Abstracts Service in the mid-1990s. 
The Society is a leader in publishing scientific journals and 
databases that are indispensable to chemists around the globe, and 
is acting to protect its intellectual property and proprietary 
information. 
Staff members are not authorized to comment on this 
matter.  It is important that you refrain from communicating and/or 
commenting about this subject to any individual while the legal 
process is being pursued. 
 
(Emphasis added.) 
{¶ 118} ACS, which had threatened “fast and furious publicity,” released 
this memo to people in the same industry as defendants, alleging that defendants 
had sought their patent fraudulently.  The statement that Leadscope and its 
founders had “received a patent for technology indistinguishable from a project 
on which they worked while employees of the Society’s Chemical Abstracts 
Service” was false, ACS knew it was false, and it injured Leadscope and the 
individual defendants. 
{¶ 119} The majority goes along with the fiction that “[t]he internal 
memorandum was simply a directive to all employees from ACS’s counsel to not 
speak about the litigation.”  Could it instead have been an effort to get as many 
people in the industry talking about the lawsuit as possible? 
{¶ 120} Regardless, 
the 
majority 
states 
that 
“[c]onsidering 
the 
memorandum as a whole and considering the fact that the statements in the 
memorandum were almost a verbatim recitation of the allegations in the 
complaint, we hold the statements are not defamatory.”  To the contrary, a 
January Term, 2012 
49 
 
consideration of the memorandum as a whole does nothing but lead to a 
conclusion that the memorandum is defamatory.  Nothing in the remainder of the 
memorandum softens the salvo from the opening paragraph that defendants’ 
product’s technology was indistinguishable from that of a project they worked on 
at CAS.  There is nothing saying “we allege” or “we think”—the reader is led to 
believe that ACS has compared the guts of the two projects and found they were 
identical, that ACS’s only option is to go to war because of what it has found.  
The jury determined that was not true. 
{¶ 121} That the memorandum went to employees and involved litigation 
was relevant, but not determinative.  Again, ACS enjoyed a qualified privilege for 
the statements made in the memorandum.  But a falsehood contained in a legal 
complaint when repeated outside of that complaint does not enjoy an absolute 
privilege. 
{¶ 122} This jury found that ACS had acted with actual malice in the 
publication of the employee memorandum.  Again, the majority ignores the jury’s 
determination. 
C 
Conclusion on Defamation 
{¶ 123} ACS levied the most serious accusation that can be brought 
against an inventor: you stole your invention.  For the majority to determine that 
those words are not defamatory is unfathomable.  This is not an instance where a 
court has been asked to determine whether a statement is simply rhetoric, satire, 
or hyperbole and thus not defamatory.  There is no way to paint the comments at 
issue in this case as anything other than defamatory.  There is no privilege 
extensive enough to protect ACS from liability for those statements.  The 
statements were well chosen, well timed, and well placed by ACS to achieve their 
maximum effect.  Leadscope and its founders were profoundly damaged.  But 
ACS pays no price for its defamatory statements because they were more or less 
SUPREME COURT OF OHIO 
50 
 
reflective of statements contained in its complaint.  The majority excuses ACS for 
its published lies to the scientific community and financial community because it 
had first lied to a federal court.  Such is the reasoning when a result goes in search 
of a justification. 
II 
Unfair Competition Based upon Malicious Litigation 
{¶ 124} I concur in the majority’s holding that the appellees proved their 
case for unfair competition based upon malicious litigation even under the 
standard of law that the majority says should have been in place in this case.  I do 
not concur with the majority that under Ohio law, the Noerr-Pennington doctrine 
establishes the elements of a claim for unfair competition based upon malicious 
litigation.  See E. RR. Presidents Conference v. Noerr Motor Freight, Inc., 365 
U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961), and United Mine Workers of Am. v. 
Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965). 
A 
Unfair Competition 
{¶ 125} First, I would hold that this court need not even address ACS’s 
appeal regarding malicious litigation.  The individual defendants and Leadscope 
alleged that ACS had engaged in unfair competition through three means: 
malicious litigation, circulation of false statements and rumors about the 
defendants, and false disparagement of individual defendants.  The jury returned a 
general verdict against ACS in favor of all the defendants; a jury interrogatory 
asked on which grounds the jury had found for the defendants on the unfair 
competition issue.  The jury answered that ACS had engaged in unfair 
competition in each of the three separate ways the defendants had alleged.  In the 
award of damages for the unfair competition claims, there was no breakdown as 
to how much the jury awarded under each theory. 
 
January Term, 2012 
51 
 
Two-Issue Rule 
{¶ 126} This court in Water Mgt., Inc. v. Stayanchi, 15 Ohio St.3d 83, 85, 
472 N.E.2d 715, 717 (1984), recognized that “[t]he concept of unfair competition 
may also extend to unfair commercial practices such as malicious litigation, 
circulation of false rumors, or publication of statements, all designed to harm the 
business of another.”  This court cited Henry Gehring Co. v. McCue, 23 Ohio 
App. 281, 283-284, 154 N.E. 171 (8th Dist.1926) in support of that statement.  
The majority opinion addresses only the malicious litigation aspect of the 
defendants’ unfair-competition claims; it does not address the claims and jury 
verdicts for the defendants that were based upon circulation of false statements 
and rumors about defendants or false disparagement of individual defendants.  
The trial court provided separate instructions for those claims, and the jury made 
discrete findings as to each and recorded those findings in its answer to an 
interrogatory. 
{¶ 127} Due to the two-issue rule, there is no need for this court to even 
address the malicious-litigation portion of defendants’ unfair-competition claims.  
Under the two-issue rule, if there is a general verdict and more than one theory of 
liability, the verdict stands if one of the theories of liability was tried without 
error: 
 
This rule as generally applied is that, where there are two causes of 
action, or two defenses, thereby raising separate and distinct issues, 
and a general verdict has been returned, and the mental processes 
of the jury have not been tested by special interrogatories to 
indicate which of the issues was resolved in favor of the successful 
party, it will be presumed that all issues were so determined; and 
that, where a single determinative issue has been tried free from 
error, error in presenting another issue will be disregarded. 
SUPREME COURT OF OHIO 
52 
 
 
H.E. Culbertson Co. v. Warden (1931), 123 Ohio St. 297, 303, 175 N.E. 205. 
{¶ 128} Here, we do not even have two separate causes of action; instead, 
the jury was presented with three ways it could find that ACS had engaged in 
unfair competition.  The jury found in favor of the defendants on three variations 
of the same tort.  That an error was alleged as to one of those theories is irrelevant 
under the two-issue rule.  According to the jury, ACS was liable to the defendants 
for unfair competition.  The general damages verdict on unfair competition was 
not tested by interrogatories.  Even if the malicious-litigation aspect of 
defendants’ claim were reversed, the general verdict remains, supported by the 
remaining findings of unfair competition.  The jury verdict on unfair competition 
should therefore stand regardless of this court’s decision on the malicious-
litigation issue. 
B 
Malicious Litigation 
1. ACS Waived Noerr-Pennington Immunity and Thus Any Requirement 
That the Defendants Prove ACS’s Claims Were “Objectively Baseless” 
{¶ 129} The majority opinion states that in this case, “the jury instructions 
were inadequate because they did not include the ‘objectively baseless’ element 
necessary to meet the two-part test for an unfair competition claim.”  But no Ohio 
case has ever required that the litigation brought by a malicious-litigation 
defendant be “objectively baseless.” See, e.g., Henry Gehring Co. v. McCue, 23 
Ohio App. at 283-284, 154 N.E. 171; Harco Corp. v. Corrpro Cos., Inc., 9th Dist. 
No. 1465, 1986 WL 12338, *3 (Oct. 29, 1986); Microsoft Corp. v. Action 
Software, 136 F. Supp.2d 735, 739 (N.D.Ohio 2001).  The majority’s statement 
about a “two-part test for an unfair competition claim” demonstrates a 
fundamental misunderstanding. 
January Term, 2012 
53 
 
{¶ 130} As the majority relates, those magic words—“objectively 
baseless”—come from Professional Real Estate Investors, Inc. v. Columbia 
Pictures Industries, Inc. (“PREI”), 508 U.S. 49, 113 S.Ct. 1920, 123 L.Ed.2d 611 
(1993), a case applying the Noerr-Pennington Doctrine.  PREI, however, does not 
establish a two-part test for malicious prosecution.  Rather, it establishes a two-
part test for defeating a claim of Noerr-Pennington immunity.  “[T]he Noerr-
Pennington doctrine, as it has evolved, is an affirmative defense which exempts 
from anti-trust liability any petitioning activity designed to influence legislative 
bodies or governmental agencies.” North Carolina Elec. Membership Corp. v. 
Carolina Power & Light Co., 666 F.2d 50, 52 (4th Cir.1981).  ACS seeks to 
extend Noerr-Pennington immunity in this case to make it immune from liability 
for filing suit against the defendants. 
{¶ 131} PREI establishes that a party claiming immunity may still be 
liable if the suit at issue constituted “sham litigation.”  Under PREI, litigation 
cannot be deprived of immunity as a sham unless it is objectively baseless. PREI, 
at 60. 
{¶ 132} Parties claiming immunity from liability pursuant to the Noerr-
Pennington Doctrine must raise that alleged immunity as an affirmative defense. 
Bayou Fleet, Inc. v. Alexander, 234 F.3d 852, 860 (5th Cir.2000).  Once the 
malicious-litigation defendant “assert[s] Noerr-Pennington as an affirmative 
defense, [the plaintiff] ‘has the burden of proving that its [opponent’s] conduct 
was a sham.’ IGEN Internatl., Inc. v. Roche Diagnostics GmbH, 335 F.3d 303, 
312 (4th Cir.2003), quoting Hosp. Bldg. Corp. v. Trustees of Rex Hosp., 791 F.2d 
288, 293 (4th Cir.1986).”  However, ACS never asserted that it had Noerr-
Pennington immunity from liability in this action.  Thus, defendants were under 
no burden to establish that ACS’s claims constituted sham litigation under PREI. 
{¶ 133} Since Noerr-Pennington immunity is an affirmative defense, ACS 
was bound by Civ.R. 8(C) (“Affirmative defenses”) to plead it in a responsive 
SUPREME COURT OF OHIO 
54 
 
pleading.  Of course, it did no such thing.  It waived the defense; ACS did not 
even mention objective baselessness or the Noerr-Pennington Doctrine until its 
motion for judgment notwithstanding the verdict, two weeks after the conclusion 
of the trial.  Now, after ignoring PREI, a United States Supreme Court case 
decided nearly a decade before this litigation started, ACS wants to retroactively 
make it control this case. 
2. The Noerr-Pennington Doctrine Is Not a Part of 
Ohio Unfair-Competition Law 
{¶ 134} What ACS failed to assert as an affirmative defense—Noerr-
Pennington immunity—it now seeks to shoehorn in as necessary proof of a claim 
for unfair competition.  ACS was thus left to claim to this court that objective 
baselessness has always been a part of malicious-litigation law in Ohio. 
{¶ 135} But it has never been a part of malicious-litigation law in Ohio.  
Greer-Burger v. Temesi, 116 Ohio St.3d 324, 2007-Ohio-6442, 879 N.E.2d 174, 
is by no means an unfair-competition case and is inapposite.  In Greer-Burger, at 
paragraph two of the syllabus, this court applied the sham litigation analysis from 
PREI to determine that the government, specifically the Ohio Civil Rights 
Commission (“OCRC”), could not prevent an employer from suing an employee 
over damages the employer suffered from the employee’s unsuccessful 
discrimination claim.  In Greer-Burger, the employer was prevented by an order 
of the OCRC from even bringing his claim; he was actually denied access to the 
courthouse. Id. at ¶ 16.  ACS, on the other hand, has not been prevented from 
seeking redress against the defendants.  It had its day in court.  It wants something 
completely different—to be held harmless for any damage it may have caused 
defendants by bringing its claims. 
{¶ 136} The test for sham litigation in PREI arises once a party claims 
immunity from liability.  It is not a part of a test for malicious litigation.  That is 
why ACS never raised it below.  That is why we should not apply it in this case. 
January Term, 2012 
55 
 
C 
Conclusion on Unfair Competition Based Upon Malicious Litigation 
{¶ 137} Although I do not agree with the majority that PREI, a case not 
raised by ACS until after the conclusion of the trial, controls the law in Ohio on 
unfair competition based upon malicious litigation, I do agree with the majority 
that defendants proved that ACS’s claims were objectively baseless under that 
standard and that the jury verdicts on appellees’ unfair-competition claims should 
stand.  Thus, I concur in the majority’s decision affirming the judgment of the 
court of appeals on appellees’ unfair-competition claims. 
__________________ 
 
LUNDBERG STRATTON, J., concurring in part and dissenting in part. 
{¶ 138} I concur in the majority’s holding that defines the proper tests for 
unfair competition and defamation and in the majority’s holding that the actions 
of American Chemical Society (“ACS”) were not defamatory as a matter of law.  
I dissent only because I would remand the unfair-competition claim of Leadscope, 
Inc. for a new trial, as opposed to deciding that issue in this court.  Therefore, I 
respectfully concur in part and dissent in part. 
{¶ 139} The trial court provided the jurors the following instruction 
regarding Leadscope’s unfair-competition claim: “In Ohio, unfair competition 
may consist of malicious acts by way of litigation that is not founded in good 
faith, but is for the purpose of harassing and injuring a rival producing and selling 
the same commodities.”  The jury returned a verdict in favor of Leadscope on its 
unfair-competition claim, and the court of appeals affirmed. 
{¶ 140} We hold that the trial court’s jury instructions pertaining to 
Leadscope’s unfair-competition claim “were inadequate because they did not 
include the ‘objectively baseless’ element necessary to meet the two-part test for 
an unfair competition claim.”  However, rather than remanding the cause for a 
new trial for a jury to apply the correct instructions, the majority reviews the 
SUPREME COURT OF OHIO 
56 
 
evidence and affirms the judgment of the court of appeals after finding that 
Leadscope would prevail on its unfair-competition claim against ACS under the 
new instructions. 
{¶ 141} “[I]t is a fundamental tenet of jury trial procedure that the judge 
decides questions of law, and the jury, as factfinder, then decides questions of 
fact.”  Gallagher v. Cleveland Browns Football Co., 74 Ohio St.3d 427, 436, 659 
N.E.2d 1232 (1996).  The jury is in the best position to judge the credibility of 
witnesses because the jury “ ‘ “is best able to view witnesses and observe their 
demeanor, gestures and voice inflections, and use these observations in weighing 
the credibility of the proffered testimony.” ’ ”  State v. Ross, 9th Dist. No. 
09CA009742, 2012-Ohio-536, ¶ 42, quoting State v. Cook, 9th Dist. No. 21185, 
2003-Ohio-727, ¶ 30, quoting Giurbino v. Giurbino, 89 Ohio App.3d 646, 659, 
626 N.E.2d 1017 (8th Dist.1993).  “The jury alone, as the trier of fact, has the 
duty to decide what weight should be given to the testimony of any expert 
witness.”  Kokitka v. Ford Motor Co., 73 Ohio St.3d 89, 652 N.E.2d 671 (1995), 
paragraph two of the syllabus.  Thus, the “weight to be given evidence and the 
credibility of witnesses are jury issues.”  State v. Jamison, 49 Ohio St.3d 182, 
191, 552 N.E.2d 180 (1990), citing State v. DeHass, 10 Ohio St.2d 230, 227 
N.E.2d 212 (1967), paragraph one of the syllabus. 
{¶ 142} In rendering a verdict in favor of Leadscope regarding its unfair-
competition claim, the jury in this case considered only whether ACS acted in bad 
faith.  Pursuant to our holding herein, the jury should have also considered 
whether ACS’s complaint alleging that Leadscope appropriated trade secrets was 
objectively baseless.  But it will never have that opportunity because the majority 
has reached its own conclusion.  In my opinion, the majority improperly reviews 
and weighs the evidence, including expert testimony, presented by both ACS and 
Leadscope, in concluding that there is sufficient evidence to support Leadscope’s 
unfair-competition claim against ACS.  I believe that the majority has usurped the 
January Term, 2012 
57 
 
jury’s duties of weighing and determining the credibility of evidence.  I would 
remand this case for a new jury trial regarding Leadscope’s counterclaim for 
unfair competition.  As we stated in State v. Petro, 148 Ohio St. 473, 501, 76 
N.E.2d 355 (1947), “[i]t is the minds of the jurors and not the minds of the judges 
of an appellate court that are to be convinced.” 
{¶ 143} Therefore, while I concur in the majority’s substantive holding, I 
would remand this cause for a new trial on Leadscope’s unfair-competition claim.  
Accordingly, I concur in part and dissent in part. 
O’DONNELL, J., concurs in the foregoing opinion. 
__________________ 
 
CUPP, J., concurring in part and dissenting in part. 
{¶ 144} I concur in paragraph one of the syllabus and agree that for a party 
to succeed on a claim of unfair competition based on an opposing party’s filing of 
a legal action, the party asserting the claim must establish both that the legal 
action is objectively baseless and that the opposing party had the subjective intent 
to injury the party’s ability to be competitive.  I am unable to agree, however, that 
the jury’s determination on this claim can be affirmed as a matter of law upon this 
court’s own review of the record in our application of the correct standard.  As 
explained in Justice Lundberg Stratton’s separate opinion, this cause should be 
remanded to the trial court for further proceedings on the unfair-competition 
claim. 
{¶ 145} I agree with much, but not all, of the legal analysis contained in 
Justice Pfeifer’s separate opinion regarding the defamation claims.  The two 
allegedly defamatory occurrences specifically at issue gave rise to jury questions 
as to whether the statements were indeed defamatory, and the jury’s conclusions 
that they were defamatory are entitled to deference.  As the appellate court stated 
in affirming on the defamation claims, sufficient evidence was presented “upon 
which the jury could find by clear and convincing evidence that ACS published 
SUPREME COURT OF OHIO 
58 
 
the statements * * * with actual malice” to overcome any privilege that attached.  
Am. Chem. Soc. v. Leadscope, 10th Dist. No. 08AP-1026, 2010-Ohio-2725, ¶ 61.  
I would affirm the judgment of the court of appeals as to the defamation issues. 
__________________ 
Vorys, Sater, Seymour and Pease L.L.P., Michael G. Long, and Kimberly 
Weber Herlihy; and Jenner & Block L.L.P., David W. DeBruin, Matthew S. 
Hellman, Lindsay C. Harrison, and Matthew E. Price, for appellant. 
Squire, Sanders & Dempsey (US) L.L.P., Alan L. Briggs, Aneca E. 
Lasley, Christopher F. Haas, Pierre H. Bergeron, and Colter Paulson, for 
appellees. 
Michael DeWine, Attorney General, Alexandra T. Schimmer, Solicitor 
General, and David M. Lieberman, Deputy Solicitor, urging reversal for amicus 
curiae state of Ohio. 
Jones Day, Douglas Cole, and Mathew A. Kairis, and Linda Woggon, 
urging reversal for amicus curiae Ohio Chamber of Commerce. 
Bricker & Eckler and Anne Marie Sferra, urging reversal for amici curiae 
Ohio Manufacturers’ Association and Ohio Council of Retail Merchants. 
Eugene P. Whetzel, urging reversal for amicus curiae Ohio State bar 
Association. 
______________________ 
 
THE APPENDIX TO JUSTICE PFEIFER’S 
CONCURRING AND DISSENTING OPINION 
APPEARS ON THE FOLLOWING PAGES. 
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