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The plain terms of a contract control the parties’ course of conduct for all matters subject to that contract’s terms. See Maher v. Schumacher, 605 So.2d 481 (Fla. 3d DCA 1992) (holding that the plain meaning of the contractual language used by the parties controls). The Court is prohibited from rewriting contract terms. Pol v. Pol, 705 So. 2d 51, 53 (Fla. 3d DCA 1997) (“It is well established that a court cannot rewrite the clear and unambiguous terms of a voluntary contract.”). However, non-complete law contains a powerful exception allowing courts to disregard the well- pronounced prohibition against rewriting contracts. Courts can “blue-pencil” (i.e., Judicially modify) provisions of non-compete agreements when they do not conform to the requirements of Florida’s restrictive covenant statute, Section 542.335, Florida Statutes. In doing so, blue pencil laws breathe life into an otherwise invalid contractual provision. The blue pencil exception can be an important tool for those attempting to obtain relief under a contractual provision that violates the restrictive covenant statute.  The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment law, and other legal disputes in federal and state courts and in arbitration.

A court’s ability to “blue-pencil” a restrictive covenant is limited to modifying the scope of the provision to bring it within the ambit of non-compete law. See White v. Mederi Caretenders Visiting Services of Se. Florida, LLC, 226 So. 3d 774 (Fla. 2017) (Courts are commanded to “modify, or blue pencil, a non-competition agreement that is overbroad, overlong, or otherwise not reasonably necessary to protect the legitimate business interest.”). The court can only narrow a restrictive covenant to the extent needed to protect the plaintiff’s established legitimate business interests. Id. (noting that courts can modify overbroad restrictive covenants to “grant only the relief reasonably necessary to protect such interest”). Courts can shorten a restrictive covenant that is too long in duration, may curtail the geographical scope to a more limited area, or may constrain the subject matter to particular legitimate business interests. Id.

Blue penciling laws can create perverse incentives for employers and similarly situated parties to draft overbroad provisions they know have little chance of being enforceable. Employers may force their employees to agree to overbroad restrictive covenants to intimidate employees and make them believe they cannot compete in any respect. Employers may believe there is little risk in drafting an overbroad restrictive provision because a court will probably blue-pencil the provision if enforcement is necessary. Therefore, employers could face little risk in purposefully drafting an onerous overbroad restrictive covenant.

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Corporations routinely require their employees to enter restrictive covenants (including non-solicition and non-compete agreements) protecting the business from unfair competition. However, employees often live and reside in states that are different from the company’s place of incorporation and principal place of business. This trend has grown in recent years as some companies have moved toward a fully remote work environment. The corporation’s ability to enforce its restrictive covenants may be hampered or become more complicated where state laws governing enforcement of restrictive covenants vary.  This article explores a sampling of contradictory restrictive covenant laws and how one might address those contradictions upfront to help ensure a restrictive covenant agreement remains enforceable.  The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment law, and other legal disputes in federal and state courts and in arbitration.

Some states, like Florida, have strong restrictive covenant laws codified by statute. Florida permits non-compete agreements when they are supported by one or more “legitimate business interests” and reasonable in time and scope to protect the business. See Fla. Stat. § 542.335 (“The person seeking enforcement of a restrictive covenant shall plead and prove the existence of one or more legitimate business interests justifying the restrictive covenant.”). Other states, like Pennsylvania, rely on caselaw to enforce restrictive covenants. See, e.g., Socko v. Mid-Atl. Sys. of CPA, Inc., 2014 PA Super 103, 99 A.3d 928, 935 (2014), aff’d, 633 Pa. 555, 126 A.3d 1266 (Penn. 2015) (permitting enforcement of a restrictive convent when the employee “receive[s] actual valuable consideration” and the restriction is reasonably limited in time and territory). Application of case law can be amorphous thereby making it more difficult to enforce the covenant or predict outcomes. See Insulation Corp. of Am. v. Brobston, 446 Pa. Super. 520, 529, 667 A.2d 729, 733 (Penn. 1995) (adding more stringent requirements to enforce a post-employment restrictive covenant). Yet other states like Minnesota prohibit enforcement of most restrictive covenant agreements. Minn. Stat. Ann. § 181.988 (“Any covenant not to compete contained in a contract or agreement is void and unenforceable”).

Companies can insert choice of law provisions in their restrictive covenant agreements to provide some definiteness as to which state’s laws apply. These provisions pre-select the application of a particular state’s laws, usually to the exclusion of all other state laws.  Choice of law provisions, however, are not always enforceable. For example, in Florida, a choice of law provision will not be enforced when its application would violate Florida’s public policy.  In Snelling & Snelling, Inc. v. Reynolds, 140 F. Supp. 2d 1314 (M.D. Fla. 2001), the United States District Court for the Middle District of Florida analyzed a restrictive covenant that selected Pennsylvania as the governing law.  The court explained that, “[s]ince Snelling has indicated its intention for the governing law, Pennsylvania law will govern the dispute between the parties, as long as that law is not against the public policy of the forum state.”   Florida courts analyze the laws of the chosen state as contrasted against Florida law, to determine whether the laws of both states contradict each other.  Snelling explained that the court “must determine whether Pennsylvania law governing non-compete covenants is contrary to Florida’s public policy.”  If a contradiction exists, further analysis would be conducted to determine whether there is a violation of Florida’s public policy.  Other states may construe choice of law provisions differently or enforce them differently.

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For certain business, their trade secrets and are their most valuable assets.  Accordingly, businesses will often seek to protect their trade secrets in various ways, including the use of a non-disclosure agreement (commonly referred to as an “NDA”).  An NDA is a contract that typically binds current and former employees and independent contractors to maintain the confidentiality of disclosed information.  To succeed in business litigation alleging misappropriation of a trade secret, a company must take reasonable measures to protect the secrecy of its information.  This requirement is codified within the Defend Trade Secrets Act (18 U.S.C. section 1839(3)(A)) as part of the definition of “trade secret.”  The United States Court of Appeals for the Seventh Circuit in Tax Track Sys. Corp. v. New Inv. World, Inc., 478 F.3d 783 (7th Cir. 2007), explained that courts evaluate the question of whether efforts to keep information confidential were sufficient “on a case-by-case basis, considering the efforts taken, the costs, benefits, and practicalities of the circumstances.”  The Tax Track decision further stated that, in some circumstances, judgment as a matter of law is appropriate because it is “readily apparent that reasonable measures were not taken.”  Peter Mavrick a Miami business litigation attorney, and represents clients in Fort Lauderdale, Boca Raton, and Palm  Beach. The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

Under the Defend Trade Secrets Act, 18 U.S.C. section 1839(5)(B)(ii)-(iii), a trade secret is “misappropriated” by, among other means, “disclosure or use of a trade secret of another without the express or implied consent by a parson who…at the time of disclosure or use, knew or had reason to know that the knowledge of the trade secret was…acquired under circumstances giving rise to a duty to maintain the secrecy of the trade secret or limit the use of the trade secret; or…derived from or through a person who owed a duty to the person seeking relief to maintain the secrecy of the trade secret or limit the use of the trade secret.”  Although an NDA is not a necessary condition to demonstrate reasonable protection for a business’ trade secrets, it nevertheless can serve as persuasive evidence in demonstrating the business took reasonable measures to protect its intellectual property.  The United States Court of Appeals for the Eleventh Circuit in Penalty Kick Management Ltd. v. Coca Cola Co., 318 F.3d 1284 (11th Cir. 2003), stated in pertinent part that, “[i]n this case, the surrounding circumstances, namely the Non–Disclosure Agreement, clearly gave rise to a duty on the part of Coca–Cola to maintain the secrecy of any Magic Windows trade secrets.”

Requiring that employees and independent contractors sign NDAs is generally not, by itself, sufficient to prove the employer took reasonable measures to protect its trade secrets.  As with any valuable asset, common sense is needed to determine what measures are appropriate under the relevant circumstances.  For example, the business may need to limit access to the trade secrets to only those employees who “need to know” the information, limit access to information via separate computer database that is password protected, and limit employee access to certain parts of the business premises to prevent inadvertent dissemination of trade secret information.  Such measures may deter or prevent trade secret information.  In the event of actual misappropriation, such prudent measures would help the business protect its trade secrets in litigation seeking an injunction and damages.

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Some businesses have experienced loss of customer relationships due to former employees taking customer relationships to competitors.  The most obvious way to protect against such a situation is to ensure employees sign a restrictive covenant under Florida Statutes Section 542.335, commonly referred to as a non-compete agreement, prohibiting solicitation of customers and competition that diverts the employer’s customers to a competitor.  Sometimes, however, businesses do not have a non-compete agreement with their employees.  The law of trade secrets can be used, under certain circumstances, to bar use of confidential information, including customer lists, to divert customers to competitors.  Peter Mavrick is a Fort Lauderdale business litigation attorney, and represents clients in business litigation in Miami, Boca Raton, and Palm Beach.  The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment law, and other legal disputes in federal and state courts and in arbitration.

Florida’s Second District Court of Appeal, in East v. Aqua Gaming, 805 So.2d 932 (Fla. 2d DCA 2001), explained what is required to prove a customer list is a trade secret.  To qualify as a trade secret, there must be evidence that a customer list “was the product of great expense and effort, that it included information that was confidential and not available from public sources, and that it was distilled from larger lists of potential customers into a list of viable customers for [a] unique business.”  Customer lists can constitute trade secrets where the lists are acquired or complied through the industry of the owner of the lists and are not just a compilation of information commonly available to the public.

In trade secret litigation, it is often a major issue whether the alleged trade secret owner took appropriate measures to keep the the subject information a secret.  Under Florida’s trade secret statute, section 688.002(4)(b), a trade secret owner must make “efforts that are reasonable under the circumstances to maintain its secrecy.”  As to this issue, Florida and federal courts will often look at whether the alleged trade secret owner had signed agreements with its employees to protect the company information.  In My Energy Monster, Inc. v. Gawrych, 2020 WL 8224616 (M.D. Fla. 12/18/2020), the federal court faulted the business that owned the alleged trade secret for not taking better measures to protect its trade secrets, and stated in pertinent part: “However, the record demonstrates that Gawrych was not required to sign a non-compete agreement, non-solicitation agreement, nor a confidentiality agreement and that non existed for other Energy Monster employees.  According to Defendants, all employees at Energy Monster had access to the customer list…Defendants, further state that [t]here [were] no ‘need to know’ employees and Energy Monster never obtained nondisclosure agreements or confidentiality agreements–even after the parties parted ways and Gawrych offered  to sign an NDA…Yet Energy Monster seeks to prevent the very action that such agreements are typically designed to prevent.”

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Federal law and Florida law provide private causes of action for unauthorized access to computers. The federal law is called the Computer Fraud and Abuse Act (CFAA), and imposes civil liability on those who “intentionally access[ ] a computer without authorization or exceed[ ] authorized access.” 18 U.S.C. § 1030(a)(2). Florida’s statute is the Computer Abuse and Data Recovery Act (CADRA), and imposes liability on persons who knowingly obtain “information from a protected computer without authorization.” Fla. Stat. § 668.803.  Peter Mavrick a Miami business litigation attorney, and represents clients in Fort Lauderdale, Boca Raton, and Palm  Beach. The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

At first blush, the wording in both statutes appears self-explanatory. When someone accesses a computer without authorization, he or she is liable for damages. But this begs the question – what is authorization? Does an individual violate CFAA or CADRA by accessing part of another’s computer system he or she was never authorized to access? Or does that individual violate CFAA or CADRA by accessing information he or she was authorized to access but for purposes exceeding the authorization?  In business litigation over the statutes, courts struggled to answer these questions and this led to divergent legal interpretations by various courts.  See United States v. Valle, 807 F.3d 508 (2d Cir. 2015) (recognizing the circuit split and noting that this sharp division means that the statute is readily susceptible to different interpretations).  In 2021, the United States Supreme Court addressed CFAA in Van Buren v. United States, 141 S. Ct. 1648 (2021), to settle how CFAA should be interpreted.  In Van Buren, a law enforcement officer was charged with criminally violating CFAA because he used a patrol car computer to access license plate information for a friend. Id. The law enforcement officer was convicted because he “exceed[ed] his authorized access.”  An appeal ensued, and the case was ultimately decided by the United States Supreme Court. The court initially noted both parties agreed the law enforcement officer was given the right to acquire license-plate information from the law enforcement computer database.  Therefore, the question was whether the law enforcement office was “entitled so to obtain” the license-plate information, as required by CFAA.  The Supreme Court held that “the phrase ‘is not entitled so to obtain’ is best read to refer to information that a person is not entitled to obtain by using a computer that he is authorized to access.”   For example, if a person has access to information stored in a computer—e.g., in ‘Folder Y,’ from which the person could permissibly pull information—then he does not violate the CFAA by obtaining such information, regardless of whether he pulled the information for a prohibited purpose. But if the information is instead located in prohibited ‘Folder X,’ to which the person lacks access, he violates the CFAA by obtaining such information.  See also Armor Corr. Health Services, Inc. v. Teal, 2021 WL 5834245 (S.D. Fla. Dec. 8, 2021) (the former employee did not lack authorization to downloaded documents from his employer’s server for the improper purpose competing against the employer because the employee was authorized to access those files).

Courts construing the “authorization” wording in CADRA seem to apply a similar analysis. See Grow Fin. Fed. Credit Union v. GTE Fed. Credit Union, 2017 WL 3492707 (M.D. Fla. Aug. 15, 2017) (finding “that no such liability could exist because ‘exceeds authorized access’ simply means that, while an employee’s initial access was permitted, the employee accessed information for which the employer had not provided permission”); see also Maintenx Mgmt., Inc. v. Lenkowski, 2015 WL 310543 (M.D. Fla. Jan. 26, 2015) (“To the extent Maintenx attempts to derive support for its allegation by maintaining that Lenkowski’s use of the data was improper, ‘exceeds authorized access’ should not be confused with exceeds authorized use”). However, it is difficult to determine whether the application of CADRA will continue running parallel to CFAA because (1) the two statutes define “without authorization” differently and (2) CADRA has not been sufficiently tested in the court system. Contrast 18 U.S.C.A. § 1030 (defining “exceeds authorized access” under CFAA) with Fla. Stat. § 668.802 (defining “without authorization).

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The expiration of a non-compete period does not necessarily mean the covenant is unenforceable. A former employer may be able to enforce a non-compete against a former employee if the non-compete period expired and the non-compete period was tolled by the former employee’s violation of his restrictive covenant. Restrictive covenants, like non-compete agreements and non-solicitation agreements, must be reasonable in time as a general matter. Non-compete statutes often contain durational periods a restrictive covenant is considered reasonable and unreadable. The enforceable durations are usually based on the relationship between the obligor and obligee. In Florida, courts presume a restraint that is six months or less reasonable if the obligor is an employee and the obligee is an employer. Fla. Stat. § 542.335. The same statute dictates that a restrictive covenant between an employee and employer is presumptively unreasonable after two years. The presumptive enforceable duration increases if the obligor sold his business to the obligee. In that case, a court presumes a restrictive to be reasonable if is three years or less and unreasonable it if is more than seven years. Therefore, restrictive covenants usually contain a provision expressly stating their enforceable duration to ensure compliance with the reasonableness standard and statutory corresponding presumptions.  Peter Mavrick is a Fort Lauderdale business litigation attorney, and represents clients in business litigation in Miami, Boca Raton, and Palm Beach.  The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment law, and other legal disputes in federal and state courts and in arbitration.

But what happens when a former employer discovers his or her former employee breached the restrictive covenant (during the restrictive period) after the covenant lapses? Can the covenant still be enforced? The answer is – probably if your state applies the equitable tolling doctrine to restrictive covenants. This doctrine allows the obligor to enforce a restrictive covenant against the obligee after the restrictive period lapses if the obligee breached the covenant during the restrictive period. For example, precedent from Florida’s Fourth District Court of Appeal in Orkin Exterminating Co., Inc. v. Bailey, 550 So. 2d 563 (Fla. 4th DCA 1989), held that “Appellant is entitled to the full duration of the two-year restriction.”  The rationale supporting equitable tolling is fairness.  In this vein, Florida’s Fourth District Court of Appeal, in Anakarli Boutique, Inc. v. Ortiz, 152 So. 3d 107, 109 (Fla. 4th DCA 2014, explained that “[i]t would be stunningly unfair if the law held that a valid non-compete clause could be nullified because the non-compete period was devoured by the time it took to appeal an erroneous ruling on the interpretation of the clause.” The obligor is entitled to the benefit of what he or she bargained for under the contract, i.e., a prohibition against certain competitive conduct for a limited duration. Capelouto v. Orkin Exterminating Co. of Fla., Inc., 183 So. 2d 532, 534 (Fla. 1966) (“Inasmuch as the appellant had been in competition with the appellee continuously since his resignation, the chancellor must have determined that this was the only way to give the appellee its two competition-free years.”).

All states do not permit equitable tolling because courts are generally prohibited from rewriting private contracts. See Coffee Sys. of Atlanta v. Fox, 227 Ga. 602, 602, 182 S.E.2d 109 (1971) (“The litigation did not toll the one year period so as to provide additional time for enjoining the employe [sic] [because s]uch an extension would in effect rewrite the one year feature of the agreement. Courts do not make contracts for the parties.”). In these states, it is important to include a tolling provision inside the contract. Including this provision could allow a former employer to toll a restrictive covenant post violation even if the state’s common law does not allow for equitable tolling because the parties expressly bargained for tolling. See Gaylord Broad. Co. v. Cosmos Broad. Corp., 746 F.2d 251 (5th Cir. 1984) (“The parties may contractually provide for the tolling of the noncompetition period, if an employee breaches a covenant not to compete and the resulting civil proceedings to enforce the covenant consume more time than the period of the covenant itself.”).

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Florida employers who have non-compete agreements may enforce the restrictive covenants based on the legitimate business interest of trade secrets under Florida Statutes Section 542.335(1)(b)(1). Employers may also sue for misappropriation of trade secrets.  However, employers sometimes sue former employees for common law claims that are related to misappropriation of company trade secrets. Such common law claims have sometimes faced roadblocks because many state law trade secret statutes preempt or displace all other non-contract claims arising from the trade secret misappropriation. Florida’s trade secret statute, like many others, preempts all potential claims arising from the unauthorized use of a trade secret unless the claim sounds in contract. Fla. Stat. § 688.008 (The Uniform Trade Secrets Act “displace[s] conflicting tort, restitutory, and other law of this state providing civil remedies for misappropriation of a trade secret [except]… contractual remedies”).  Peter Mavrick is a Fort Lauderdale business litigation attorney, and represents clients in business litigation in Miami, Boca Raton, and Palm Beach.  The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment law, and other legal disputes in federal and state courts and in arbitration.

Florida’s Third District Court of Appeal in Digiport, Inc. v. Foram Dev. BFC, LLC, 314 So. 3d 550 (Fla. 3d DCA 2020), provided an analysis of Florida law trade secret preemption.  Digiport explained that Florida courts look to the facts alleged in the complaint to determine whether “there are material distinctions between the allegations comprising the additional torts and the allegations supporting the [trade secret claim].” The appellate court determined the plaintiff’s claims were preempted because they were premised on the same allegations and elements as its trade secret claims, stating “[b]oth the trade secret misappropriation claim and the misappropriation of a business idea count are premised upon allegations that [the plaintiff] invested substantial time in creating a novel business idea, the idea was disclosed to [the defendant] in confidence, reasonable measures to protect the secrecy were undertaken, and [the defendant] misappropriated the idea by disclosing its plans to other companies for its own benefit.” Conversely, courts allow claims affiliated with trade secrets to proceed if trade secret misappropriation does not alone comprise the underlying wrong. For example, in Mortgage Now, Inc. v. Stone, 2009 WL 4262877 (N.D. Fla. Nov. 24, 2009), the United States District Court for the Northern District of Florida allowed a claim of civil conspiracy to proceed because the defendant’s acts were unrelated to the misappropriation of trade secrets.

Preemption is a powerful tool that may apply to claims involving the use of information that does not qualify as a trade secret. K3 Enterprises, Inc. Saspwski, 2021 WL 8363506 *9 (S.D. Fla. Nov. 19, 2021), explained that, “[a]ccording to the majority view, non-FUTSA, non-contractual civil misappropriation claims do constitute conflicting law under Florida Statute § 688.008(1) and are preempted at the motion to dismiss stage.”) (internal quotations omitted).  Similarly, another federal district court in American Registry, LLC v. Hanaw, 2014 WL 12606501, *6 (M.D. Fla. July 16, 2014), stated in pertinent part that, “[t]he Court finds that the FUTSA preempts all non-contract claims based on the misappropriation of confidential and/or commercially valuable information even if the information does not constitute a trade secret under the FUTSA.”

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A former employee cannot avoid non-compete obligations by causing the demise of the business to whom he or she owes the obligation.  Florida law requires the business that intends to enforce the restrictive covenant to establish a legitimate business interest justifying the restriction. Florida Statutes Section 542.335(c) states in pertinent part that, “[a] person seeking enforcement of a restrictive covenant…shall plead and prove that the contractually specified restraint is reasonably necessary to protect the legitimate business interest or interests justifying the restriction.” Peter Mavrick a Miami business litigation attorney, and represents clients in Fort Lauderdale, Boca Raton, and Palm  Beach. The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

These “legitimate interests” include trade secrets; valuable confidential business or professional information that otherwise does not qualify as trade secrets; substantial relationships with specific prospective or existing customers; extraordinary or specialized training; and customer goodwill associated with an ongoing business, trade name, trademark, service mark, “trade dress,” a specific geographic location, or a specific marketing area. Once a former employer satisfies his burden of establishing that the covenant is supported by the existence of one or more legitimate business interests, the party refusing to comply has the burden of demonstrating the restraint is “overbroad, overlong, or otherwise not reasonably necessary to protect the established legitimate business interest or interests.”

Some former employees caught red-handed violating their non-compete agreements have tried to justify their actions by contending the court should not enforce a non-compete when the former employer’s business is no longer operational. See USI Ins. Services of Florida Inc. v. Pettineo, 987 So. 2d 763, 766 (Fla. 4th DCA 2008) (“Section 542.335, however, allows an enforcing party to establish prima facie the enforceability of the agreement itself, after which the party opposing enforcement can raise “as a defense the fact that the person seeking enforcement no longer continues in business in the area or line of business that is the subject of the action to enforce the restrictive covenant”). This argument can be effective when the business ended for reasons having nothing to do with the violations of the non-compete covenant. For example, the United States District Court for the Southern District of Florida, in Chen v. Cayman Arts, Inc., 2011 WL 3903158 (S.D. Fla. Sept. 6, 2011), refused to enforce a restrictive covenant because the plaintiff employer “has not suggested any reason that its purported trade secrets remain a legitimate business interest following [the plaintiff’s] dissolution.”).  Similarly, in Wolf v. James G. Barrie, P.A., 858 So. 2d 1083 (Fla. 2d DCA 2003), Florida’s Second District Court of Appeal stated explained that enforcement of a restrictive covenant “requires that the employer must be engaged in the business that the covenant seeks to protect.”

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Employers beware: it is possible to invalidate trade secret protections if employees access your trade secrets using personal smartphones and other similar devices. The erosion of trade secret protections can occur even if the employer undertakes other, reasonable measures to protect those very same trade secrets. Most, if not all, trade secret statutes require the trade secret proponent to take reasonable measures to protect its trade secrets. See, e.g., 18 U.S.C.A. § 1839 (defining trade secret as information the owner thereof has taken reasonable measures to keep such information secret”); Fla. Stat. § 688.002 (2) (requiring that a trade secret be “the subject of efforts that are reasonable under the circumstances to maintain its secrecy”); Cal. Civ. Code § 3426.1 (mandating that trade secrets be “the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”). Employers commonly protect trade secrets by limiting access to essential employees and storing the secrets in password protected computer systems. See, e.g., Yellowfin Yachts, Inc. v. Barker Boatworks, LLC, 898 F.3d 1279 (11th Cir. 2018). These safeguards are usually sufficient to protect the information’s secrecy and preserve the trade secret. See Bridge Fin., Inc. v. J. Fischer & Associates, Inc., 310 So. 3d 45, 49 (Fla. 4th DCA 2020) (storing trade secrets on password protected server constituted reasonable protections); but see Physiotherapy Associates, Inc. v. ATI Holdings, LLC, 592 F. Supp. 3d 1032, 1042 (N.D. Ala. 2022) (holding that the utilization of password protections alone does not sufficiently protect trade secrets).Peter Mavrick is a Fort Lauderdale business litigation attorney, and represents clients in business litigation in Miami, Boca Raton, and Palm Beach.  The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment law, and other legal disputes in federal and state courts and in arbitration.

However, employers can nullify trade secret protections by allowing employees to access trade secrets on their personal smartphones. For example, in Yellowfin Yachts, Inc. v. Barker Boatworks, LLC, 898 F.3d 1279 (11th Cir. 2018), the former employer took normal precautionary measures to protect the secrecy of its trade secrets. The former employer limited employee access to trade secrets and maintained the trade secrets on a password-protected computer system. However, the federal appellate court refused to find the existence of a trade secret because the employer “encouraged [the former employee] to store the information on a personal laptop and phone.” As a result, the court determined that the former employer “compromised the efficacy of these [security] measures by encouraging [the former employee] to keep the Customer Information on his cellphone and personal laptop.”

It is important to point out that employees do not automatically destroy trade secret protections by accessing information using personal devices. As a general matter, trade secrets protections are vitiated when the employer approves or knowingly permits the employee to access the trade secret using a personal device. Therefore, unauthorized access or access unbeknownst to the employer may not terminate trade secret protections concerning the information. For example, the United States District Court for the Northern District of California, in WeRide Corp. v. Kun Huang, 379 F.Supp.3d 834, 848 (N.D. Cal. 2019), determined the employer was likely to succeed on the merits under the federal Defend Trade Secrets Act where the employee copied company files to his personal devices during the same period when he was actively seeking alternative employment.

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Under Florida law, restrictive covenants are generally unenforceable under Florida law as restraints on trade.  Section 541.18, Florida Statutes, states that “[e]very contract, combination or conspiracy in restrain of trade or commerce in this state is unlawful.”  Precedent from the Supreme Court of Florida in White v. Mederi Caretenders Visiting Servs. of Se. Fla, LLC, 226 So.3d 774 (Fla. 2017), held that “covenants ‘whose sole purpose is to prevent competition per se'” are “void against public policy.”  But, under Florida Statutes Section 542.335(1), where such covenants are set forth in writing, “reasonable in time, area, and line of business,” and “supported by a legitimate business interest” they are not prohibited.  The Supreme Court in the White decision explained that for a non-compete agreement or other restrictive covenant to be enforceable, “‘there must be special facts present over and above ordinary competition’ such that, absent a non-competition agreement, ‘the employee would gain an unfair advantage in the future competition with the employer.'”  Confidential information can qualify as a legitimate business interest, but in many cases courts have found businesses’ designations of information as “confidential” is unfounded and therefore does not qualify as a legitimate business interest.  Peter Mavrick a Miami business litigation attorney, and represents clients in Fort Lauderdale, Boca Raton, and Palm  Beach. The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

To sufficiently plead and prove a legitimate business interest in confidential information, the employer must articulate the information that it deems confidential.  For example, in Passalacqua v. Naviant, Inc., 844 So.2d 792 (Fla. 4th DCA 2003), Florida’s Fourth District Court of Appeal found there was no legitimate business interest where the employer failed to “articulate how any activity, method or technique utilized by [the company] was unique or proprietary in any way.”  Similarly, the United States District Court for the Middle District of Florida, in Lucky Cousins Trucking, Inc. v. QC Energy Res. Texas, LLC, 223 F.Supp.3d 1221 (M.D. Fla. 2016), explained that “information commonly known in the industry and not unique to [the] allegedly injured party [is] not ‘confidential’ and thus not entitled to protection.”

Florida’s restrictive covenant statute, at Florida Statutes Section 542.335(b), requires not only that the information is truly “confidential,” but it must also be “valuable.”  An employer must prove that the employee could use the information to gain an unfair advantage, and the employer must prove this with specific factual evidence. In the Passalacqua case, the appellate court determined that the allegedly “confidential” information was not valuable, and explained in pertinent part: “Hirsch did not articulate how any activity, method or technique utilized by Naviant was unique or proprietary in any way. Nor did he give any reason to believe that the manual was anything but a compilation of widely known and commonly used sales and marketing techniques. Naviant failed to prove, through Hirsch or otherwise, anything which even approximates a ‘legitimate business interest’ as defined in the statute, section 542.335(1)(b), Florida Statutes.”  In Passalacqua, the employer failed to meet its legal burden of proof, but its case weakened further when the employee presented counter-evidence.  The appellate court explained that: “Although not required to disprove Naviant’s conclusory and unsubstantiated claims of proprietary information, appellants presented detailed and uncontroverted testimony and other evidence showing that there was nothing unique about Naviant’s operations, sales methods or other aspects of its business that anyone with their history of making unsolicited sales calls (“cold calling”) does not know.”

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