Articles Posted in Trade Secrets

It is a common mistake in trade secret litigation for the company seeking protection for its trade secrets to fail to explain what trade secrets it wishes to protect.  Courts require that plaintiffs describe their trade secret with a certain degree of particularity.  Failing to do that can be fatal to trade secret claims. Peter Mavrick is a Miami business litigation lawyer, and also represents clients in business litigation in Fort Lauderdale, Boca Raton, and Palm Beach.  The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

In business litigation alleging trade secret misappropriation, plaintiffs often focus on how a trade secret was misappropriated rather than what was misappropriated.  A trade secret  case is not like a regular civil theft or other misappropriation case.  How a party lost its trade secret is less important than what was taken.  Unlike other theft-related torts, “misappropriation” under the Florida Uniform Trade Secret Act also includes circumstances when a party simply possesses the trade secret material.  § 688.002(2) (defining trade secrets misappropriation to include possession of the material in certain circumstances).  A plaintiff does not merely have to prove that confidential information was stolen, it must also prove that what was stolen qualifies as a trade secret under Florida or federal law.  Particularly, trade secret is defined under Florida law as “information, including a formula, pattern, compilation, program, device, method, technique, or process that [d]erives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and [i]s the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”  § 688.002 (4), Florida Statutes.

Plaintiffs in business litigation asserting theft of a trade secret must be able to show that what was taken is valuable because it is secret.  The plaintiff must also show acted reasonably in trying to keep its information secret.  A litigant that fails to adequately explain what its trade secret is will inherently fail to prove that what was misappropriated qualifies as a trade secret.  “In order to ascertain whether trade secrets exist, the information at issue must be disclosed.”  Lovell Farms, Inc. v. Levy, 641 So. 2d 103 (Fla. 3d DCA 1994); Revello Med. Mgmt., Inc. v. Med-Data Infotech USA, Inc., 50 So. 3d 678 (Fla. 2d DCA 2010) (“The plaintiff must, as a threshold matter, establish that the trade secret exists. To do so, it must disclose the information at issue”).  “[I]t is insufficient to describe the trade secrets by generic category, such as the components of the night vision devices to which the alleged trade secrets relate. Rather, [plaintiff] must identify the specific characteristics of each trade secret, such as a particular drawing, process, procedure or cost/pricing data. It must also describe with reasonable particularity all of its trade secrets, including those involving “business methods, know-how, machines, manufacturing process and procedure, marketing information, pricing data, product designs and manufacturing information […].”  Knights Armament Co. v. Optical Sys. Tech., Inc., 254 F.R.D. 463, (M.D. Fla. 2008).

Plaintiffs may be tempted to bring as many causes of action into a legal complaint that the facts may allow.  Diversity of causes of action in business litigation can provide the plaintiff with different types of remedies and help a suit endure should a legal defect arise concerning any particular cause of action.  However, cases involving the Florida Uniform Trade Secrets Act (FUTSA) can preempt many other related causes of action, including those made under the Florida Deceptive and Unfair Trade Practices Act (FDUTPA).  Peter Mavrick is a Fort Lauderdale business litigation lawyer, and also represents clients in business litigation in Miami, Boca Raton, and Palm Beach.  The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

FUTSA provides a way for owners of trade secrets to sue parties who misappropriate those trade secrets or use those trade secrets.  § 688.002, Fla. Stat.  Depending upon the defendant’s conduct and culpability, a business litigation plaintiff suing under FUTSA can be awarded damages, exemplary damages, an injunction against use or disclosure of trade secrets, and/or attorneys’ fees.

FDUTPA permits parties to sue for “[u]nfair methods of competition, unconscionable acts or practices, and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.”  § 501.204(1), Fla. Stat.  A plaintiff suing under FDUTPA can claim damages, an injunction, and attorneys’ fees.  § 501.211, Fla. Stat.

A previous article discussed how it is unlawful under the Florida Uniform Trade Secrets Act (FUTSA) to take a trade secret using “improper means.”  As technology has developed, new methods of commercial reconnaissance can make it difficult to determine whether method was lawful acquisition or unlawful espionage.  Peter Mavrick is a Fort Lauderdale business litigation lawyer, representing clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

Under FUTSA, it is unlawful for a business to misappropriate, use, or disclose another’s trade secrets when the business knew or had reason to know that it was acquired through “improper means.”  § 688.002(2).  While it is clear that “improper means” includes theft and other crimes, it is less obvious when the reconnaissance crosses the line and becomes unlawful.  This line is further blurred as technology continues to develop to allow information to be acquired remotely.

In E. I. duPont deNemours & Co. v. Christopher, 431 F.2d 1012 (5th Cir. 1970), the United States Court of Appeals for the Fifth Circuit addressed whether the use of a plane to fly over the construction of a factory was an “improper means” to discover trade secrets.  In this important federal court precedent, DuPont held that the use of spy planes was an improper means and explained the legal analysis of trade secret misappropriation:

The Florida Uniform Trade Secrets Act (FUTSA) allows Florida businesses who have had their trade secrets misappropriated to seek damages or an injunction against the perpetrator of the misappropriation.  For the acquisition to be an unlawful misappropriation, the confidential information must usually have been acquired through “improper means.”  It is lawful for a Florida business to acquire and use another company’s trade secret for itself if it acquired that confidential information through proper means, such as through independent discovery of the trade secret, reverse engineering of the product which uses the trade secret, or through the voluntary disclosure by an owner of the trade secret.  Peter Mavrick is a Miami business litigation lawyer, and also represents clients in business litigation in Fort Lauderdale, Boca Raton, and Palm Beach.  The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

Pursuant to FUTSA, the misappropriation of a trade secret through improper means is unlawful.  The manner of acquisition of trade secret is a critical question in determining whether there has been unlawful misappropriation.  Generally, if one knows or has reason to know that information was acquired through improper means, the use or disclosure of that information is unlawful.  FUTSA defines misappropriation to mean:

(a) Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or

Trade secrets and confidential information can lose protection under the Florida Uniform Trade Secrets Act (FUTSA) when they are disclosed to third parties. One way to maintain protection of this information under FUTSA, is by entering into a confidentiality agreement with the third parties that will receive the information.  When trade secrets or confidential information is disclosed to employees without a confidentiality agreement, the information does not necessarily lose trade secret protection.  Peter Mavrick is a Miami business litigation lawyer who represents clients in trade secret litigation in Miami, Fort Lauderdale, Boca Raton, and Palm Beach.

A company seeking to protect its confidential information under FUTSA must show that the confidential information at issue was “the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”  See § 688.002(4)(b), Florida Statutes.  Disclosing information to third parties can defeat the requisite element of secrecy under either FUTSA when the party given the confidential information is not informed of the confidential nature of the information or otherwise has no obligation to keep the information confidential. “Disclosing the ‘information to others who are under no obligation to protect the confidentiality of the information defeats any claim that the information is a trade secret.’” M.C. Dean, Inc. v. City of Miami Beach, Florida, 199 F. Supp. 3d 1349 (S.D. Fla. 2016).  The underlying principle behind this rule is that something cannot be a trade secret if it is freely shared with outsiders.

“This necessary element of secrecy is not lost, however, if the holder of the trade secret reveals the trade secret to another ‘in confidence, and under an implied obligation not to use or disclose it.’”  Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470 (1974); see Advantor Sys. Corp. v. DRS Tech. Services, Inc., 678 Fed. Appx. 839 (11th Cir. 2017) (“[T]rade secret protection is not lost when a company shares its trade secrets with an entity that has a duty to maintain the secrecy or limit access to the disclosed document”).

Protection of trade secrets and proprietary information from a business’ competitors can be a critical part of owning a company. An injunction may become necessary to stop a competing company from possessing or using those trade secrets for their own benefit. The injunction, however, must be specific enough for the enjoined party to understand what they are no longer allowed to do. Peter Mavrick is a Fort Lauderdale trade secret attorney who represents businesses in trade secret litigation and other business litigation.

In American Red Cross v. Palm Beach Blood Bank, Inc., 143 F. 3d 1407 (11^th Cir. 1998), Palm Beach Blood Bank, Inc. (“Palm Beach”) opened a branch in Miami. Palm Beach hired a person for the Miami Branch, who previously worked for the American Red Cross (“Red Cross”). Palm Beach and Red Cross competed for sponsors and donors. The former employee took a donor list from Red Cross and provided it to Palm Beach.  Palm Beach then contacted the persons on Red Cross’ list to recruit its blood donors.

Red Cross filed a lawsuit against Palm Beach and alleged that its donor lists were trade secrets that Palm Beach illegally misappropriated.  The district court granted Red Cross’ motion for a temporary restraining order (“TRO”) against Palm Beach. The TRO prohibited Palm Beach from, among other things, “soliciting donations from any Red Cross donor” or “in any way adversely affecting Red Cross’s reputation or goodwill.” The district court held evidentiary hearings on Red Cross’s motion to convert the TRO into a preliminary injunction. Palm Beach moved to modify the TRO to allow Palm Beach to accept donations from persons whom it had not solicited from any Red Cross list. The district court denied the motion to modify the TRO, without explanation. The district court entered a broad preliminary injunction against Palm Beach.