Articles Posted in Trade Secrets

Business litigation often involve claims for trade secret misappropriation under Florida’s Uniform Trade Secret Act (FUTSA). Under certain circumstances, parties in business litigation may be entitled injunctive relief under FUTSA. A plaintiff seeking a temporary injunction to protect its trade secrets must show that there is an actual or likely misappropriation of trade secrets and that the circumstances justify the entry of a temporary injunction. To prevail on a motion for a preliminary or temporary injunction, a plaintiff must show that “(1) irreparable harm will result if the temporary injunction is not entered; (2) an adequate remedy at law is unavailable; (3) there is a substantial likelihood of success on the merits; and (4) entry of the temporary injunction will serve the public interest.” Donoho v. Allen-Rosner, 254 So. 3d 472 (Fla. 4th DCA 2018). Peter Mavrick is a Miami business litigation attorney, and represents clients in business litigation 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.

A plaintiff seeking an injunction must establish that it “(1) that it possessed a trade secret and took reasonable steps to protect its secrecy; and (2) the trade secret was misappropriated, either by one who knew or had reason to know the trade secret was improperly obtained or who used improper means to obtain it.” Mapei Corp. v. J.M. Field Mktg., Inc, 295 So. 3d 1193 (Fla. 4th DCA 2020). Under Florida law, misappropriation of a trade secret occurs “where a person who knows or has reason to know that the trade secret was acquired by improper means acquires the trade secret of another or where a person who has obtained the trade secret by improper means discloses or uses the trade secret of another without express or implied consent.” ACR Elecs., Inc. v. DME Corp., 2012 WL 13005955 (S.D. Fla. Oct. 31, 2012).

In addition, “the information that the plaintiff seeks to protect must derive economic value from not being readily ascertainable by others and must be the subject of reasonable efforts to protect its secrecy. Del Monte Fresh Produce Co. v. Dole Food Co., Inc., 136 F. Supp. 2d 1271 (S.D. Fla. 2001). If the subject information is already known or readily accessible to the public, it typically does not qualify for trade secret protection. Am. Red Cross v. Palm Beach Blood Bank, Inc., 143 F.3d 1407 (11th Cir.1998). “[S]omething that is already readily ascertainable can[not] be misappropriated.” Wound Care Concepts, Inc. v. Vohra Health Services, P.A., 2022 WL 320952 (S.D. Fla. Jan. 28, 2022).

Trade secret claims in business litigation require courts to determine whether a business adequately protects its alleged trade secrets by preventing disclosure to unauthorized third parties. To qualify for protection under Florida Uniform Trade Secrets Act (“FUTSA”) and the federal Defend Trade Secrets Act (“DTSA”), a business therefore must show that it adequately maintained the secrecy of its trade secrets and confidential information. For this reason, courts often will not protect an alleged trade secret if the subject information is disclosed to other parties who do not have an obligation to keep the information confidential. Peter Mavrick is a Miami business litigation attorney, and 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, employment law, and other legal disputes in federal and state courts and in arbitration.

“In a trade secret action, the plaintiff bears the burden of demonstrating both that the specific information it seeks to protect is secret and that it has taken reasonable steps to protect this secrecy.” Am. Red Cross v. Palm Beach Blood Bank, Inc., 143 F.3d 1407 (11th Cir.1998). 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.” In re Maxxim Med. Grp., Inc., 434 B.R. 660 (Bankr. M.D. Fla. 2010).

If the party receiving confidential, trade secret information has a legal obligation to maintain secrecy of the information, then disclosure to such parties does not automatically destroy the secrecy element required under FUTSA or DTSA. This remains true even if the disclosing party and the receiving party do not have a confidentiality agreement between them. For example, in XTec, Inc. v. Hembree Consulting Services, Inc., the United States District Court for the Southern District of Florida found that disclosure of confidential information to the government did not necessarily defeat the requirement of secrecy for trade secret protection, because 48 C.F.R. § 27.402 “obligates the government to maintain the secrecy of proprietary data; thus, in this case, there was an accompanying mechanism to maintain [plaintiff’s] secrecy.” 183 F. Supp. 3d 1245 (S.D. Fla. 2016).

In business litigation, Florida courts require plaintiffs to describe their alleged trade secret with a certain degree of particularity. Failing to do that can be fatal to trade secret claims. A plaintiff does not only have to prove that certain confidential information was misappropriated, but it must also prove that the misappropriated information actually qualifies as a trade secret under Florida or federal law. To establish its claim for trade secret misappropriation, the party must adequately explain what information qualifies as trade secret and why the alleged confidential information’s secrecy makes the trade secret valuable to a business. 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 litigation, and other legal disputes in federal and state courts and in arbitration.

Florida’s Uniform Trade Secret Act (FUTSA) defines a trade secret as 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.” Section 688.002(4), Florida Statutes. Misappropriation under FUTSA also includes circumstances when a party simply possesses the trade secret material. Section 688.002(2), Florida Statutes.

Business litigation plaintiffs asserting trade secret misappropriation claims must show that what was taken is valuable because it is secret. Plaintiffs are also required to show that they acted reasonably when trying to keep its information secret. Trade secret misappropriation claims inherently fail when the litigants do not demonstrate that the allegedly misappropriated information 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). “The plaintiff must, as a threshold matter, establish that the trade secret exists. To do so, it must disclose the information at issue.” Revello Med. Mgmt., Inc. v. Med-Data Infotech USA, Inc., 50 So. 3d 678 (Fla. 2d DCA 2010).

Trade secret claims often arise in business litigation under federal and state law. The Defend Trade Secrets Act (DTSA) provides parties with opportunities to pursue trade secret misappropriation claims in a federal forum. Florida’s Uniform Trade Secret Act (FUTSA) is substantially similar to DTSA and specifically recognizes that it “shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this act among states enacting it.” Section 688.009, Florida Statutes. Trade secret law is generally uniform between states. Peter Mavrick is a Miami business litigation attorney, and represents clients in business litigation 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.

DTSA defines a “trade secret” as information which “the owner thereof has taken reasonable measures to keep such information secret; and the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information”). By comparison, FUTSA§ 688.002 (4), Florida Statutes (defining “trade secret” as information which [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”).

Federal courts in Florida will generally interpret these substantive provisions in the same way. M.C. Dean, Inc. v. City of Miami Beach, Florida, 199 F. Supp. 3d 1349 (S.D. Fla. 2016). The similarity between FUTSA and DTSA provides Florida business litigation plaintiffs with flexibility in terms of their forum.  Unlike trade secret claims under state laws like FUTSA, claims under DTSA may be brought in federal court as a “federal question.”

A common issue in business litigation involving trade secret misappropriation claims under Florida’s Uniform Trade Secrets Act (FUTSA) is whether the plaintiff sufficiently identified its alleged trade secrets in its pleadings. Under Florida law, a “plaintiff must, as a threshold matter, establish that the trade secret exists. To do so, it must disclose the information at issue.” Revello Med. Mgmt., Inc. v. Med-Data Infotech USA, Inc., 50 So. 3d 678 (Fla. 2d DCA 2010). “The term trade secret is one of the most elusive and difficult concepts in the law to define.” Furmanite America, Inc. v. T.D. Williamson, Inc., 506 F. Supp. 2d 1134 (M.D. Fla. 2007). However, a “party proceeding under FUTSA need only describe the misappropriated trade secrets with ‘reasonable particularity.’” Treco Intern. S.A. v. Kromka, 706 F. Supp. 2d 1283 (S.D. Fla. 2010). 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 litigation, and other legal disputes in federal and state courts and in arbitration.

A plaintiff must identify its trade secrets to prove trade secret misappropriation in business litigation. Without identifying the specific  the trade secret at issue, it is impossible to determine whether the party pled each of the elements of a trade secret, which are: (1) “information”; (2) that “derives independent economic value” “from not being generally known”; (3) that is “not readily ascertainable by proper means”; and (4) “is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”  Section 688.02 (4)(a)-(b), Florida Statutes. While it is oftentimes difficult to describe a trade secret without divulging its confidential characteristics, Florida courts require “[a] party proceeding under Florida’s Uniform Trade Secrets Act [to] only describe the misappropriated trade secrets with reasonable particularity.” Textile USA, Inc. v. Diageo N. Am., Inc., 2017 WL 10187642 (S.D. Fla. July 31, 2017). The Court’s determination of whether a particular type of information constitutes a trade secret is a question of fact.” Poet Theatricals Marine, LLC v. Celebrity Cruises, Inc., 307 So. 3d 927 (Fla. 3d DCA 2020).

In Poet Theatricals Marine, LLC v. Celebrity Cruises, Inc., Florida’s Third District Court of Appeal held that the plaintiff sufficiently identified its trade secrets by describing them as “(1) ‘proprietary digital and tracking and management systems over the operation and functioning of equipment used in the shows,’ and (2) a ‘unique training system that enabled a cruise line to hire non[ ]acrobatic performers (dancers) who would be trained to perform as skilled aerialists/acrobats in a fraction of the time typically required for acquiring such skills, all while maintaining a high level of safety of the performers, staff, and passengers.’” 2020 WL 5931884 (Fla. 3d DCA Oct. 7, 2020).

Business litigation in Florida often involves claims for trade secret misappropriation under Florida’s Uniform Trade Secret Act (FUTSA) or the Defend Trade Secrets Act (DTSA). For liability to attach under DTSA or FUTSA, the trade secret information must be the fruit of a wrongful acquisition or misappropriation. A common issue concerning trade secret claims is whether the alleged trade secret was wrongfully acquired through improper means. Actions may be “improper” for trade-secret purposes even if not independently unlawful. Compulife Software Inc. v. Newman, 959 F.3d 1288 (11th Cir. 2020). 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 litigation, and other legal disputes in federal and state courts and in arbitration.

Misappropriation of a trade secret occurs “where a person who knows or has reason to know that the trade secret was acquired by improper means acquires the trade secret of another or where a person who has obtained the trade secret by improper means discloses or uses the trade secret of another without express or implied consent.” ACR Elecs., Inc. v. DME Corp., 2012 WL 13005955 (S.D. Fla. Oct. 31, 2012). The DTSA defines “misappropriation” to include “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 “disclosure or use of a trade secret of another without express or implied consent” in specified circumstances. 18 U.S.C. § 1839(5). “Improper means” under DTSA includes “theft, bribery, misrepresentation, [and] breach or inducement of a breach of a duty to maintain secrecy,” but excludes “reverse engineering, independent derivation, or any other lawful means of acquisition.” 18 U.S.C. § 1839(6). Meanwhile, the definition of “improper means” under FUTSA also includes “breach or inducement of a breach of a duty to maintain secrecy.” Fla. Stat. § 688.002(1). While the general definitions of a trade secret are identical under FUTSA and DTSA, a court’s analysis under each statute is substantially equivalent. Compulife Software Inc. v. Newman, 959 F.3d 1288 (11th Cir. 2020).

Florida courts routinely find that trade secrets may be acquired through improper means when a business’ employee copies or extracts electronic information before their employment ends. For example, in Pharmerica, Inc. v. Arledge, the United States District Court for the Middle District of Florida held that the defendant “misappropriated those trade secrets by duplicating and copying them and/or sending them to his home computer or personal email account and deleting them from the [plaintiff’s] computers.” 2007 WL 865510 (M.D. Fla. Mar. 21, 2007). The Court considered the fact that the defendant “copied almost all of his electronic files from his work computer” just two days before he resigned from his position with his former employer. The trade secrets and proprietary information involved the former employer’s distribution and operational plans, quality control programs, and—most importantly—the former employer’s pricing details for major corporate clients that represented at one-third of the company’s total revenues.

Business litigation involving claims under Florida’s Uniform Trade Secrets Act (FUTSA) for trade secret misappropriation often also include similar additional claims for tortious interference, fraud, or violations of Florida’s Deceptive and Unfair Trade Practices Act (FDUTPA). However, these additional claims rarely survive past the pleading stage because FUTSA prohibits parties from maintaining common law and statutory claims arising from facts substantially similar to the alleged trade secret misappropriation. FUTSA “displace[s] conflicting tort, restitutory, and other laws of this state providing civil remedies or misappropriation of a trade secret.” Section 688.008, Florida Statutes. This “provision expressly prohibits a pleader from asserting alternative claims based on trade secret misappropriation because Florida’s Legislature decreed that FUTSA preempts all other causes of action.” Coihue, LLC v. PayAnyBiz, LLC, 2018 WL 7376908 (S.D. Fla. Feb. 6, 2018). Peter Mavrick is a Fort Lauderdale trade secret attorney, and also advocates for clients in Palm Beach, Boca Raton, and Miami, Florida.  The Mavrick Law Firm represents corporations and their owners in business litigation, non-compete agreement litigation, trademark infringement litigation, employment law, and other legal disputes in federal and state courts and in arbitration.

Under Florida law, a party’s “separate tort claim is preempted by FUTSA if there is no material distinction between the plaintiff’s FUTSA claim and the other allegation.” Sentry Data Systems, Inc. v. CVS Health, 361 F. Supp. 3d 1279 (S.D. Fla. 2018). “To determine whether allegations of trade-secret misappropriation preempt a plaintiff from sufficiently pleading a separate, but related tort, the Court must evaluate whether allegations of trade secret misappropriation alone comprise the underlying wrong; if so, the cause of action is barred by § 688.008.” Sentry Data Systems, Inc. v. CVS Health, 361 F. Supp. 3d 1279 (S.D. Fla. 2018). “In determining if a tort cause of action is preempted by the FUTSA, courts have examined whether there are “material distinctions between the allegations comprising the additional torts and the allegations supporting the FUTSA claim.” Digiport, Inc. v. Foram Dev. BFC, LLC, 314 So. 3d 550 (Fla. 3d DCA 2020). “In other words, the allegations must be separate and distinct.” ThinkLite LLC v. TLG Sols., LLC, 2017 WL 5972888 (S.D. Fla. Jan. 31, 2017). If the trade secret misappropriation alone comprises the underlying wrong, the claim is preempted. Allegiance Healthcare Corp. v. Coleman, 232 F. Supp. 2d 1329 (S.D. Fla. 2002).

Florida courts will dismiss additional tort or statutory claims as preempted under FUTSA where “the underlying wrong in each of those claims [was] limited to trade secret misappropriation and each re-allege[d] all the prior allegations” related to FUTSA. Fla. Beauty Flora Inc. v. Pro Intermodal L.L.C., 2021 WL 1945821, (S.D. Fla. May 14, 2021). In Pelfrey v. Mahaffy, the U.S. District Court for the Southern District of Florida dismissed claims for tortious interference where he alleged a party stole and deleted confidential business information and then used it to divert clients to a competing business. Pelfrey v. Mahaffy, 2018 WL 3110794 (S.D. Fla. Feb. 7, 2018). Similarly, in American Registry, LLC v. Hanaw, the U.S. District Court for the Middle District of Florida dismissed FDUTPA claims as preempted under FUTSA where the plaintiff alleged FDUTPA claims based on allegations that defendant used trade secret information to solicit and steal customers. 2014 WL 12606501 (M.D. Fla. July 16, 2014).