FORT LAUDERDALE BUSINESS LITIGATION: IMPROPER TRADE SECRET MISAPPROPRIATION

The act of misappropriating a trade secret is not one size fits all because there are two different types of misappropriation – acquisition and disclosure or use. Fla. Stat. § 688.002. Misappropriation under the acquisition theory occurs when a person obtains the trade secret knowing it was acquired through improper means or possesses reason to know the trade secret was acquired through improper means. Disclosure or use and can occur three different ways when the misappropriator uses or discloses the trade secret without express or implied consent of the trade secret owner. First, the misappropriator uses improper means to acquire knowledge of the trade secret. Second, the misappropriator knows, or has reason to know, his or her knowledge of the trade secret was derived from a person who utilized improper means to acquire the secret, acquired the secret under circumstances giving rise to a duty to protect the secret, or derived the secret from a person who owed a duty to protect the secret. Third, the misappropriator knows, or has reason to know, the information was a trade secret, the secret was acquired by accident, and the misappropriator materially changes position. The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent 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 common theme throughout most of the misappropriation theories is the existence of improper means. Improper means is defined to include “theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means.” Fla. Stat. § 688.002. Theft,wiretapping, or and even aerial reconnaissance can also constitute improper means. Compulife Software Inc. v. Newman, 959 F.3d 1288 (11th Cir. 2020). However, “fair and honest means” of acquiring trade secrets like independent invention, accidental disclosure, or reverse engineering will not generally be considered improper means. Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470 (1974).

The distinction between proper means and improper means can often become blurred when the acquirer of a trade secret improperly uses a mechanism to acquire the secret information that is usually considered proper. Compulife Software, Inc. v. Newman, 111 F.4th 1147 (11th Cir. 2024), provides a good example of this dichotomy. In Compulife Software, Inc., theplaintiff alleged the defendant used internet scraping to improperly acquire a trade secret database of insurance quotes. Internet scraping and related technologies like crawling are generally considered proper means. In fact, much of the modern internet is built on those technologies. However, the court determined the defendant’s use of the scraping technology was improper because he copied the order of Compulife’s copyrighted code and used that code to commit a scraping attack that ultimately allowed the defendant to acquire millions of variable-dependent insurance quotes. The defendant would not have been able to obtain the database information without formatting and ordering the code exactly as Compulife did. The court likened the defendant’s scrapping conduct to surreptitious aerial photography and determined it was improper as a result.

It is not enough to prove the defendants misappropriated the trade secret information at issue in the lawsuit. Instead, the plaintiff usually must prove the defendant used improper means to misappropriate the trade secret. Defendants can improperly misappropriate trade secret information even though they use means that are typically considered proper methods of information gathering.

The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent 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.