In business litigation, a business’ customer information can qualify as a trade secret under Florida and Federal law. This trade secret protection extends further than just a business’ list of customers. A business’ cognizable trade secrets can include a different elements of customer information that are compiled in the aggregate and protected by business. The business must adequately protect this compiled customer information and maintain its confidentiality to protect this information under federal and Florida trade secret laws. 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.
Trade secrets are broadly defined under the Florida Uniform Trade Secrets Act (“FUTSA”) and the federal Defend Trade Secrets Act (“DTSA”) define trade secrets as information that: (a) is subject to reasonable measures for maintaining the information’s secrecy; and (b) derives independent economic value from not being generally known or readily ascertained through proper means by, another person. 18 U.S.C. § 1839(3); Fla Stat. § 688.002(4). Under FUTSA and DTSA, trade secrets include information that “derive[s] 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). FUTSA also expressly defines trade secrets to include a “list of customers,” so long as the “owner thereof takes measures to prevent it from becoming available to persons other than those selected by the owner . . . .” Fla. Stat. § 812.081. “Regardless of who compiled the customer list, however, it is clearly protected under [Florida law].” Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Hagerty, 808 F. Supp. 1555 (S.D. Fla. 1992).
Generally, Florida law considers a business’ customer lists and the information contained therein to be trade secrets subject to protection if that information is compiled from non-public information and is kept confidential by the business. Marine Turbo Eng’g, Ltd. v. Turbocharger Servs. Worldwide, LLC, 2011 WL 6754058 (S.D. Fla. Dec. 22, 2011). “Customer lists can constitute trade secrets where the lists are acquired or compiled through the industry of the owner of the lists and are not just a compilation of information commonly available to the public. Kavanaugh v. Stump, 592 So. 2d 1231 (Fla. 5th DCA 1992). The unique compilation of customer information typically adds value to a business when it allows the information’s possessor to diminish substantial barriers impeding the exodus of its customers in-mass. “Even if all of the information is publicly available, a unique compilation of that information, which adds value to the information, also may qualify as a trade secret.” Cap. Asset Research Corp. v. Finnegan, 160 F.3d 683 (11th Cir. 1998). “Customer lists are trade secrets if they are compiled from non-public information, and thus derive independent economic value.” Fortiline, Inc. v. Moody, 2013 WL 12101142 (S.D. Fla. Jan. 7, 2013).
Businesses must adequately protect and safeguard any compilation of customer information to qualify them as trade secrets under FUTSA and DTSA. A business can protect its trade secret customer information by prohibiting disclosure under various policies and procedures and utilizing password protections on electronically stored information. For example, federal courts in Florida have found that “password restricted” computer systems “are sufficient for the Court to draw a reasonable inference that the [business] took reasonable steps to protect the secrecy of their trade secrets”. Coihue, LLC v. PayAnyBiz, LLC, 2018 WL 7376908 (S.D. Fla. Feb. 6, 2018). Business can also take reasonable measures to protect the secrecy of its customer list and customer information by requiring its employees to sign agreements that demonstrate the importance the business places on the confidential information. Therefore, a business’ compilation of customer information can qualify as trade secrets if the business regularly maintains confidentiality policies with its agents who have access to the confidential information. Mech. Servs., Inc. v. Brody, 2008 WL 4613046 (M.D. Fla. Oct. 15, 2008).
A customer’s ability to provide its information to competitive businesses also does not automatically negate trade secret protection, if the trade secrets arise from a compilation of information amalgamated from many customers. In this sense, a business must demonstrate that it prevents its customers from disclosing confidential information of other customers. In business litigation concerning whether trade secret status will cover customer lists, Federal and Florida courts routinely enforce trade secret protections despite the customers’ ever present inherent ability to disclose his/her/its information to rivals, so long as the “information is compiled from non-public information and is kept confidential by the business.” All Leisure Holidays Ltd. v. Novello, 2012 WL 5932364 (S.D. Fla. Nov. 27, 2012).
Peter Mavrick is a Fort Lauderdale business litigation lawyer, and represents clients in Miami, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.