Businesses can use non-compete agreements to protect their substantial business relationships with prospective and current customers, patients, or clients. A common issue in business litigation seeking to enforce non-compete agreements is whether a business has a trade secret that qualifies as a legitimate business interest. 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.
A non-compete agreement cannot be enforced without a court finding that the agreement is supported by a “legitimate business interest” in the non-compete agreement. “Section 542.335 contains a comprehensive framework for analyzing, evaluating and enforcing restrictive covenants in Florida based on an ‘unfair competition’ analysis.” Henao v. Prof’l Shoe Repair, Inc., 929 So. 2d 723 (Fla. 5th DCA 2006). Under Section 542.335, a plaintiff must satify three requirements to enforce a restrictive covenant: (1) the restrictive covenant must be “set forth in writing signed by the person against whom enforcement is sought”; (2) the party seeking to enforce the restrictive covenant “shall plead and prove the existence of one or more legitimate business interests justifying the restrictive covenant”; and (3) the party seeking to enforce the 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.” Section 542.335, Florida Statutes.
A business’ trade secret can qualify as a legitimate business interest pursuant to Florida law. Trade secrets are specifically delineated as legitimate business interests in Section 542.335(1)(b)(1), Florida Statutes. The Florida Uniform Trade Secrets Act (“FUTSA”) defines trade secrets as “information, including a formula, pattern, compilation, program, device, method, technique, or process” that:
- Derives 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
- Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
Under Florida law, some “[e]xamples of trade secrets include confidential business information such as a customer list, when the list is not just a compilation of information readily available to the public, but rather acquired or compiled through the owner’s industry.” Sea Coast Fire, Inc. v. Triangle Fire, Inc., 170 So. 3d 804 (Fla. 3d DCA 2014). “Information that is generally known or readily accessible to third parties cannot qualify for trade secret protection.” Am. Red Cross v. Palm Beach Blood Bank, Inc., 143 F.3d 1407 (11th Cir. 1998). For example, in Templeton v. Creative Loafing Tampa, Inc., Florida’s Second District Court of Appeal evaluated whether to reverse a trial court’s injunction concerning a customer list. 552 So. 2d 288 (Fla. 2d DCA 1989), Templeton then determined that the list of the plaintiff’s advertisers could be clearly discovered from a simple review of plaintiff’s magazine. Templeton ultimately concluded that the customer list would not receive trade secret protection because that information could be kept secret by the business.
In Gould & Lamb, LLC v. D’Alusio, the business contended that the trial court should have enforced its non-compete agreement, to protect its business’ trade secrets. 949 So. 2d 1212 (Fla. 2d DCA 2007). The plaintiff furthe ralleged that, during his employment, the defendant was provided access to the company’s proprietary information, including training manuals, customer lists, marketing processes, and production forms, techniques, and processes. Florida’s Second District Court of Appeal held that generic statements are insufficient to prove that a business possesses a trade secret that qualifies as a legitimate business interest. Accordingly, Gould & Lamb found that the client’s list was not a protectible trade secret, even though the plaintiff alleged that the defendant knew specific identities of the company’s top clients.
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.