MIAMI BUSINESS LITIGATION: ESTABLISHING A TRADE SECRET’S INDEPENDENT ECONOMIC VALUE CAN BE TRICKY

American law recognizes that the protection of trade secrets results in substantial benefits to businesses and society. Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470 (1974). Protecting commercial entities trade secret theft encourages investment in processes and technologies benefiting consumers. Therefore, trade secret laws promote “the efficient operation of industry” by affording those who invested time, capital, or effort into securing or creating the trade secret whatever benefits result therefrom. Brooklyn Life Ins. Co. of New York v. Dutcher, 95 U.S. 269 (1877). Most, if not all, states recognize the importance of trade secrets to commercial development and enacted statutes preventing their theft. These statutes generally require the trade secret owner to do more than merely prove its information is secret. The owner must also prove it took reasonable measures under the circumstances to protect the information’s secrecy and prove the information has independent economic value from not being known to others. Fla. Stat. § 688.002 (Trade secret “means information, including a formula, pattern, compilation, program, device, method, technique, or process that:… [d]erives independent economic value… from not being generally known to… other person…; and… [i]s the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”). The Miami 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.

“Not everything with commercial value constitutes a trade secret.” Synopsys, Inc. v. Risk Based Sec., Inc., 70 F.4th 759 (4th Cir. 2023). A trade secret’s value must be derived from, and dependent on, the information remaining a secret. Stromback v. New Line Cinema, 384 F.3d 283 (6th Cir. 2004). Therefore, a trade secret owner asserting a claim for trade secret misappropriation must link the value of its information to the information’s secrecy. Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984) (noting that the “economic value” of a trade secret “lies in the competitive advantage over others” that a possessor “enjoys by virtue of its exclusive access to the data”). For example, customer leads can hold economic value from not being generally known to the public. If those leads became generally known, their value would decline because the potential customers would be inundated with rival offers. dmarcian, Inc. v. dmarcian Europe BV, 60 F.4th 119 (4th Cir. 2023) (“[I]f dInc’s list of sales leads was generally known, the value of that list would decline as its members become inundated with rival offers.”).

Courts often analyze the economic value element under a different rubric dispute the body of law discussed above requiring courts to determine whether there is a link between the information’s secrecy and the information’s value. Courts will often look to whether the trade secret owner spent considerable time effort, or expense creating the trade secret. James B. Oswald Co. v. Neate, 98 F.4th 666 (6th Cir. 2024) (The trade secret “certainly must have economic value because Oswald expended considerable money, time, and resources to gather this information, including buying Neate’s book of business for a significant sum, and it spent money helping Neate cultivate, maintain, and grow this customer information.”). The discrepancy between the two methods for determining whether a trade secret derives independent economic value from not being generally known to other persons is not meaningfully discussed in authorities. Therefore, litigants should be prepared to establish value through both methods.

The Miami business litigation lawyers of the Mavrick Law Firm also represent clients in Fort Lauderdale, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.