MIAMI BUSINESS LITIGATION: TRADE SECRET INTERSTATE COMMERCE

Trade secret statutes are generally similar. For example, Florida’s trade secret statute defines trade secrets as information deriving independent economic value from not being readily ascertainable by others through proper means and is the subject of reasonable efforts under the circumstances to maintain the information’s secrecy. Fla. Stat. § 688.002. California likewise defines trade secrets as information deriving independent economic value from not being generally known to the public or to other persons who can obtain economic value from the information’s disclosure and is the subject of efforts that are reasonable under the circumstances to maintain the information’s secrecy. Cal. Civ. Code § 3426.1.  However, the federal trade secret statute has one important difference separating it from state trade secret statutes like Florida and California. The federal Defend Trade Secrets Act (DTSA) requires the trade secret to be associated with a product or service used in interstate commerce. 18 U.S.C.A. § 1836 (“An owner of a trade secret that is misappropriated may bring a civil action under this subsection if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce.”). 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.

The DTSA statute “indicates that its applicability is limited to activity that is actually in, as opposed to activity that merely affects, interstate commerce.” Providence Title Co. v. Truly Title, Inc., 547 F. Supp. 3d 585 (E.D. Tex. 2021). Determining whether activity associated with a trade secret is actually in interstate commerce is not always simple. In KOVA Commercial of Naples, LLC v. Sabin, 2024 WL 2019872 (M.D. Fla. May 7, 2024), the defendant argued the plaintiff’s federal trade secret claim should be dismissed because the plaintiff helps clients buy, sell, lease, and rent real estate exclusively located in Florida. The defendant wanted the court to focus its inquiry on the location where the products or services were offered for sale as opposed to the location of the persons purchasing the products or services. The plaintiff took the opposite position and argued the provision of local services exclusively in Florida to out-of-state clients satisfied the interstate commerce requirement under DTSA. The court agreed with the plaintiff based on federal caselaw from many jurisdictions.

Chief among the authorities Kova relied upon was a United States Supreme Court case called Goldfarb v. Va. State Bar. 421 U.S. 773 (1975). The Supreme Court in Goldfarb determined a real estate transaction is an interstate activity when the funds used to purchase the real estate originate outside the state where the property is located. As a result,real estate title services, even when performed entirely within a state, can constitute an interstate transaction and can satisfy the interstate commerce requirement. McLain v. Real Estate Bd. of New Orleans, Inc., 444 U.S. 232 (1980).

The authorities discussed above demonstrate the importance of considering the location of the trade secret plaintiff’s customers when bringing a DTSA claim. The location of the trade secret plaintiff’s customers will dictate whether the plaintiff has a viable DTSA claim under the interstate commerce requirement.

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.