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A trade mark is any word, name, symbol, or device, that is used by a person to identify and distinguish his or her goods from a competitor’s goods. 15 U.S.C.A. § 1127. Registering a trademark with the United States Patent and Trademark Office constitutes prima facie evidence that the trademark is valid and provides constructive notice to all others that the trademark is already owned by another. 15 U.S.C. § 1115. These benefits foreclose many defenses one may assert to defeat a trademark infringement lawsuit. 15 U.S.C. § 1072. However, an unregistered trademark is still valid and enforceable against infringers. Iancu v. Brunetti, 588 U.S. 388 (2019) (“The owner of an unregistered mark may still use it in commerce and enforce it against infringers.”). Peter Mavrick is a Miami business litigation attorney, and represents clients in Fort Lauderdale, 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.

Federal law provides the owner of an unregistered trademark with a cause of action to sue for infringement of that mark. A person shall be liable for infringement of an unregistered trademark if he or she:

“uses… any word, term, name, symbol, or device [in connection with any goods or services, or any container for goods]… which— (A) is likely to cause confusion, or… mistake, or to deceive… as to the origin… of his or her goods, services, or commercial activities by another person, or (B) …misrepresents the nature, characteristics, qualities, or geographic origin of his or her goods, services, or commercial activities.

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One cornerstone needed to enforce a valid restraint on trade is the requirement to be in writing and “signed by the person against whom enforcement is sought.” Fla. Stat. § 542.335. Courts use this requirement to reject enforcement of restrictive covenants that are not in writing or signed by the enforcee. See Iron Bridge Tools, Inc. v. Meridian Int’l Co., Ltd., USA, 2016 WL 8716673 (S.D. Fla. Feb. 2, 2016) (refusing to enforce the plaintiff’s claim because it hinged on a contract that was “in form and substance, an agreement in the nature of an agreement not to compete” that “was never reduced to a writing in any form”). Based on a plain reading of the statutory text, it seems obvious that one cannot be liable for violating a restrictive covenant he or she did not sign. However, this is not always true. The caselaw surrounding restrictive covenants provide courts with power to enjoin third-parties from helping another violate his or her restrictive covenant even though the third-party never signed the covenant. Infra. Peter Mavrick is a Fort Lauderdale business litigation attorney.  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.

Florida juris prudence contains many examples demonstrating that a third-party can be enjoined if he or she helps another violate his or her restrictive covenant. USI Ins. Services of Florida Inc. v. Pettineo, 987 So. 2d 763 (Fla. 4th DCA 2008) (“There is no doubt that a court can enjoin others who were not parties to the non-compete agreement” as long as they “receive notice and have an opportunity to be heard.”). The power to enjoin comes from common law rather than the restrictive covenant statute. Bauer v. DILIB, Inc., 16 So. 3d 318 (Fla. 4th DCA 2009) (At “no time has this court or any other court held that the power to enjoin third parties derives from section 542.335… Florida Statutes.”). Third-party enjoinment was created to prevent a person from violating a restrictive covenant through a strawman. Dad’s Properties, Inc. v. Lucas, 545 So. 2d 926 (Fla. 2d DCA 1989) (“Mr. Lucas cannot be allowed to do indirectly, through his wife and her controlled corporation, that which he covenanted not to do himself.”). Therefore, a third-party who knows about the restrictive covenant and provides substantial assistance to help violate the restriction will be enjoined. LLW Enter., LLC v. Ryan, 2020 WL 2630859 (M.D. Fla. May 4, 2020) (“A cause of action for aiding and abetting requires ‘(1) an underlying violation on the part of the primary wrongdoer; (2) knowledge of the underlying violation by alleged aider and abettor; and (3) the rendering of substantial assistance in committing the wrongdoing by the alleged aider and abettor.”). But the third-party will not be liable for damages. See Bauer, 16 So. 3d 318 (holding that the court could not require the third-party to pay the attorney’s fees of the covenant’s enforcer even though the court could enjoin the third-party from further assistance).

The first Florida case that allowed a third-party to be enjoined for helping violate a restrictive covenant was called W. Shore Rest. Corp. v. Turk, 101 So. 2d 123 (Fla. 1958). In Turk, the court looked to two decisions from the state of Washington. The first decision enjoined a son from helping his father operate a business that competed with the plaintiff in violation of a non-compete and the second decision found there was “overwhelming weight of authority” to enjoin a stranger of a restrictive covenant when he or she aids and abets. Id. (citing Madison v. La Sene, 44 Wash. 2d 546 (Wash. 1954) and Le Maine v. Seals, 47 Wash. 2d 259 (Wash. 1955)). Subsequent legal authorities in Florida rely on Turk to prohibit third-parties from rendering aid or assistance that would violate another’s restrictive covenant (assuming the elements escribed above are met). See, Yours-Temp. Help Services, Inc. v. Manpower, Inc., 377 So. 2d 825 (Fla. 1st DCA 1979) (finding that Turk recognized “a decree of injunction not only binds the parties[’] defendant but also those identified with them in interest, in privity with them, represented by them or subject to their control.”). Therefore, third-parties could become entangled in litigation concerning a restrictive covenant it did not sign if the third-party knows about the covenant and helps another to violate it.

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Tortious interference is a common business tort whereby the defendant unlawfully interferes with the plaintiff’s business relationship or contractual relationship. The elements of tortious interference are:

(1) the existence of a business relationship [or contractual relationship] between the plaintiff and a third person, not necessarily evidenced by an enforceable contract, under which the plaintiff has legal rights; (2) the defendant’s knowledge of the relationship; (3) an intentional and unjustified interference with the relationship by the defendant which induces or otherwise causes the third person not to perform; and (4) damage to the plaintiff resulting from the third person’s failure to perform.

Seminole Tribe of Florida v. Times Pub. Co., Inc., 780 So. 2d 310 (Fla. 4th DCA 2001). Peter Mavrick is a Miami business litigation attorney, and represents clients in Fort Lauderdale, 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.

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Proving the existence of a trade secret in a court of law is no easy feat. The trade secret’s proponent has the burden of establishing the specific information he or she seeks to protect. Am. Red Cross v. Palm Beach Blood Bank, Inc., 143 F.3d 1407 (11th Cir. 1998) (“In a trade secret action, the plaintiff bears the burden of demonstrating both that the specific information it seeks to protect is secret and that it has taken reasonable steps to protect this secrecy.”). The proponent must prove it has a “a formula, pattern, compilation, program, device, method, technique, or process that” derives independent economic value from not being generally known to other persons and is the subject of reasonable secrecy efforts. Fla. Stat. § 688.002. In this article, we explore circumstances where the trade secret proponent has, and has not, met its burden of proof. Peter Mavrick is a Fort Lauderdale business litigation attorney.  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.

Premier Lab Supply, Inc. v. Chemplex Indus., Inc., 10 So. 3d 202 (Fla. 4th DCA 2009), is an example of the trade secret proponent satisfying its burden of proof. Id. (“Based on his testimony concerning the unique and specialized nature of the machine’s design, the jury could have found that the design of Chemplex’s machine derived an economic benefit from not being generally known to or readily ascertainable by others.”). In Premier Lab Supply, Inc., the proponent presented evidence that the trade secret machine was unique and not readily ascertainable by others because it was invented by the proponent and his father. Id. The machine was not readily ascertainable by others because it used intricate calculations and a timing chain with a counter. Id. The proponent demonstrated the value of the machine by explaining the difficulty he faced in experimenting with the precise measurements and ratios to obtain the desired result. Id. The proponent further explained that competitor machines are inferior because users cannot obtain desired measurements. Id.

Contrast Premier Lab Supply, Inc. with RX Sols., Inc. v. Express Pharmacy Services, Inc., 746 So. 2d 475 (Fla. 2d DCA 1999) and Yellowfin Yachts, Inc. v. Barker Boatworks, LLC, 898 F.3d 1279 (11th Cir. 2018). In RX Sols., Inc., the plaintiff claimed it developed a cardless online claims system. RX Sols., Inc., 746 So. 2d 475. However, the evidence demonstrated the system was not unique to the plaintiff because the program was developed by a South Carolina company and incorporated within the plaintiff’s online system. Id. In Yellowfin Yachts, Inc., the plaintiff claimed its customer list was a trade secret. Yellowfin Yachts, Inc., 898 F.3d 1279. The Court rejected this claim for two reasons. First, the central components of the customer list were publicly available because the customers were boaters required by statute to register their vessels. Id. The state’s Public Records Act required the state to openly provide registration information such as the registrants’ name and address to those who inquired. Id. A person could then use the Internet or White Pages to find the remainder of the customers’ contact information. Id. Second, the customer information was not confidential because the plaintiff failed to protect it. Id. The plaintiff encouraged its employees to save the customer information to their personal laptops and smartphones thereby destroying any potential for secrecy. Id.

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Standing is a legal concept requiring the litigant bringing the lawsuit to have a sufficient stake in the outcome of the controversy that enables the litigant to judicially resolve the controversy. Jamlynn Invs. Corp. v. San Marco Residences of Marco Condo. Ass’n, 544 So. 2d 1080 (Fla. 2d DCA 1989). The standing concept imposes a requirement that the claim be brought by someone who is recognized in law as a “real party in interest.” Brady v. P3 Group (LLC), 98 So. 3d 1206 (Fla. 3d DCA 2012). Contracting parties are generally deemed to be the real parties in interest, and can therefore, sue each other for breach of the underlying contract. Metropolitan Life Ins. Co. v. McCarson, 467 So. 2d 277 (Fla. 1985) (“Unless a person is a party to a contract, that person may not sue—or, for that matter, be sued—for breach of that contract where the non-party has received only an incidental or consequential benefit of the contract.”) However, one does not always need to be a contracting party to possess the standing needed to sue to enforce a contract’s terms. Third-party beneficiaries to a contract possess the requisite standing to sue to enforce a contract even though they are not themselves parties to the contract. Jim Macon Bldg. Contractors, Inc. v. Lake Cnty., 763 So. 2d 1223 (Fla. 5th DCA 2000) (“The right of an intended third-party beneficiary to sue under a contract is recognized in Florida…”). Peter Mavrick is a Miami business litigation attorney, and represents clients in Fort Lauderdale, 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.

A third-party contractual beneficiary is one who is specifically intended to be a beneficiary of the contract. Morgan Stanley DW Inc. v. Halliday, 873 So. 2d 400 (Fla. 4th DCA 2004). The contract must “clearly express an intent to primarily and directly benefit the third[-]party or a class of persons to which that party belongs.” Id. Both contracting parties must intend to benefit the third-party. Caretta Trucking, Inc. v. Cheoy Lee Shipyards Ltd., 647 So. 2d 1028 (Fla. 4th DCA 1994) (It “must be shown that both contracting parties intended to benefit the third party. It is insufficient to show that only one party unilaterally intended to benefit the third party.”). Florida’s Supreme Court has long that:

Where a contract shows its clear intent and purpose to be a direct and substantial benefit to third parties, and not merely that third parties might be benefited by it, or that third parties are indirectly or incidentally benefited by it, the third parties who are directly and substantially benefited by the performance of the contract may maintain an action for its breach under the statute as the real parties in interest. If a direct and substantial benefit accrues to persons severally, and they are the real parties in interest, they may maintain an action severally.

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“Florida law … contains a comprehensive framework for analyzing, evaluating and enforcing restrictive covenants contained in employment contracts.”  Vital Pharmaceuticals, Inc. v. Alfieri, 23 F. 4th 1282, 1291 (11th Cir. 2022) (quotation and citation omitted).  This framework includes a burden shifting approach between the restrictive covenant’s enforcer and enforcee that provides each party with an opportunity the negate the other’s position. Below we explore the framework’s burden shifting approach and each parties’ ability to use those burdens to their advantage.  Peter Mavrick is a Fort Lauderdale business litigation attorney.  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.

The restrictive covenant’s enforcer has the initial burden of pleading and proving that the restrictive covenant is supported by one or more legitimate business interests justifying the restrictive covenant. Fla. Stat. § 542.335. These legitimate business interests are identified by statute in a non-exhaustive list and include the protection of trade secrets, valuable confidential business information that does not qualify as a trade secret, substantial relationships with specific prospective or existing customers, and customer good will. Id; Alonso-Llamazares v. Int’l Dermatology Research, Inc., 339 So. 3d 385 (Fla. 3d DCA 2022) (“Section 542.335(1)(b) sets forth a non-exhaustive list of legitimate business interests that may justify the restrictive covenant sought to be enforced.”). The initial requirement that the enforcer plead and prove the existence of a legitimate business interest may present the enforcee with his or her first opportunity to thwart enforcement. If the enforcee can demonstrate the enforcer failed to prove the existence of a legitimate business interest, the court cannot enforce the restrictive covenant. See Blue-Grace Logistics LLC v. Fahey, 653 F. Supp. 3d 1172 (M.D. Fla. 2023), appeal dismissed, 2023 WL 3691014 (11th Cir. Apr. 12, 2023) (granting summary judgment against the enforcer because it “repeatedly speaks of ‘confidential’ and ‘proprietary’ information, but it never explains exactly what that information is or what makes it proprietary or confidential. Even where it describes the information with slightly more detail, it fails to explain the information’s value”).

The enforcer must also plead and prove that the restrictive covenant is reasonably necessary to protect the legitimate business interest asserted. Fla. Stat. § 542.335. This presents the enforcee with his or her second opportunity to thwart enforcement of the restrictive covenant if the enforcee can prove the covenant does not reasonably protect the legitimate business interest. For example, maybe the confidential information the enforcer is trying to protect has no utility in the hands of a competitor. See Blue-Grace Logistics LLC, 653 F. Supp. 3d 1172 (granting summary judgment because the plaintiff failed to show that the purported confidential information “was still relevant ‘given fluctuations in the industry,’ which Blue-Grace’s corporate representative agreed led to rate changes and customers having to rebid their freight”). Or maybe, the enforcer no longer conducts business with the customer it is trying to protect. IDMWORKS, L.L.C. v. Pophaly, 192 F. Supp. 3d 1335 (S.D. Fla 2016) (rejecting the plaintiff’s request to enforce a non-compete agreement because a “company cannot successfully claim a protectable business interest in a relationship with a former customer”). These are just two ways the enforcee can demonstrate that the enforcer failed to meet its second burden.

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In the absence of a non-compete agreement, Florida law prohibits tortious interference with certain business relationships.  The Supreme Court of Florida, in Tamiami Trail Tours, Inc. v. Cotton, 463 So.2d 1126 (Fla. 1985), explained that the elements of a claim for tortious interference with a business relationship are “(1) the existence of a business relationship…(2) knowledge of the relationship on the part of the defendant; (3) an intentional and unjustified interference with the relationship by the defendant; and (4) damage to the plaintiff as a result of the breach of the relationship.”  A protected business relationship need not be evidenced by an enforceable contract.  In Landry v. Hornstein, 462 So.2d 844 (Fla. 3d DCA 1985), Florida’s Third District Court of Appeal explained in pertinent part: “An action for intentional interference is appropriate even though it is predicated on an unenforceable agreement, if the jury finds that an understanding between the parties would have been completed had the defendant not interfered…A mere offer to sell, however, does not, by itself, give rise to sufficient legal rights to support a claim of intentional interference with a business relationship.”  In other words, “an action for intentional interference with a business relationship will lie if the parties’ understanding would have been completed if the defendant had not interfered.”  Charles Wallace Co. v. Alternative Copier Concepts, Inc., 583 So.2d 396 (Fla. 2d DCA 1991).  Peter Mavrick is a Miami business litigation attorney, and represents clients in Fort Lauderdale, 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.

Important precedent from the Supreme Court of Florida, in Ethan Allen, Inc. v. Georgetown Manor, Inc., 647 So.2d 812 (Fla. 1995), held that “a plaintiff may properly bring a cause of action alleging tortious interference  with present or prospective customers but no cause of action exists for tortious interference with a business’s relationship to the community at large…As a general rule, an action for tortious interference with a business relationship requires a business relationship evidenced by an actual and identifiable understanding or agreement which in all probability would have been completed if the defendant had not interfered.”  In reaching its decision, the Supreme Court found the Landry decision persuasive.  In Landry, a pharmacist who rented premises for his drugstore entered into negotiations, with his landlord’s permission, with a prospective purchaser to sell the pharmacist’s business and to assign the pharmacy lease.  However, when the landlord told the prospective buyer that the landlord was “going to get rid of” the pharmacist and that the landlord would rent the premises directly to the buyer, the negotiations stopped between the pharmacist and the prospective buyer.  Thereafter, the prospective buyer leased the drugstore from the landlord. The pharmacist then sued the landlord for tortious interference with a business relationship.  The appellate court in Landry found a business relationship existed between the pharmacist and the prospective buyer, explaining: “[T]he negotiations had progressed beyond the stage of a mere offer, to an understanding between [the pharmacist and the prospective buyer] for the sale of the business and assignment of the lease, transactions which would have been consummated had [the landlord] not interfered.  Evidence disclose that [the landlord]…had undertaken their own negotiations with [they buyer] regarding the rental of the drugstore premises while [the buyer and the pharmacist] were still involved in negotiations.”  In Ethan Allen, the Supreme Court explained that the plaintiff, Georgetown, was entitled to damages reasonably flowing from Ethan Allen’s interference with existing relationships.  Ethan Allen also qualified its decision, stating that Georgetown’s “relationship with its past customers was not one upon which a claim for tortious interference could be based.  Georgetown had no identifiable agreement with its past customers that they would return to Georgetown to purchase furniture in the future.   The mere hope that some of its pas customers may choose to buy again cannot be the basis for a tortious interference claim.”  The Supreme Court recognized, however, that there are situations where a plaintiff may have valid tortious interference claim based on the plaintiff’s reasonable expectation of future business from a recurring practice of performing work for certain clients.  Such a scenario would be distinguishable from a situation of a retail furniture dealer, like Georgetown, with tens of thousands of past customers who may or not return for future furniture purchases.

Peter Mavrick is a Miami business litigation lawyer, and represents 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.

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Under Florida law, a trade secret means information not commonly known by or available to the public, which derives economic value from not being generally known to or ascertainable by proper means by others who can obtain economic value from the information, and that was subject to reasonable efforts to maintain its secrecy.  Florida’s trade secret statute, at Florida Statutes section 688.002(2), states that a defendant “misappropriates” a trade secret when, among other things, it discloses or uses “a trade secret of another without express or implied consent” knowing at the time of the disclosure or use that the trade secret was “[a]cquired under circumstances giving rise to maintain secrecy or limit its use.”  To prove the trade secret was acquired in a manner that imposed a duty of secrecy on the receiving party, businesses often use confidentiality or non-disclosure agreements to clarify, in writing, the obligations of the receiving party.  The United States Court of Appeals for the Eleventh Circuit, in Penalty Kick Mgmt. Ltd. v. Coca Cola Co., 318 F.3d 1284 (11th Cir. 2003), explained that a non-disclosure agreement can be the basis for imposing a duty not to disclose a trade secret.  The Penalty Kick decision explained that “a defendant is liable for misappropriation of a trade secret only if the plaintiff can show that the defendant (1) disclosed information that enabled a third party to learn the trade secret or (2) used a ‘substantial portion’ of the plaintiff’s trade secret to create an improvement or modification that is ‘substantially derived’ from the plaintiff’s trade secret.”  By contrast, if the defendant independently created the allegedly misappropriated item with only “slight” contribution from the plaintiff’s trade secret, then the defendant is not liable for misappropriation.  Peter Mavrick is a Fort Lauderdale business litigation attorney.  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.

The Restatement (Third) of Unfair Competition, section 40, at Comment c (1995), summarizes a well-established body of law concerning a defendant’s liability for trade secret misappropriation based on substantial derivation from the original trade secret.  The Restatement explains in pertinent part: “As a general matter, any exploitation of the trade secret that is likely to result in injury to the trade secret owner or enrichment to the defendant is a ‘use’…. Thus, marketing goods that embody the trade secret, employing the trade secret in manufacturing or production, [and] relying on the trade secret to assist or accelerate research or development … all constitute ‘use.’  The unauthorized use need not extend to every aspect or feature of the trade secret; use of any substantial portion of the secret is sufficient to subject the actor to liability…. [A]n actor is liable for using the trade secret with independently created improvements or modifications if the result is substantially derived from the trade secret…. However, if the contribution made by the trade secret is so slight that the actor’s product or process can be said to derive from other sources of information or from independent creation, the trade secret has not been “used” for purposes of imposing liability under the rules.”

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.

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Federal courts distinguish between “direct” and “indirect” claims of trade secret misappropriation.  The United States District Court for the Northern District of California, in Heller v. Cepia, L.L.C., 2012 WL 13572 (N.D. Cal. Jan. 4, 2012), explained that the difference depends on whether a plaintiff alleges the defendant obtained the trade secrets directly from the plaintiff or indirectly “from someone other than plaintiff.”  Proving a claim of direct trade secret misappropriation is generally more simple than one asserting indirect misappropriation.  Peter Mavrick is a Miami business litigation attorney, and represents clients in Fort Lauderdale, 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.

To state a claim for direct trade secret misappropriation under the Defend Trade Secrets Act, “a plaintiff must allege (1) that it is the owner of a trade secret; (2) that the defendant misappropriated the trade secret; and (3) that it was damaged by the defendant’s actions.”  Alta Devices, Inc. v. LG Elecs., Inc., 343 F.Supp.3d 868 (N.D. Cal. 2018).

By contrast, the United States District Court for the Northern District of California, in Cal. Police Activities League v. Cal. Police Youth Charities, Inc., 2009 WL 537091 (N.D. Cal. Mar. 3, 2009), explained that claims of indirect trade secret misappropriation must set forth facts showing that a defendant: “(a) knew or had reason to know before the use or disclosure that the information was a trade secret and knew or had reason to know that the disclosing party had acquired it through improper means or was breaching a duty of confidentiality by disclosing it; or (b) knew or had reason to know it was a trade secret and that the disclosure was a mistake.”  The knowledge element places a much higher burden on the plaintiff.

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Not all contractual breaches are treated equally. Some breaches are material, while other breaches are not. Materiality matters because a material breach relieves the non-breaching party of his or her duties to perform under the contract. JF & LN, LLC v. Royal Oldsmobile-GMC Trucks Co., 292 So. 3d 500 (Fla. 2d DCA 2020) (“…[N]ot every breach permits the nonbreaching party to cease performance. Instead, the failure to perform the contractual obligation must be central to the contract or, in other words, material.”). Material breaches occur when the breach “go[es] to the essence of the contract; it must be the type of breach that would discharge the injured party from further contractual duty on his part.” Eclectic Synergy, LLC v. Seredin, 347 So. 3d 27 (Fla. 4th DCA 2022). However, “trivial noncompliance and minor failings do not constitute material breaches.” Burlington & Rockenbach, P.A. v. Law Offices of E. Clay Parker, 160 So. 3d 955 (Fla. 5th DCA 2015). By extension, trivial breaches do not relieve the non-breaching party from performing. See DK Arena, Inc. v. EB Acquisitions I, LLC, 121 So. 3d 634 (Fla. 4th DCA 2013) (The “failure of the appellee to cause the release of the escrow deposit was a non-material breach of contract, [because n]othing in the contract or addendum obligated appellee to take any action to cause the deposit to be released.”). Peter Mavrick is a Fort Lauderdale business litigation attorney.  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 “time is of the essence” provision can transform an immaterial breach into a material breach. Imagine a scenario where a seller agrees to sell a widget to a buyer for a specific price to be paid by January 1. Then imagine the buyer does not pay the full purchase price until January 2. Many would argue a one-day tardiness in payment is trivial and immaterial. However, a “time is of the essence provision” can make the buyer’s late payment a material breach relieving the seller of his obligation to sell the widget. In fact, “time is of the essence provisions” where created for this very purpose. Rybovich Boat Works, Inc. v. Atkins, 587 So. 2d 519 (Fla. 4th DCA 1991) (A “time is of the essence provision” is “intended to give the sellers an immediate right to cancel the contract if the buyer were unable to timely demonstrate an ability to purchase.”). For example, in Rybovich Boat Works, Inc., 587 So. 2d 519, the court granted summary judgment in favor of the seller because the buyer failed to set a closing date and failed to close by the latest date called for in the agreement despite the “time is of the essence” provision. Id.

“Time is of the essence” provisions are not always enforced. In equitable proceedings, “time is of the essence” provisions are only given effect when the party seeking enforcement demonstrates clear applicability to the relevant contract requirement. Jackson v. Holmes, 307 So. 2d 470, 472 (Fla. 2d DCA 1975) (A “‘time is of the essence’ provision will be given effect in an equitable proceeding probided [sic] it is shown to be clearly applicable to the contract requirement against which it is sought to be applied.”). Court do not want to “‘achieve [a] result by merely putting into the contract the words time is of the essence….’” Jackson v. Holmes, 307 So.2d 470 (Fla. 2d DCA 1975) (quoting 3A Corbin, Contracts § 715 (1960)). Therefore, “time is of the essence” provisions may be rejected in equitable proceedings when applied to matters of minimal consequence. Arvilla Motel, Inc. v. Shriver, 889 So. 2d 887 (Fla. 2d DCA 2004) (cautioning courts “not to apply a general provision that time is of the essence to all of the many ‘promises for sundry performance, varying in amount and importance,’ because parties often insert the provision in the contract without any realization of its significance.”) (quoting 3A Corbin, Contracts § 715 (1960)).

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