Some businesses have experienced loss of customer relationships due to former employees taking customer relationships to competitors. The most obvious way to protect against such a situation is to ensure employees sign a restrictive covenant under Florida Statutes Section 542.335, commonly referred to as a non-compete agreement, prohibiting solicitation of customers and competition that diverts the employer’s customers to a competitor. Sometimes, however, businesses do not have a non-compete agreement with their employees. The law of trade secrets can be used, under certain circumstances, to bar use of confidential information, including customer lists, to divert customers to competitors. 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.
Florida’s Second District Court of Appeal, in East v. Aqua Gaming, 805 So.2d 932 (Fla. 2d DCA 2001), explained what is required to prove a customer list is a trade secret. To qualify as a trade secret, there must be evidence that a customer list “was the product of great expense and effort, that it included information that was confidential and not available from public sources, and that it was distilled from larger lists of potential customers into a list of viable customers for [a] unique business.” Customer lists can constitute trade secrets where the lists are acquired or complied through the industry of the owner of the lists and are not just a compilation of information commonly available to the public.
In trade secret litigation, it is often a major issue whether the alleged trade secret owner took appropriate measures to keep the the subject information a secret. Under Florida’s trade secret statute, section 688.002(4)(b), a trade secret owner must make “efforts that are reasonable under the circumstances to maintain its secrecy.” As to this issue, Florida and federal courts will often look at whether the alleged trade secret owner had signed agreements with its employees to protect the company information. In My Energy Monster, Inc. v. Gawrych, 2020 WL 8224616 (M.D. Fla. 12/18/2020), the federal court faulted the business that owned the alleged trade secret for not taking better measures to protect its trade secrets, and stated in pertinent part: “However, the record demonstrates that Gawrych was not required to sign a non-compete agreement, non-solicitation agreement, nor a confidentiality agreement and that non existed for other Energy Monster employees. According to Defendants, all employees at Energy Monster had access to the customer list…Defendants, further state that [t]here [were] no ‘need to know’ employees and Energy Monster never obtained nondisclosure agreements or confidentiality agreements–even after the parties parted ways and Gawrych offered to sign an NDA…Yet Energy Monster seeks to prevent the very action that such agreements are typically designed to prevent.”