FORT LAUDERDALE BUSINESS LITIGATION: DISCOVERY OF TRADE SECRETS IN LITIGATION

A trade secret plaintiff may have to divulge its claimed trade secret with reasonable particularity to the defendant before engaging in discovery because a growing number of courts require trade secret plaintiffs to do so. This rule places the plaintiff in a “Catch-22.” See DeRubeis v. Witten Techs., Inc., 244 F.R.D. 676 (N.D. Ga. 2007) (acknowledging that the plaintiff may be placed in a “Catch-22”, but nonetheless requiring the plaintiff to disclose its trade secrets with reasonable particularity). If the plaintiff limits disclosure to the portion of the trade secret it believes the defendant misappropriated and later discovers the defendant misappropriated the entire trade secret, the plaintiff may be precluded from fully recovering for the defendant’s misappropriation. Conversely, if the plaintiff discloses its entire trade secret and later discovers the defendant only misappropriated limited portions thereof, the plaintiff will have voluntarily disclosed its entire secret unnecessarily to an adverse party. Both situations are problematic. 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.

Parties are normally free to engage in discovery once the complaint is served or after conducting a preliminary discovery conference. See, e.g., Fla. R. Civ. P. 1.280 (e) (The “fact that a party is conducting discovery,… shall not delay any other party’s discovery.”); Fed. R. Civ. P. 26(a)(1)(C) (“A party must make the initial disclosures at or within 14 days after the parties’ Rule 26(f) conference….”). This is generally true even when the defendant moves to stay discovery due to a pending motion to dismiss the complaint. See Montoya v. PNC Bank, N.A., 14-20474-CIV, 2014 WL 2807617 (S.D. Fla. June 20, 2014) (“[D]iscovery stay motions are generally denied except where a specific showing of prejudice or burdensomeness is made or where a statute dictates that a stay is appropriate or mandatory.”). However, a growing number of courts throughout the United States require trade secret plaintiffs to disclose their trade secrets with reasonable particularity before discovery commences to prevent meritless claims. See, e.g., Kalencom Corp. v. Shulman, 2018 WL 1806037 (E.D. La. Apr. 17, 2018) (“[C]ourts routinely require ‘pre-discovery identification’ of [a plaintiff’s] trade secrets to discourage meritless trade secrets claims and abusive discovery into the trade secrets of a competitor.”). This rule is gaining consensus throughout many jurisdictions. See StoneEagle Servs., Inc. v. Valentine, 2013 WL 9554563 (N.D. Tex. June 5, 2013) (citing several cases) (The “growing consensus seems to be in favor of requiring” the plaintiffs “to identify, with reasonable particularity, the alleged trade secrets at issue.”).

Uniformity on the issue does not exist. In Florida for example, state courts tend to agree with the modern trend. See AAR Mfg., Inc. v. Matrix Composites, Inc., 98 So. 3d 186 (Fla. 5th DCA 2012) (A “plaintiff is required to identify with reasonable particularity the trade secrets at issue before proceeding with discovery.”). But Florida federal courts take a different approach. A Florida federal trade secret plaintiff is only required to (1) plausibly show a trade secret was involved and (2) notify the defendant about the material constituting the trade secret at issue. DynCorp Int’l v. AAR Airlift Group, Inc., 664 Fed. Appx. 844 (11th Cir. 2016) (At “the dismissal stage in federal court, the plaintiff need only allege sufficient facts to plausibly show a trade secret was involved and to give the defendant notice of the material it claims constituted a trade secret.”). Therefore, courts within the same state can take different positions on this issue.

A trade secret plaintiff should carefully consider the forum it chooses to litigate before filing suit to avoid the Catch-22 discussed above. Careful research and consideration should be given to the prerequisites to engaging in discovery. This forethought can help ensure a full recovery while preventing unwanted trade secret disclosures.

Peter Mavrick is a Fort Lauderdale business litigation attorney, 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.