FORT LAUDERDALE BUSINESS LITIGATION: REMEDIES UNDER THE DEFEND TRADE SECRETS ACT

Congress enacted the Defend Trade Secrets Act (DTSA) to supplement the state law trade secret protection available to aggrieved businesses. While the Florida Uniform Trade Secrets Act (FUTSA) and DTSA cover essentially identical conduct, the DTSA provides unique opportunities for plaintiffs to pursue their case in a federal forum and allows plaintiffs to seek an order of seizure. Peter Mavrick is a Fort Lauderdale business litigation lawyer, and also represents clients in business litigation in Miami, Boca Raton, and Palm Beach. The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

Trade secret law is generally uniform between the states. Florida codified trade secret law when it enacted the Uniform Trade Secrets Act in 1988. FUTSA is substantially the same as Uniform Trade Secret Act (UTSA), which was enacted in 47 other states. FUTSA specifically recognizes that it should be interpreted in conformity with the other states’ versions of the UTSA. § 688.009, Florida Statutes (“Sections 688.001-688.009 shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this act among states enacting it”).

The DTSA, 18 U.S.C. 1831, et seq., was enacted on May 11, 2016 to supplement the trade secret rights already provided under state law. DTSA makes unlawful the same conduct which is already unlawful under UTSA/FUTSA. 18 U.S.C. § 1839(3) (defining “trade secret” as information which “the owner thereof has taken reasonable measures to keep such information secret; and the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information”); § 688.002 (4), Florida Statutes (defining “trade secret” as information which [d]erives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and [i]s the subject of efforts that are reasonable under the circumstances to maintain its secrecy”).

The DTSA is unusual because it provides a federal business litigation cause of action which is nearly identical to a state court cause of action under UTSA. Congress’ legislative history reflects that this is by design in the legislative history from the Senate report, stating in pertinent part:

While … minor differences between the UTSA and the Federal definition of a trade secret remain, the Committee does not intend for the definition of a trade secret to be meaningfully different from the scope of that definition as understood by courts in States that have adopted the UTSA …. “[M]isappropriation” is defined identically in all relevant respects to the definition of misappropriation in § 1(2) of the UTSA. The Committee intentionally used this established definition to make clear that this Act is not intended to alter the balance of current trade secret law or alter specific court decisions.

In light of the shared wording, federal courts in Florida will generally interpret these substantive provisions in the same way. E.g. M.C. Dean, Inc. v. City of Miami Beach, Florida, 199 F. Supp. 3d 1349 (S.D. Fla. 2016) (interpreting FUTSA and DTSA without distinguishing between the two).

The similarity between FUTSA and DTSA provides Florida business litigation plaintiffs with flexibility in terms of their forum. Unlike state court trade secret claims like FUTSA, claims under DTSA may be brought in federal court as a “federal question.” Litigation in federal court can be strategically beneficial to a plaintiff, depending on the circumstance. Litigation in federal court tends to be swifter, more expensive, and less forgiving than similar proceedings in state court.

Discovery outside of Florida is substantially easier in federal court than it is in Florida state court. In federal court business litigation, a litigant need only issue a subpoena compliant with Fed.R.Civ.P. Rule 45 to compel discovery outside of the state of Florida but within the United States. Florida court litigants need to rely on the other state’s laws, which can complicate or delay discovery. Even states which have attempted to simplify this procedure by enacting the Uniform Discovery and Deposition Act generally require that a party file the discovery in the appropriate state court. A plaintiff may choose to litigate in federal court when the plaintiff intends to seek significant out-of-state discovery.

The remedies available to litigants under FUTSA and DTSA are nearly identical, with one major exception. See 18 U.S.C. § 1836(b)(3) (permitting aggrieved plaintiffs the opportunity to be awarded an injunction, damages, as well as double damages and attorneys’ fees when the defendant “willfully and maliciously” misappropriated a trade secret; § 688.004-005, Florida Statutes (providing the same relief). DTSA uniquely permits business litigation plaintiffs the opportunity to request that the court seize things to ensure that a trade secret is not disclosed. This is distinct from an injunction because it is enforced through direct action by federal law enforcement personnel, rather than through the traditional civil contempt process in court. To prevail, plaintiffs must show that an injunction would not be sufficient to protect the misappropriation of a trade secret, an irreparable injury would occur if seizure was not ordered, the balance of the harms is in favor of a seizure, and “the person against whom seizure would be ordered, or persons acting in concert with such person, would destroy, move, hide, or otherwise make such matter inaccessible to the court, if the applicant were to proceed on notice to such person and the applicant has not publicized the requested seizure.” 18 U.S.C. § (b)(2)(A).

While the seizure remedy under the DTSA is extraordinarily powerful, it is also extraordinarily difficult to prove a right to this remedy. It is unclear whether any request for a seizure in trade secret litigation has been granted in federal courts within the Eleventh Circuit Court of Appeals (governing federal courts within Florida, Georgia, and Alabama). An analysis of the reported cases did not reveal any instance where a court within the jurisdiction of the Eleventh Circuit Court of Appeals granted seizure. See Hayes Healthcare Services, LLC v. Meacham, 19-60113-CIV, 2019 WL 2637053 (S.D. Fla. Feb. 1, 2019) (rejecting seizure based upon the defendant’s promise to provide the subject material); Balearia Caribbean Ltd., Corp. v. Calvo, 16-23300-CIV, 2017 WL 8780944 (S.D. Fla. Aug. 3, 2017) (referring to the court’s previous order granting a temporary restraining order but denying seizure); Compulife Software, Inc. v. Newman, 9:16-CV-81942, 2017 WL 2537357 (S.D. Fla. June 12, 2017) (referring to previous order which denied seizure and temporary injunction); Truepenny People LLC v. Cota, 3:16CV424/MCR/CJK, 2016 WL 9308534 (N.D. Fla. Oct. 18, 2016) (purportedly granting request for seizure, but not actually providing relief which was different than an injunction).

A Florida business that wishes to protect its trade secrets should carefully consider whether to seek relief under DTSA. Peter Mavrick is a Fort Lauderdale business litigation attorney who also practices business litigation in Miami, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.