FORT LAUDERDALE BUSINESS LITIGATION: TRADE SECRET PRIVILEGE

Sometimes litigants are asked to disclose trade secret information during the course of a lawsuit. These litigants usually object claiming the privilege of trade secret. See, e.g., Fla. Stat. § 90.506 (“A person has a privilege to refuse to disclose, and to prevent other persons from disclosing, a trade secret owned by that person if the allowance of the privilege will not conceal fraud or otherwise work injustice.”). However, the trade secret privilege is not absolute. Auto Owners Ins. Co. v. Totaltape, Inc., 135 F.R.D. 199 (M.D. Fla. 1990) (“The trade secret privilege is, however, not absolute under Florida law and the court may order production if the balance tips in favor of promoting the interests of facilitating the trial and doing justice as opposed to the interests of the claimant in maintaining secrecy.”). A court can compel the disclosure of trade secret information to another litigant; even if that litigant is a party opponent or competitor. 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 trade secret privilege was designed to prevent a party from obtaining valuable information that could be used to advantage itself or disadvantage the disclosing party. Freedom Newspapers, Inc. v. Egly, 507 So. 2d 1180 (Fla. 2d DCA 1987) (“The purpose underlying the trade secrets privilege established by section 90.506 is to prohibit a party to a suit from obtaining valuable information that could be used to its own advantage….”). To assert the privilege, the party resisting disclosure must prove the information qualifies as a trade secret and that harm will result if the information is disclosed. Am. Exp. Travel Related Services, Inc. v. Cruz, 761 So. 2d 1206 (Fla. 4th DCA 2000). The court usually inspects the information in a private in-camera setting to ensure trade secret information is not unnecessarily divulged. GCTC Holdings, LLC v. Tag QSR, LLC, 346 So. 3d 700 (Fla. 2d DCA 2022). If the resisting party satisfies his initial burden, the requesting party must show reasonable need for the information. Id. The court weighs the requesting party’s need against the resisting party’s interest in maintaining the information’s confidentiality. Lewis Tree Serv., Inc. v. Asplundh Tree Expert, LLC, 311 So. 3d 206 (Fla. 2d DCA 2020). The court will also determine whether safeguards can be implemented to prevent the requesting party from disclosing or using the information. GCTC Holdings, LLC, 346 So. 3d 700. Safeguards usually come in the form of a confidentiality order. Id.

Asserting a trade secret privilege is more difficult when the lawsuit pertains to the defendant’s trade secret misappropriation. Pursuing a trade secret misappropriation claim generally waives the right to claim a trade secret privilege because an ultimate issue in the case is whether the information qualifies as a trade secret. Del Monte Fresh Produce Co. v. Dole Food Co. Inc., 148 F. Supp. 2d 1322 (S.D. Fla. 2001) (“By bringing a claim under the Uniform Trade Secrets Act, and thereby placing the trade secrets at issue, Del Monte essentially has waived its right to assert the trade secret privilege.”). “In order to ascertain whether trade secrets exist, the information at issue must be disclosed.” Lovell Farms, Inc. v. Levy, 641 So. 2d 103 (Fla. 3d DCA 1994). However, the disclosure requirement does not necessarily mean a trade secret plaintiff has no protection. Courts can still require information to be exchanged under a confidentiality order or limit disclosure to only the information that is relevant to the dispute. See Ecometry Corp. v. Profit Ctr. Software, Inc., 2007 WL 9706934, at *5 (S.D. Fla. Mar. 15, 2007) (To “the extent that Interrogatory number 9 calls for the divulgence of trade secrets or confidential information, this Court ORDERS that PCS maintain the confidential nature of such information.”); Owners Ins. Co. v. Armour, 303 So. 3d 263 (Fla. 2d DCA 2020) (“Even though the disclosure of various types of information can result in irreparable harm, including material protected by privilege, trade secrets, or work product, the baseline test for discovery is always relevance to the disputed issues of the underlying action.”).

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.