FORT LAUDERDALE BUSINESS LITIGATION: TRADE SECRETS LAWSUITS AND LEGAL REQUIREMENT OF SPECIFITY OF ALLEGED “TRADE SECRET”

Employees sometimes raid their employer’s trade secrets prior to quitting so that they may have an advantage starting up their own business or in their employment with a competitor. An aggrieved employer may sue under the Florida Uniform Trade Secrets Act (FUTSA) to recover those trade secrets and for any damages arising from the theft of trade secrets. However, FUTSA has many requirements that must be met before an employer can prevail on a misappropriation of trade secrets claim. An important, but easily missed requirement, is that business litigation concerning theft of trade secrets must specify in the complaint what exactly are the trade secrets. This article is a continuation of a prior article discussing the requirement for the identification of a trade secret. 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, employment litigation, trademark litigation, and other legal disputes in federal and state courts and in arbitration.

The Florida Uniform Trade Secret Act (FUTSA) is nearly identical to the Uniform Trade Secret Act (UTSA) enacted by most states. To prevail in business litigation concerning trade secret misappropriation, a plaintiff must sufficiently identify its trade secrets. “The plaintiff must, as a threshold matter, establish that the trade secret exists. To do so, it must disclose the information at issue.” Revello Med. Mgmt., Inc. v. Med-Data Infotech USA, Inc., 50 So. 3d 678 (Fla. 2d DCA 2010). The requirement that a plaintiff identify the particular basis for a trade secret is not explicitly found in the Uniform Trade Secret Act. Nevertheless, the UTSA necessarily requires that a plaintiff identify a trade secret with particularity, because it is impossible to evaluate whether information fulfills the basic requisite elements of trade secret law without the trade secret being identified. Altavion, Inc. v. Konica Minolta Sys. Lab., Inc., 171 Cal. Rptr. 3d 714 (Ct. App. 2014) (“‘[U]ntil the content and nature of the claimed secret is ascertained, it will likely be impossible to intelligibly analyze the remaining’ elements that constitute the cause of action”). Without identifying with particularity the trade secret at issue, it is impossible for the court to make to determine that each of the elements of a trade secret are met: (1) “information”; (2) “derives independent economic value” “from not being generally known”; (3) is “not readily ascertainable by proper means”; and (4) “is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” See §688.02 (4)(a)-(b).

Failing to adequately identify a trade secret can be a fatal error for an employer in a trade secret misappropriation case. At the pleadings stage of litigation, “[a] party proceeding under Florida’s Uniform Trade Secrets Act need only describe the misappropriated trade secrets with ‘reasonable particularity.’” Textile USA, Inc. v. Diageo N. Am., Inc., 15-24309-CIV, 2017 WL 10187642 (S.D. Fla. July 31, 2017). “[A plaintiff] cannot state a claim for trade secret protection under UTSA by simply ‘producing long lists of general areas of information which contain unidentified trade secrets.’ Instead he must articulate protectable trade secrets with specificity or suffer dismissal of his claim.” Nilssen v. Motorola, Inc., 963 F. Supp. 664 (N.D. Ill. 1997); GlobalTap LLC v. Elkay Mfg. Co., 13 C 632, 2015 WL 94235 (N.D. Ill. Jan. 5, 2015) (“[T]o sustain a trade secrets claim a party must do more than simply persist in the blunderbuss statement that ‘[e]verything you got from us was a trade secret’ … That view is wrong as a matter of law”).

The Third District Court of Appeal for Florida recently decided the trade secrets case Poet Theatricals Marine, LLC v. Celebrity Cruises, Inc., 3D19-1339, 2020 WL 5931884 (Fla. 3d DCA Oct. 7, 2020), concerning the business litigation plaintiff’s specificity of trade secrets in its pleading. There, the trial court had dismissed the plaintiff’s complaint because the purported trade secrets were not sufficiently articulated in the complaint. Poet reversed.

Poet held that the plaintiff had sufficiently identified the trade secrets by describing them as “(1) ‘proprietary digital and tracking and management systems over the operation and functioning of equipment used in the shows,’ and (2) a ‘unique training system that enabled a cruise line to hire non[ ]acrobatic performers (dancers) who would be trained to perform as skilled aerialists/acrobats in a fraction of the time typically required for acquiring such skills, all while maintaining a high level of safety of the performers, staff, and passengers.’” Poet reached this conclusion by comparing what was alleged in the complaint with the allegations made in other business litigation cases where courts held the plaintiff adequately identified its trade secrets in the complaint. E.g. DynCorp Int ‘l v. AAR Airlift Group, Inc., 664 Fed. Appx. 844 (11th Cir. 2016) (“[F]inancial and technical data, but specifically identified financial and technical data related to DynCorp’s pre-existing WASS contract, including personnel lists, salary and pay differentials, and pricing data related to staffing and business operations ….”); Disability Law Claims, P.A. v. IM Solutions, LLC, 2014 WL 12589140 (S.D. Fla. Sept. 5, 2014) (“ ‘[A] confidential and proprietary system’ that creates leads in the SSD industry and ‘provides a competitive advantage’ which ‘generate[s] a premium marketplace price’ ….”).

An employer suing under FUTSA risks dismissal of its complaint when it fails to adequately identify the trade secrets which were stolen. However, an employer that carefully complies with all requirements of FUTSA can effectively protect its trade secrets through litigation. 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.