MIAMI BUSINESS LITIGATION: BUSINESSES MUST TAKE REASONABLE MEASURES TO MAINTAIN THE SECRECY OF ITS TRADE SECRETS

In business litigation, a commonly litigated issue is whether a business took reasonable measures to maintain the secrecy of its alleged trade secret information. If such measures are not taken, then Florida courts routinely find that the subject information is not a protectable trade secret. Under Florida law, businesses must therefore adequately protect its trade secret information by maintaining its confidentiality and limiting third-party or outside access to such information. Peter Mavrick is a Miami business litigation attorney, and represents clients in business litigation in Fort Lauderdale, 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, employment law, and other legal disputes in federal and state courts and in arbitration.

Under the Florida Uniform Trade Secrets Act (“FUTSA”), “trade secret” means information, including a formula, pattern, compilation, program, device, method, technique, or process that:

• derives 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
• is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

To prevail in an action under FUTSA, a party must ultimately prove that the information it contends was misappropriated constitutes a trade secret. To do this, the party must prove that: (1) the information was not generally known by others who might profit from its use or disclosure, (2) the information was not readily ascertainable by that same class of persons, and (3) the information was subject to reasonable efforts under the circumstances to maintain its secrecy. In re Maxxim Medical Group, Inc., 434 B.R. 660 (Bankr. M.D. Fla. 2010). Thus, in a trade secret action, the claimant bears the burden of proof of demonstrating that the claimant took reasonable efforts to maintain secrecy. Am. Red Cross v. Palm Beach Blood Bank, Inc., 143 F.3d 1407 (11th Cir. 1998).

A trade secret claim will be defeated if a party disclosed the alleged trade secret information to a third party who was under no obligation to protect the confidentiality of the information. Ruckelshaus v. Monsanto, Co., 467 U.S. 986 (1984). For example, in Cubic Transp. Sys., Inc. v. Miami–Dade County, Florida’s Third District Court of Appeal held that a corporation failed to protect the secrecy of certain documents because it failed to mark the documents confidential before providing them to county officials. 899 So. 2d 453 (Fla. 3d DCA 2005). Likewise, in Sepro Corp. v. Florida Dept. of Env’t Prot., Florida’s First District Court of Appeal found that a business owner failed to maintain adequate security measures because he failed to label his confidential information as a “trade secret” and he did not otherwise indicate in writing that the information was a trade secret. 839 So. 2d 781 (Fla. 1st DCA 2003). Nonetheless, information that is generally known or readily accessible to third parties cannot qualify for trade secret protection. Bestechnologies, Inc. v. Trident Envtl. Sys., Inc., 681 So. 2d 1175 (Fla. 2d DCA 1996).

To demonstrate that reasonable measures were taken to secure and protect its trade secrets, a business can demonstrate that it kept its trade secrets inaccessible to the general public. As one example, in Premier Lab Supply, Inc. v. Chemplex Indus., Inc., Florida’s Fourth District Court of Appeal held that a business (Chemplex Industries) “presented evidence [at trial] of the reasonable measures it took to maintain the secrecy of its [spooling] machine.” 10 So. 3d 202 (Fla. 4th DCA 2009). Premier considered testimony that confirmed the “spooling machine was kept in a separate room away from the public” and that “[o]nly those persons who operated the machine were authorized to enter the ‘film room’” to access the machine. Premier Lab Supply, Inc. v. Chemplex Indus., Inc., 10 So. 3d 202 (Fla. 4th DCA 2009). This testimonial evidence was sufficient to establish that Chemplex Industries adequately safeguarded its trade secret information related to its spooling machine.

Peter Mavrick is a Miami business litigation lawyer, and represents clients in Fort Lauderdale, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.