FORT LAUDERDALE BUSINESS LITIGATION: TRADE SECRET INJUNCTION AND DAMAGES BASED ON “HEAD START PERIOD”

You should protect your trade secrets at all lawful costs. But sometimes, trade secrets are stolen and misappropriated despite your best efforts to protect them. This article discusses some of the remedies available when trade secrets are stolen and the duration you can obtain those remedies in the future. 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 federal Defend Trade Secrets Act (DTSA) and the Florida Uniform Trade Secrets Act (FUTSA) allows a trade secret plaintiff to prevent the defendant from using his trade secret in the future through an injunction. Courts may also require the defendant to pay the trade secret plaintiff damages for revenues or profits the defendant will generate in the future by using the plaintiff’s trade secret. Fla. Stat. § 688.003; Fla. Stat. § 688.004; 18 U.S.C. § 1836.

Court’s sometimes use the head start period to determine the length of time an injunction should last or the cutoff for awarding damages for future use of the trade secret to the plaintiff. The duration of the head start is typically defined as the time it would have taken the defendant to independently develop its own product or process without the benefit of the plaintiff’s trade secret. Sensormatic Electronics Corp. v. The TAG Co. U.S., LLC, 632 F. Supp. 2d 1147 (S.D. Fla., Dec. 19, 2018); Medical Store, Inc. v. AIG Claim Servs., Inc., 2003 WL 25669175 (S.D. Fla., Oct. 17, 2003) (stating that the “damage period begins when the alleged misappropriation began” and ends “at the point in time when the Defendants would have been able to achieve the same results through the independent development of the protected information.”).

However, applicability of the head start period is not uniform in Florida. For example, the Florida Fourth District Court of Appeals found that a trial court was not required to limit a manufacturer’s damages for actual loss caused by the misappropriation to a head start period in Premier Lab Supply, Inc. v. Chemplex Industries, Inc., 94 So. 3d 640 (Fla. 4th DCA 2012). In that case, the trial court allowed a jury instruction limiting damages for unjust enrichment to the head start period. However, the trial court did not allow a similar instruction for actual losses. The jury returned an unjust enrichment verdict limited to the head start period, and a verdict for actual losses that went beyond the head start period by several years. The defendant appealed and argued that the trial court should have limited actual losses to the head start period. However, the Fourth District affirmed the trial court’s actions. The Fourth District reasoned that the jury had sufficient evidence to determine the plaintiff’s actual losses, and section 688.004 of the Florida Statutes does not limit actual losses to a head start period. Therefore, a head start period can be a useful benchmark for determining damages but it is not always required.

The remedies in every trade secret case are highly case specific. A head start period for determining the duration of remedies could be applicable in some cases, but not in others. Determining the correct model and applicable period is an important aspect of a trade secret lawsuit and you should consult legal counsel to determine whether the head start period could apply and whether it useful.

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.