MIAMI BUSINESS LITIGATION: TRADE SECRET THEFT DURING EMPLOYMENT

One of the main issues in trade secret litigation is whether the business can prove the statutory element that there was a “misappropriation” of its trade secrets. To qualify for protection under Florida Uniform Trade Secrets Act (“FUTSA”) and the federal Defend Trade Secrets Act (“DTSA”), an employer must prove its trade secrets were acquired wrongfully through improper means. For liability to attach under the DTSA and FUTSA, the information must be the fruit of this wrongful acquisition, which is commonly referred to as “misappropriation.” 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.

The federal trade secrets statute, DTSA , defines “misappropriation” to include “acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means” or “disclosure or use of a trade secret of another without express or implied consent” in specified circumstances. 18 U.S.C. § 1839(5). “Improper means” under the Act includes “theft, bribery, misrepresentation, [and] breach or inducement of a breach of a duty to maintain secrecy,” but excludes “reverse engineering, independent derivation, or any other lawful means of acquisition.” 18 U.S.C. § 1839(6). The definition of “improper means” under FUTSA includes “breach or inducement of a breach of a duty to maintain secrecy.” Fla. Stat. § 688.002(1).

Federal courts in the Eleventh Circuit regularly find that trade secrets are acquired through improper means when a former employee downloads a former employer’s trade secret information before resigning. For example, in Fortiline, Inc. v. Moody, the United States District Court for the Southern Distrit of Florida found “ample evidence to suggest that [the defendants] acquired [plaintiff’s] trade secrets through improper means” when a defendant “removed [plaintiff’s] customer contact and pricing information from the company server to his laptop hard drive, and used this information to solicit customers for [his new company] while working for [the plaintiff].” 2013 WL 12101142 (S.D. Fla. Jan. 3, 2013). Fortiline held that “FUTSA allows courts to issue injunctions to prevent actual or threatened misappropriation of trade secrets, whether or not a non-compete agreement restricts post-employment competition.” The Fortiline Court ultimately enjoined the defendant from soliciting customers after it was shown that Moody copied his former employer’s trade secrets from company laptops onto his own personal storage devices, which was determined through forensic examination.

In Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Silcox, the United States District Court for the Southern District of Florida granted an injunction in favor of a former employer where the defendant, while still employed, removed certain “customer information maintained on a laptop computer . . . pertaining to the clients [defendant] serviced while employed at Merrill Lynch.” 2001 WL 1200656 (S.D. Fla. Oct. 4, 2001). Silcox determined that the employee misappropriatd its employer’s trade secrets because “[p]rior to his resignation, Silcox removed from Merrill Lynch certain information pertaining to the customers he serviced at Merrill Lynch, including customers’ names, addresses, telephone numbers, Merrill Lynch account numbers and trust documents.” Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Silcox, 2001 WL 1200656 (S.D. Fla. Oct. 4, 2001). The Court ultimately found the employee misappropriated the employer’s trade secrets by using “the customer information to prepare and send mailings on Smith Barney letterhead to the Merrill Lynch customers he helped manage while employed by Merrill Lynch.” Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Silcox, 2001 WL 1200656 (S.D. Fla. Oct. 4, 2001).

In VAS Aero Servs., LLC v. Arroyo, the United States District Court for the Southern District of Florida found that trade secrets were misappropriated where a subsequent computer forensic investigator’s investigation of defendant’s work-issued laptop and cell phone revealed that defendant had copied multiple files containing the plaintiff business’s confidential information onto a USB device. 860 F. Supp. 2d 1349 (S.D. Fla. 2012). The Court granted plaintiff’s motion for temporary injunction based on this misappropriation of trade secrets that occurred while the defendant was still employed by his former employer.

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.