TRADE SECRET LITIGATION: MISAPPROPRIATION OF TRADE SECRETS BY A BUSINESS RIVAL

Intellectual property is the foundation for innovation and ingenuity. Protecting your intellectual property rights, both as an individual or business, is essential to maintaining an economic advantage over your competitors. Trade secrets are one of the most controversial forms of intellectual property because the information is maintained in secrecy. By contrast, other intellectual property, such as copyrights and patents, must follow certain legal procedures. The purpose of a trade secret is to protect any information that is proprietary to your business because it is a secret. A trade secret can be misappropriated by your competitors or employees, who are seeking to directly compete with your business. Peter Mavrick is a West Palm Beach business lawyer who has extensive experience dealing with trade secret misappropriation.

As an individual or business owner, the preservation of your trade secret is paramount. It is important to take reasonable measures to ensure the protection of your trade secret. Although trade secrets do not require legal disclosure, they are still afforded legal protection. Florida’s Fourth District Court of Appeal in Premier Lab Supply, Inc. v. Chemplex Indus., Inc., 10 So. 3d 202, 203 (Fla. 4th DCA 2009), analyzed a corporation’s alleged claim of trade secret misappropriation by a business rival.

In Chemplex, the plaintiff owned a film spooling machine that would produce a variety of thin film products. The owner and his father invented and built the spooling machine used by the corporation. They also developed and designed all the products, manufactured them, and determined the formulations for all the required chemicals. Although the machine had numerous components that were simple and readily available on the open market, it was the specifications and calculations of these components that made the machine unique in its design and manufacturing capability. The owner of the machine also took reasonable measures to protect the machine. It was isolated and placed into a separate room only accessible by employees who were given permission to operate it. Upon the termination of one of its employees, the spooling machine was stolen and reproduced by a direct competitor. This enabled the plaintiff’s competitor to directly compete with the corporation because they could manufacture the same pre-cut rolls of thin film. Without direct physical access to the spooling machine, the pre-cut film rolls could never be reproduced because of the specific measurements involved.

Although spooling machines are readily available on the open market, the corporation established that its spooling machine was unique and not readily ascertainable by proper means. The machine also derived an economic benefit from not being generally known to or readily ascertainable by others. The trial court found the spooling machine and its design qualified as a trade secret. The trial court entered a permanent injunction. It enjoined the competitor from using its spooling machine or selling products derived from it.

The Fourth District Court of Appeal affirmed the trial court’s decision that the spooling machine and its design were trade secrets, but reversed the permanent injunction. The appellate court cited to Rule 1.610(c) of Florida Civil Procedure, which states: “Every injunction shall specify the reasons for entry, shall describe in reasonable detail the act or acts restrained without reference to a pleading or another document.” Failure to include specific reasons for issuing the injunction has resulted in reversals of temporary injunctions. Since the trial court had failed to specify the reasons for entry of the permanent injunction, it constituted reversible error. The appellate court required the trial court to reconsider the injunctive relief sought, and if a permanent injunction is granted, the order must specify all of the reasons.

If you own a trade secret, it is important to understand how you can protect that information. Trade secret misappropriation can be detrimental to your success and ability to derive economic benefits. If you have been the victim of trade secret misappropriation, or if you have any general questions regarding trade secrets, contact West Palm Beach trade secret attorney Peter Mavrick.

The West Palm Beach trade secret litigation attorneys at the Mavrick Law Firm have successfully represented many businesses in trade secret misappropriation in the Miami-Dade, Broward, and Palm Beach County areas encompassed by the Third and Fourth District Courts of Appeal, as well as Hillsborough, Sarasota, and other counties encompassed by the Second Circuit Court of Appeal. This article is not a substitute for legal advice tailored to a particular situation. Peter T. Mavrick can be reached at: Website: www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311.