Articles Posted in Business Litigation

Published on: June 1, 2019

FLORIDA NON-COMPETE LAW: COURTS SCRUTINIZE THE CONTRACTUAL WORDING WHEN DECIDING THE SCOPE OF A NON-COMPETE COVENANT

A party seeking a temporary injunction to enforce a non-compete agreement must establish four elements: (1) a likelihood of irreparable harm and the unavailability of an adequate remedy at law; (2) a substantial likelihood of success on the merits; (3) the threatened injury to the petitioner outweighs any possible harm to the respondent, and (4) the granting of a temporary injunction will not disserve the public interest. Avisena, Inc. v. Santalo, 65 So. 3d 14, (Fla. 3d DCA 2011). The party seeking the injunction has the burden of persuasion of these four elements. Peter Mavrick is a Miami non-compete lawyer who has extensive experience representing clients in non-compete litigation, including cases seeking injunctions.

In Avisena, Inc. v. Santalo, 65 So. 3d 14, (Fla. 3d DCA 2011), Avisena, Inc., (“Avisena”), i.e., the former employer, sued Alberto C. Santalo (“Santalo”), its founder and former president and chief executive officer, along with his new company CareCloud Corporation (“CareCloud”) for alleged violation of a non-compete agreement. Santalo had previously signed an employment agreement containing non-compete covenant that prohibited competition with his former employer. Santalo’s non-compete period was conditional because it depended on whether he voluntarily quit or instead whether he was terminated and what was the basis for the employment termination.

The employment agreement articulated three reasons that Santalo’s employment may be terminated either by the Avisena or by Santalo. Subsection 5.5 of the employment agreement described termination by Avisena without cause. This subsection stated that Santalo may be terminated by Avisena for any reason or for no reason. Subsection 8.9 of the employment agreement provided varying lengths of non-compete periods depending on which of the three subsections of Section 5 applied. Subsection 8.9 provided that if Santalo were terminated without cause, then the non-compete period would be the twelve-month period following Santalo’s termination from Avisena.

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Published on: May 31, 2019

FLORIDA TRADEMARK INFRINGEMENT LITIGATION: TIME BARRED CLAIMS ARE SUBJECT TO LACHES DEFENSE

By Mavrick Law Firm

The Lanham Act does not contain a statute of limitations. When the filing of a trademark infringement lawsuit is delayed for years, the defendants may instead assert laches as an affirmative defense. Federal courts use the limitations period for analogous state law claims as a standard for the defense of laches. Peter Mavrick is a business litigation lawyer who represents clients in unfair competition and trademark infringement lawsuits.

The laches defense requires a defendant to show 1) a delay in asserting a right or a claim, 2) that the delay was not excusable, and 3) that there was undue prejudice to the party against whom the claim is asserted.” Ares Defense Systems, Inc. v. Karras, 2016 WL 7042957 (M.D. Fla. March 10, 2016) citing AmBrit, Inc. v. Kraft, Inc., 812 F.2d 1531 (11th Cir. 1986). In Florida, Plaintiff’s delay in asserting its trademark infringement claims is assessed against a four-year limitations period, pursuant to Florida Statute § 95.11(3). AmBrit, Inc. v. Kraft, Inc., 812 F.2d 1531 (11th Cir. 1986). Florida Statute § 95.11(3) sets forth a four-year statute of limitations for several causes of action, including actions based on statutory liability, actions for injury to property and is also a “catch-all” limitations period for any action not specifically provided for in Florida Statutes.

A recent case examined this issue. In Ares Defense Systems, Inc. v. Karras, Plaintiff Ares Defense Systems, Inc. (“ADS”) was a firearm manufacturing company that designed, manufactured, and sold a variety of firearms and components under the marks Ares and Ares Defense since 1999. ADS filed suit alleging trademark infringement against (among others) Defendants Double A and Lycurgan (and their president Dimitrios Karras (“Karras”)), two companies that each claimed use of the mark “Ares Armor” since 2010 or 2011.

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Published on: May 18, 2019

FLORIDA NON-COMPETE LAW: ANTITRUST ISSUES WHEN EMPLOYERS AGREE NOT TO SOLICT EACH OTHER’S EMPLOYEES

By Mavrick Law Firm

Many employers possess confidential information vital to generating profits. Employers routinely entrust employees with this information to facilitate business operations, but employees often leave their job after a few years to work for a competitor. When this happens, the employee takes the confidential information he or she learned to the next job. The employee might disclose this information to the new employer, and thereby detrimentally affect the former employer’s business. As a result, some employers competing in the same space have joined forces to combat disclosure of their confidential information by agreeing not to solicit each other’s employees, thereby ensuring the employees will remain at the same company. However, these agreements would likely constitute an unlawful restraint on trade under federal law it and may result in significant civil and criminal liability. The Mavrick Law Firm has extensive experience with non-compete agreements and related litigation.

Under the Sherman Act’s prohibition against anti-competitive behavior, an employer cannot lawfully stymie competition by entering agreements with other employers to hinder their employees’ ability to compete in the labor market. Congress declared every contract, trust, or conspiracy restraining trade or commerce illegal. 15 U.S.C. § 1 (“Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States….”). The Sherman Act therefore prevents anti-competitive behavior and courts interpret this statute to prohibit competitors from agreeing not to solicit each other’s customers or fix prices. Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 458 (1993) (“The law directs itself… against conduct which unfairly tends to destroy competition itself.”); United States v. Topco Associates, Inc., 405 U.S. 596, 608 (1972) (“We think that it is clear that the restraint in this case is a horizontal one, and, therefore, a per se violation of § 1.”); Texaco Inc. v. Dagher, 547 U.S. 1, 5 (2006) (“Price-fixing agreements between two or more competitors… are per se unlawful.”). The Department of Justice has used the Sherman Act to sue several employers who agreed to refrain from competing for each other’s employees. In one such case, the Department of Justice contended in court filings that the employers “fix[ed] and suppress[ed] employee compensation and to restrict[ed] employee mobility.” In re High–Tech Employee Litig., 856 F. Supp. 2d 1103, 1108-10 (N.D. Cal. 2012). The case settled but opened the door for employees to assert similar private causes of action. For example, in Nitsch v. DreamWorks Animation SKG Inc., an employee sued DreamWorks Animation SKG Inc., The Walt Disney Company, Lucasfilm Ltd., and others claiming they agreed to refrain from actively soliciting each other’s employees and set employee compensation ranges. Nitsch v. DreamWorks Animation SKG Inc., 100 F. Supp. 3d 851, 853 (N.D. Cal. 2015). Although the Nitsch lawsuit was resolved through arbitration, the case is problematic for employers because it sets a precedent for employees who fall within agreements between two or more employers to sue. These lawsuits could negatively affect businesses and business owners because liabilities associated with the Sherman Act can be severe. For instance, an individual can be fined up to one million dollars or imprisoned for up to ten years and a business can be fined up to one-hundred thousand dollars. 15 U.S.C. § 1. In addition, significant class action liability could arise. In re High–Tech Employee Litig., 2011-2509, ECF 1032 (granting class certification). Employers should therefore consider these risks before agreeing with another employer to inhibit employees from participating in the labor market.

Employers may avoid liability under the Sherman Act by entering bilateral employment contracts with employees that prohibit employees from disclosing confidential information. Florida law allows non-disclosure provisions within employment contracts. Courts must enforce these provisions if they are in a signed writing; protect a legitimate business interest; and are reasonable in time, area, and line of business. Fla. Stat. § 542.335 (1) (“enforcement of contracts that restrict or prohibit competition during or after the term of restrictive covenants, so long as such contracts are reasonable in time, area, and line of business, is not prohibited”); Fla. Stat. § 542.335 (1)(a)-(b) (“A court shall not enforce a restrictive covenant unless it is set forth in a writing signed by the person against whom enforcement is sought… and the person seeking enforcement of a restrictive covenant [must] plead and prove the existence of one or more legitimate business interests justifying the restrictive covenant”). These non-disclosure employment agreements are less likely to violate the Sherman Act because they are generally considered reasonable. Alders v. Afa Corp. of Florida, 353 F. Supp. 654, 658 (S.D. Fla. 1973) (finding the employer’s restrictive covenant reasonable). In fact, non-disclosure employment agreements may further the Sherman Act’s goals of creating an efficient marketplace by securing a business’ confidential information. Consultants & Designers, Inc. v. butler Service Group, Inc., 720 F. 2d 1553, 1561 (11 Cir. 1983) (“when a practice tends to reduce competition…, but nevertheless operates to make the market more efficient… then it may still be found, under the rule of reason, to further the Sherman Act’s goals in aiding competition.”). An employer employee non-disclosure agreement therefore reduces legal exposure and is more likely to be enforced.

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Published on: May 5, 2019

FLORIDA BUSINESS LITIGATION: CLAIMS FOR PUNITIVE DAMAGES DO NOT IMPOSE ADDITIONAL BURDENS ON PLAINTIFFS ASSERTING FRAUD CLAIMS

By Mavrick Law Firm

Punitive damages punish and dissuade wrong-doers from committing egregious acts by increasing the damages award to exceed compensable injuries. Cooper Indus., Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 432 (2001) (the purpose of punitive damages is to punish and deter future wrongdoing); Engle v. Liggett Group, Inc., 945 So. 2d 1246, 1265 (Fla. 2006) (Punitive damages are calculated by multiplying the compensatory damages award by a number less than 10). A claim for punitive damages is therefore an important weapon in a litigant’s arsenal because it creates liability and risk exposure exceeding the value of the plaintiff’s actual claim. See State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 425 (2003) (“The Court further referenced a long legislative history, dating back over 700 years and going forward to today, providing for sanctions of double, treble, or quadruple damages to deter and punish.”). Because the incentive to pursue punitive damages in unwarranted circumstances may be too difficult for some to resist, the Florida Legislature developed a heightened pleading standard to assert a claim for punitive damages. See W.R. Grace & Co.–Conn. v. Waters, 638 So. 2d 502, 505 (Fla. 1994) (“We acknowledge the potential for abuse when a defendant may be subjected to repeated punitive damage awards arising out of the same conduct.”). While this enhanced standard may preclude some litigants from asserting punitive damages claims, it is unlikely to affect fraud claims because the pleading requirements for fraud and punitive damages coincide. Peter Mavrick has successfully represented clients in Palm Beach, Broward, and Miami-Dade business litigation and related arbitration proceedings.

A claimant establishes a punitive damage claim with evidence demonstrating the tortfeasor (i.e., the defendant) acted with intentional misconduct or gross negligence. A tortfeasor is liable for punitive damages for engaging in intentional misconduct or gross negligence. Fla. Stat. § 768.72 (2). Intentional misconduct occurs when the tortfeasor knows the conduct is wrongful and has a high probability of injury but proceeds to act anyway. Id. at (2)(a) (“Intentional misconduct” means that the defendant had actual knowledge of the wrongfulness of the conduct and the high probability that injury or damage to the claimant would result”). Gross negligence similarly occurs when reckless or wanton conduct constitutes a conscious disregard for the plaintiff’s rights. Id. at (2)(b) (“Gross negligence” means that the defendant’s conduct was so reckless or wanting in care that it constituted a conscious disregard or indifference to the life, safety, or rights of persons exposed to such conduct”). However, conclusory allegations of intentional misconduct or gross negligence will not sustain a punitive damage claim. Douse v. Boston Scientific Corporation, 314 F. Supp. 3d 1251, 1264 (M.D. Fla. 2018) (Conclusory allegations are insufficient to provide a reasonable basis, and instead “a plaintiff must plead specific acts committed by a defendant”). A pleader must therefore present evidence or make a proffer demonstrating a reasonable basis for the recovery of punitive damages. Compare Fla. Stat. § 768.72 (1) (“No claim for punitive damages shall be permitted unless there is a reasonable showing by evidence in the record or proffered by the claimant which would provide a reasonable basis for recovery of such damages”) and Fla. R. Civ. P. 1.120 (b) (a claim shall contain “a short and plain statement of the ultimate facts showing that the pleader is entitled to relief”).

This heightened pleading standard for punitive damage claims does not significantly alter what plaintiffs need to plead for fraud claims. Claims asserting fraud must be pled with specificity, regardless of whether punitive damages are sought. In addition, intent is an element of fraud. Fraud is perpetrated by a tortfeasor who, inter alia, intentionally and knowingly makes a false statement about a material fact for purposes of inducing reliance. Johnson v. Davis, 480 So. 2d 625, 627 (Fla. 1985) (providing the elements of fraud). Intent is thus a prerequisite of fraud and must be plead with particularity. Mejia v. Ruiz, 985 So. 2d 1109, 1113 (Fla. 3d DCA 2008) (“Proof of fraud requires proof of intent.”); Cedars Healthcare Group, Ltd. v. Mehta, 16 So. 3d 914, 917 (Fla. 3d DCA 2009) (All elements of fraud must be plead with particularity). A claim for punitive damages therefore does not impose an additional burden on a plaintiff claiming fraud, because fraud already contains an element of intent. Pearlman v. Prudential Ins. Co. of America, Inc., 686 So. 2d 1378, 1382 (Fla. 3d 1997) (“A claim of fraud sufficient to justify compensatory damages is also sufficient to support an award of punitive damages.”). Consequently, a claimant providing evidence of fraud claim automatically satisfies the punitive damages pleading standard. Espirito Santo bank v. Rogo, 990 S0. 2d 1088, 1090 (Fla. 3d 2007) (“When a party has presented sufficient facts in support of a fraudulent inducement claim that would entitle him to an award of compensatory damages, he has also presented sufficient facts that would support a request for punitive damages” because intent in an element of fraud); see also First Interstate Development Corp. c. Ablanedo, 511 So. 2d 536 (Fla. 1987) (“Proof of fraud sufficient to support compensatory damages necessarily is sufficient to create a jury question regarding punitive damages.”); Rappaport v. Jimmy Bryan Toyota of Fort Lauderdale, Inc., 522 So. 2d 1005, 1006 (Fla. 4th DCA 1988) (“Thus, in all cases of fraud the jury is empowered to award punitive damages.”). Plaintiffs with fraud claims should therefore consider asserting punitive damages claims because there is no additional burden of proof. The leverage gained from the liability associated with punitive damages could help plaintiffs reach favorable resolutions in business litigation and other disputes.

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Published on: April 16, 2019

ARBITRATION AND BUSINESS LITIGATION: COURTS CAN DEEM PARTIES BOUND BY ARBITRATION CLAUSE FROM A SEPARATE WRITTEN CONTRACT

By Mavrick Law Firm

When parties execute two separate contracts and only one contract contains an arbitration clause, generally the parties cannot be compelled to arbitrate disputes arising from the contract that does not call for arbitration. However, under certain circumstances courts will extend the arbitration provisions from one contract to a separate contract, and the parties may be bound to arbitrate disputes arising out of either agreement because the two agreements will be read together as one contract. Peter Mavrick has successfully represented clients in Palm Beach, Broward, and Miami-Dade business litigation and related arbitration proceedings.

Phoenix Motor Co. v. Desert Diamond Players Club, Inc. involved four agreements for the purchase of new motor vehicles. The purchase agreements contained an arbitration clause, but also stated that “[t]he Purchaser, before or at the time of delivery of the motor vehicle covered by the Order, shall execute such other forms of agreement or documents as may be required by the terms and conditions of payment indicated on the front of this Order.” Phoenix Motor Co. v. Desert Diamond Players Club, Inc., 144 So.3d 694 (Fla. 4th DCA 2014). The purchaser also signed an export policy imposing liquidated damages if Desert exported the new vehicle out of the United States within one year of purchase. The export policy stated that “[e]xecution of the purchase/lease documents by the purchaser/lessee shall constitute acceptance of these terms and conditions.”

The purchaser sued for a declaration that the export policy was invalid and unenforceable. The seller filed a motion to compel arbitration pursuant to the arbitration clause in the purchase agreements. The trial court in Phoenix Motor Co. addressed whether there was a valid agreement to arbitrate a dispute arising from the export policy. The trial court denied the seller’s motion and the seller immediately appealed.

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Published on: April 7, 2019

FLORIDA ARBITRATION LAW: WHEN CAN THIRD PARTY BENEFICIARIES TO A CONTRACT BE COMPELLED TO ARBITRATE?

By Mavrick Law Firm

An important trend in business contracts today involves the use of arbitration provisions to resolve some or all contemplated disputes that may arise between parties to the contract and sometimes “third-party beneficiaries” of the contract. Contracts are often made for the benefit of a third-party who did not sign the agreements. A third-party beneficiary is a person or entity that the parties to the contract intended to benefit from the contract. The question sometimes arises: is a third-party, non-signatory to a contract legally obligated to submit itself to an arbitrator to decide the third-party’s rights/obligations in the business litigation? To answer this question, Florida courts analyze the issue in the following manner. Peter Mavrick is a Fort Lauderdale business litigation attorney who has successfully represented many Fort Lauderdale, Miami, and Palm Beach businesses in connection with arbitration proceedings.

Florida courts examine the following three factors when determining whether to compel arbitration: (1) whether a valid written agreement to arbitrate exists; (2) whether an arbitrable issue exists; and (3) whether the right to arbitration was waived. Florida Power and Light Co. v. Road Rock, Inc., 920 So.2d 201 (Fla. 4th DCA 2006). The first factor requires the court to determine the validity of the arbitration provision. Ordinary contract principles determine who will be bound by such an agreement. Courts give arbitration clauses their broadest possible interpretation to accomplish the statutory purpose of resolving controversies out of the court. Royal Caribbean Cruises, Ltd. v. Universal Employment Agency, 664 So.2d 1107 (Fla. 3d DCA 1995). Doubts concerning the scope of an arbitration agreement should be resolved in favor of arbitration. Breckenridge v. Farber, 640 So. 2d 208 (Fla. 4th DCA 1994). While it is fundamental that a court may compel parties to a contract to arbitrate their disputes when the contract mandates arbitration, generally “[o]ne who has not agreed to be bound by an arbitration agreement cannot be compelled to arbitrate.” Liberty Communications, Inc. v. MCI Telecommunications Corp., 733 So.2d 571 (Fla. 5th DCA 1999). “Where the contract contains an arbitration clause which is legally enforceable, the general view is that the beneficiary is bound thereby to the same extent that the promisee is bound.” Zac Smith & Co., Inc. v. Moonspinner Condominium Ass’n, Inc., 472 So.2d 1324 (Fla. 1st DCA 1985) quoting 2 Williston on Contracts (3d ed.) § 364A (1959). A third-party beneficiary’s contractual rights, however, cannot rise higher than the rights of the contracting party through whom he claims. Crabtree v. Aetna Casualty & Surety Co., 438 So.2d 102, 105 (Fla. 1st DCA 1983).

For example, Florida’s First District Court of Appeal in Zac Smith & Co., Inc. held that an arbitration clause in a contract is binding on a third-party beneficiary and can compel the third-party to participate in arbitration. In Zac Smith & Co., a condominium association sued a contractor, based in part, on an alleged breach of a construction contract to which the condominium association was a third-party beneficiary. The defendant contractor moved to compel arbitration because that condominium association was required to abide by arbitration clause contained in contract. The condominium association was asserting its rights as a third-party beneficiary to the contract but disputed being bound to the arbitration clause. The trial court denied the motion and the contractor immediately appealed. The appellate court reversed the trial court’s decision and held that that the Florida Arbitration Code applies to third-party beneficiaries to a contract containing an arbitration clause.

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Published on: February 23, 2018

FLORIDA TRADE SECRET LAW: PROTECTING TRADE SECRETS DURING LITIGATION

By Mavrick Law Firm

A temporary injunction is often an effective protection for to prevent an adversary from using stolen trade secrets, such as a customer list. Peter Mavrick is a Fort Lauderdale trade secret lawyer who represents businesses in trade secret litigation.

In the case of I.C. Systems, Inc. v. Oliff, 824 So. 2d 286 (Fla. 4^th DCA 2002), an employer sued its former employee for damages and injunctive relief and alleged that the former employee misappropriated its client lists and other trade secrets to be used by the employee’s new employer (i.e. a competitor). The employer had no way to control or mitigate the potential damage that would inevitably occur during the lawsuit because the former employee possessed their confidential information. So, contemporaneous to filing its lawsuit, the employer filed a motion for a temporary injunction to immediately prevent further harm by its former employee while the lawsuit proceeded. A temporary injunction is strategically valuable because it penalizes noncompliance by holding them in contempt and the imposition of sanctions against the former employee if he or she fails to comply with the Court’s Order.

The trial court denied the motion for temporary injunction under the mistaken reasoning that the employer did not need the injunction because it could be fully compensated through its claim for monetary damages. However, in Florida’s Trade Secret Act, the legislature expressly authorized parties to seek both injunctive relief and damages. So, a business should not be limited to recovery of its monetary relief, particularly when its trade secrets could be negatively impacted before a judgment is ever entered by the Court.

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Published on: February 16, 2018

PROTECTION OF TRADE SECRETS FROM LITIGATION DISCOVERY

By Mavrick Law Firm

Businesses often envision that litigation over trade secrets will generally involve a direct lawsuit by or against a person or company that steals or divulges such information in violation of a position of trust. However, trade secrets can come under attack by way of a discovery requests in litigation where the owner of the trade secret may not even be involved in the lawsuit. The following two recent appellate decisions are examples of the diligence required to safeguard trade secrets in litigation. Peter Mavrick is a Fort Lauderdale trade secret lawyer who represents businesses in trade secret litigation.

In Kelley v. Healthcare-IQ, Inc., 230 So. 3d 955 (Fla. 2d DCA 2017), former employees sued their former employer for breach of an employment contract. The former employer filed counterclaims against them alleging disclosure of its trade secrets. During discovery, the former employer served subpoenas for documents relating to the business practices of its competitor, who was the former employees’ current employer. The employees asserted the trade secret privilege on its current employer’s behalf. At the court hearing on the privilege, there was no evidence taken and no findings were made by the judge. Nevertheless, the trial court allowed the discovery of the trade secret information.

The employees immediately appealed to prevent the irreparable harm that the disclosure of their employer’s trade secret information would cause to their employer. On certiorari review, the Appeals Court reversed the decision because the trial court failed to follow the proper procedure, which required it to examine evidence and determine the answers to the following two prongs: 1) whether the information requested is in fact a trade secret and 2) if it is trade secret information, whether there is a reasonable necessity for the requesting party to have the information.

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Published on: January 15, 2018

TRADE SECRET MISAPPROPRIATION BY CURRENT AND FORMER EMPLOYEES IN FLORIDA

By Mavrick Law Firm

Trade secrets are a form of intellectual property that are maintained in secrecy. There is no bright line rule that the courts use to determine whether an employee should be enjoined from utilizing a corporation’s trade secrets. The courts must first determine whether the information in question constitutes a trade secret. Courts also look to the reasonable measures taken by the trade secret owner to protect that information. Courts have not been clear on whether skills and knowledge an employee acquired during the course of his employment can be protected as trade secrets. Peter Mavrick is a Palm Beach trade secret lawyer who has extensive experience with trade secret misappropriation.

A trade secret exists if it has economic value because of it secrecy. As a property right, trade secrets cannot be appropriated without the exclusive consent of the trade secret owner. If a trade secret is misappropriated and made readily available to other competing businesses, they can derive economic benefits from that information to the detriment of the trade secret owner.

In Lee v. Cercoa, Inc., 433 So. 2d 1 (Fla. 4th DCA 1983), Florida Fourth District Court of Appeal was confronted with the issue of whether the skills and knowledge a former employee acquired during the course of his employment are trade secrets. In Lee, the employer was engaged in the business of manufacturing and marketing polishing compounds for glass and plastic materials. The former employee worked for two years as a production manager for the employer. As a part of his job, the former employee learned about the combination of certain chemicals and products to formulate polishing compounds. When the employer learned that the employee was going to use the information he acquired during his employment to begin manufacturing his own glass polishing compound, the employer terminated the employee and filed a lawsuit to enjoin the employee from using trade secrets belonging to the employer. The former employee contended there was no valid agreement between him and the employer prohibiting him from disclosing or using such trade secrets. The former employee further contended that the manufactured glass polish compounds were derived from major elements and that those processes were well known to others in that field. The trial court granted the employer’s injunction preventing the former employee from utilizing the corporation’s trade secrets. The former employee then appealed that decision.

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Published on: December 21, 2017

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

By Mavrick Law Firm

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.

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