FORT LAUDERDALE BUSINESS LITIGATION: TRADE SECRET MISAPPROPRIATION VIA UNLAWFUL “USE”

To prove a claim under the Florida Uniform Trade Secrets, the plaintiff “must demonstrate that (1) it possessed a trade secret and (2) the secret was misappropriated.” Yellowfin Yachts, Inc. v. Barker Boatworks, LLC, 898 F.3d 1279 (11th Cir. 2018). Florida law defines a trade secret (at Florida Statutes § 688.002(4)) as information that: (a) derives independent economic value 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 (b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Peter Mavrick is a Fort Lauderdale business litigation attorney, and represents clients in business litigation in Miami, Boca Raton, and Palm Beach. 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. Under Florida’s trade secret statute, a party can misappropriate another’s trade secret by either acquisition, disclosure, or use. A person misappropriates a secret by use if he uses it “without express or implied consent” and either:

1. Used improper means to acquire knowledge of the trade secret; or
2. At the time of disclosure or use, knew or had reason to know that her or his knowledge of the trade secret was:
3. Derived from or through a person who had utilized improper means to acquire it;
4. Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or
5. Derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or
6. Before a material change of her or his position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.

Florida’s trade secrets act defines the term “improper means” as including “theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means.” In the law of trade secrets more generally, the United States Supreme Court explained in Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470 (1974), that “theft, wiretapping, or even aerial reconnaissance” can constitute improper means, but “independent invention, accidental disclosure, or … reverse engineering” cannot. Actions may be “improper” for trade-secret purposes even if not independently unlawful. In the federal appellate case S E. I. duPont deNemours & Co. v. Christopher, 431 F.2d 1012 (5th Cir. 1970), the United States Court of Appeal for the Fifth Circuit rejected the argument “that for an appropriation of trade secrets to be wrongful there must be a trespass, other illegal conduct, or breach of a confidential relationship.” In Christopher, DuPont claimed that trade secrets had been misappropriated by photographers who took pictures of its methanol plant from a plane. DuPont contended that these aerial photographs threatened to reveal its secret method of manufacturing methanol. The photographers sought summary judgment, emphasizing that “they conducted all of their activities in public airspace, violated no government aviation standard, did not breach any confidential relation, and did not engage in any fraudulent or illegal conduct.” The federal appellate court rejected their contention, holding that the aerial photography constituted improper means even though DuPont had left the its facility open to inspection from the air. Christopher broadly construed the term “improper means,” such that misappropriation occurs whenever a defendant acquires the secret from its owner “without his permission at a time when he is taking reasonable precautions to maintain its secrecy.”

Some types of “use” misappropriation of a trade secret require proof of an external duty under the Florida statute, see Fla. Stat. § 688.002(2)(b)2.b. However, the same statute describes other kinds of “use” misappropriation that do not depend on the existence of an external duty. This occurs in a situation where, for example, a defendant knows that his knowledge of a trade secret was acquired using “improper means,” or that he has acquired knowledge of a trade secret “by accident or mistake,” and despite that knowledge he still uses it and thereby is liable for trade secret misappropriation. Fla. Stat. § 688.002(2)(b) 1., 2.a., 3. In addition, while not defined in the statute, the bar for what counts as “use” of a trade secret is generally low. See Penalty Kick Mgmt. v. Coca Cola Co., 318 F.3d 1284, 1292 (11th Cir. 2003) (“[A]ny exploitation of the trade secret that is likely to result in injury to the trade secret owner or enrichment to the defendant is a ‘use.’ ” (quoting Restatement (Third) of Unfair Competition § 40 cmt. c (1995)).

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.