FORT LAUDERDALE BUSINESS LITIGATION: TRADE SECRET THEFT BY AN EMPLOYEE

Business litigation in Florida often involves claims for trade secret misappropriation under Florida’s Uniform Trade Secret Act (FUTSA) or the Defend Trade Secrets Act (DTSA). For liability to attach under DTSA or FUTSA, the trade secret information must be the fruit of a wrongful acquisition or misappropriation. Misappropriation of a trade secret occurs “where a person who knows or has reason to know that the trade secret was acquired by improper means acquires the trade secret of another or where a person who has obtained the trade secret by improper means discloses or uses the trade secret of another without express or implied consent.” ACR Elecs., Inc. v. DME Corp., 2012 WL 13005955 (S.D. Fla. Oct. 31, 2012). In business litigation involving an employment relationship, misappropriation may occur during the employment or after an employees’ employment terminates. 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 litigation, and other legal disputes in federal and state courts and in arbitration.

The 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 DTSA 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). Meanwhile, the definition of “improper means” under FUTSA also includes “breach or inducement of a breach of a duty to maintain secrecy.” Fla. Stat. § 688.002(1). While the general definitions of a trade secret are identical under FUTSA and DTSA, a court’s analysis under each statute is substantially equivalent. Compulife Software Inc. v. Newman, 959 F.3d 1288 (11th Cir. 2020). Actions may be “improper” for trade-secret purposes even if not independently unlawful. Compulife Software Inc. v. Newman, 959 F.3d 1288 (11th Cir. 2020).

Florida courts routinely find that trade secrets may be acquired through improper means after an employment relationship ends. Federal courts within the Eleventh Circuit Court of Appeals must review the facts surrounding the alleged misappropriation on a case-by-case basis. For example, in Int’l Hair & Beauty Sys., LLC v. Simply Organic, Inc., the United States District Court in and for the Middle District of Florida granted plaintiff’s motion for preliminary injunction against the business’ former technical director for misappropriation of company trade secrets and to enforce non-compete and non-solicitation agreements. 2011 WL 5360098 (M.D. Fla. Sep. 26, 2011). During his employment, the Simply Organic defendant “had access to contact management lists including clients, customers and potential customers” of plaintiff’s hair salon. Months after his employment ended, the former employee then obtained, from another former employee of plaintiff, “a list of hair salons and beauty supply stores” that contained several “salons that were utilizing products of Plaintiff.”

Simply Organic held that the information at hand qualified as a trade secret, and this information was improperly acquired by the former employee after his employment ended. The former employee readily accepted his former employer’s trade secret information after he left the company, and then quickly disseminated it to his new employer. Simply Organic ultimately held that such actions demonstrated that defendant misappropriated plaintiffs’ trade secrets by acquiring them through improper means after the employment ended.

Courts will likewise find misappropriation through improper means when certain actions occur during the course of employment. In Fortiline, Inc. v. Moody, the United States District Court in and for the Southern District 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). The Fortiline defendant “had exclusive use of Fortiline’s customer list after his resignation, and used this to send a mass email to all of Fortiline’s customers” to solicit their business. 2013 WL 12101142. Even though the defendant did not acquire the information from a third-party, the court still found that the defendant “actively obtain[ed] trade secrets through improper means” because he utilized plaintiff’s confidential customer data for his own benefit after he resigned.

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.