FORT LAUDERDALE BUSINESS LITIGATION: PROTECTING CUSTOMER INFORMATION FROM TRADE SECRET MISAPPROPRIATION

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”). In business litigation, a business’ customer list may qualify for trade secret protection if the list is misappropriated through improper means. may occur during the employment or after an employees’ employment terminates. 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). 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.

A plaintiff bringing a claim under the DTSA must plausibly allege that it (i) “possessed information of independent economic value” that (a) “was lawfully owned by” the plaintiff and (b) for which the plaintiff “took reasonable measures to keep secret,” and (ii) the defendant “used and/or disclosed that information,” despite (iii) “a duty to maintain its secrecy.” Trinity Graphic, USA, Inc. v. Tervis Tumbler Co., 320 F.Supp.3d 1285 (M.D. Fla. 2018).

Similarly, FUTSA provides a cause of action for the misappropriation of trade secrets. Fla. Stat. § 688.001-09. “To prevail on a FUTSA claim, a 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). Under FUTSA, a “trade secret” is:

[I]nformation, including a formula, pattern, compilation, program, device, method, technique, or process that: (a) Derives independent economic value, actual or potential, 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.

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).

Certain customer lists may qualify as a trade secrets under FUTSA and DTSA. “Under Florida law, customer lists are generally considered trade secrets provided: (1) the list was acquired or compiled through the industry of the owner of the list and is not just a compilation of information commonly available to the public; and (2) the owner shows that it has taken reasonable efforts to maintain the secrecy of the information.” Digital Assurance Certification, LLC v. Pendolino, 2017 WL 320830 (M.D. Fla. Jan. 23, 2017).

In Sentry Data Sys., Inc. v. CVS Health, the United States District Court in and for the Southern District of Florida found that the plaintiff sufficiently alleged trade secret misappropriation by claiming that the defendant misused confidential customer lists to call plaintiff’s customer list and switch to a competing company. 361 F. Supp. 3d 1279 (S.D. Fla. 2018). Sentry further found misappropriation where the defendant used the confidential list to develeope a competing platform that was compatible with plaintiff’s platform “to promote a seamless transition of [plaintiff’s] customers to [defendant].” Sentry Data Sys., Inc. v. CVS Health, 361 F. Supp. 3d 1279 (S.D. Fla. 2018).

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). Moody ultimately held that the defendant “actively obtain[ed] trade secrets through improper means” because he utilized plaintiff’s confidential customer list for his own benefit after he resigned.

“Information that is generally known or readily accessible to third parties cannot qualify for trade secret protection.” Am. Red Cross v. Palm Beach Blood Bank, Inc., 143 F.3d 1407 (11th Cir. 1998). Therefore, it is important for businesses to take adequate security measures to ensure their confidential customer information is protected and inaccessible from all improper personnel.

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.