FORT LAUDERDALE BUSINESS LITIGATION: WHAT CONSTITUTES PROOF OF A TRADE SECRET

Proving the existence of a trade secret in a court of law is no easy feat. The trade secret’s proponent has the burden of establishing the specific information he or she seeks to protect. Am. Red Cross v. Palm Beach Blood Bank, Inc., 143 F.3d 1407 (11th Cir. 1998) (“In a trade secret action, the plaintiff bears the burden of demonstrating both that the specific information it seeks to protect is secret and that it has taken reasonable steps to protect this secrecy.”). The proponent must prove it has a “a formula, pattern, compilation, program, device, method, technique, or process that” derives independent economic value from not being generally known to other persons and is the subject of reasonable secrecy efforts. Fla. Stat. § 688.002. In this article, we explore circumstances where the trade secret proponent has, and has not, met its burden of proof. Peter Mavrick is a Fort Lauderdale business litigation attorney. 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.

Premier Lab Supply, Inc. v. Chemplex Indus., Inc., 10 So. 3d 202 (Fla. 4th DCA 2009), is an example of the trade secret proponent satisfying its burden of proof. Id. (“Based on his testimony concerning the unique and specialized nature of the machine’s design, the jury could have found that the design of Chemplex’s machine derived an economic benefit from not being generally known to or readily ascertainable by others.”). In Premier Lab Supply, Inc., the proponent presented evidence that the trade secret machine was unique and not readily ascertainable by others because it was invented by the proponent and his father. Id. The machine was not readily ascertainable by others because it used intricate calculations and a timing chain with a counter. Id. The proponent demonstrated the value of the machine by explaining the difficulty he faced in experimenting with the precise measurements and ratios to obtain the desired result. Id. The proponent further explained that competitor machines are inferior because users cannot obtain desired measurements. Id.

Contrast Premier Lab Supply, Inc. with RX Sols., Inc. v. Express Pharmacy Services, Inc., 746 So. 2d 475 (Fla. 2d DCA 1999) and Yellowfin Yachts, Inc. v. Barker Boatworks, LLC, 898 F.3d 1279 (11th Cir. 2018). In RX Sols., Inc., the plaintiff claimed it developed a cardless online claims system. RX Sols., Inc., 746 So. 2d 475. However, the evidence demonstrated the system was not unique to the plaintiff because the program was developed by a South Carolina company and incorporated within the plaintiff’s online system. Id. In Yellowfin Yachts, Inc., the plaintiff claimed its customer list was a trade secret. Yellowfin Yachts, Inc., 898 F.3d 1279. The Court rejected this claim for two reasons. First, the central components of the customer list were publicly available because the customers were boaters required by statute to register their vessels. Id. The state’s Public Records Act required the state to openly provide registration information such as the registrants’ name and address to those who inquired. Id. A person could then use the Internet or White Pages to find the remainder of the customers’ contact information. Id. Second, the customer information was not confidential because the plaintiff failed to protect it. Id. The plaintiff encouraged its employees to save the customer information to their personal laptops and smartphones thereby destroying any potential for secrecy. Id.

Comparing and contrasting case law on whether a trade secret proponent succeeded in establishing the existence of a trade secret, or failed to establish the existence of a trade secret, is useful to understand the level of detail one must provide the trier of fact to prevail on a trade secret claim. As demonstrated above, the proponent should provide information about the origins of the secret by explaining how the proponent created, tested, and experimented to create the final product. The proponent should also provide information demonstrating that he or she is the only person possessing the secret and that the secret cannot be obtained from third-party sources.

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.