FORT LAUDERDALE BUSINESS LITIGATION: TRADE SECRETS PROTECTED AS A COMPILATION

Under Florida’s version of the Uniform Trade Secrets Act, Florida Statutes Section 688.002(b)(4), a “trade secret” means information, including a formula, pattern, 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.” Trade secret litigation sometimes involves situations where parts of a trade secret are not individually protectable because each of the parts is available to the public. That, however, does not dispose of the entire issue because the trade secret can constitute a “compilation” that is protectable despite the fact that aspects of the trade secret, considered in isolation, fail to qualify as a trade secret. 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.

For example, important precedent from Florida’s Third District Court of Appeal in Unistar v. Child, 415 So. 2d 733 (Fla. 3d DCA 1982), decided that a “distillation of” publicly available information was a protectable trade secret. This distillation can include a compilation of publicly available information that, as a compilation, has independent economic value and is maintained as a secret for business purposes. In Penalty Kick Management Ltd. v. Coca Cola Co., 318 F.3d 1284 (11th Cir. 2003), the United States Court of Appeals for the Eleventh Circuit considered the Georgia version of the Uniform Trade Secrets Act, and explained that “[t]he unauthorized use need not extend to every aspect or feature of the trade secret; use of any substantial portion of the secret is sufficient to subject the actor to liability.” The Eleventh Circuit’s Penalty Kick decision substantially relied on the Restatement (Third) of Unfair Competition § 40 cmt. c (1995), a scholarly compendium that distills the state of the law. Courts often find the Restatement to be persuasive authority. The Restatement explains that a defendant is liable for the misappropriation of a trade secret only if the plaintiff can show that the defendant (1) disclosed information that enabled a third party to learn the trade secret or (2) used a “substantial portion” of the plaintiff’s trade secret to create an improvement or modification that is “substantially derived” from the plaintiff’s trade secret. In this regard, the Restatement explains in pertinent part: “There are no technical limitations on the nature of the conduct that constitutes “use” of a trade secret…. As a general matter, any 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’…. Thus, marketing goods that embody the trade secret, employing the trade secret in manufacturing or production, [and] relying on the trade secret to assist or accelerate research or development … all constitute “use.” The unauthorized use need not extend to every aspect or feature of the trade secret; use of any substantial portion of the secret is sufficient to subject the actor to liability. Similarly, the actor need not use the trade secret in its original form. Thus, an actor is liable for using the trade secret with independently created improvements or modifications if the result is substantially derived from the trade secret…. However, if the contribution made by the trade secret is so slight that the actor’s product or process can be said to derive from other sources of information or from independent creation, the trade secret has not been “used” for purposes of imposing liability under the rules….” The owner of a trade secret may be injured by unauthorized disclosure of a trade secret as well as by unauthorized use…. Any conduct by the actor that enables another to learn the trade secret … is ‘disclosure’ of the secret.”

Parties in trade secret litigation have to carefully assess what is the trade secret, because often the “whole” can be of greater value than the “sum of the parts.” A Advocacy in litigation over a compilation should emphasize the value of the compilation as distinct from each of its parts. Trade secret can be valuable precisely because it uses publicly available information in a manner where nobody before thought about it in that way.

The Mavrick Law Firm 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.