FORT LAUDERDALE NON-COMPETE AGREEMENTS: “TRADE SECRETS” AS A BASIS FOR ENFORCEMENT

It is a good practice for businesses to require its employees to sign restrictive covenants, such as non-compete and confidentiality agreements, to protect trade secrets or confidential business information. If an employee breaches the restrictive covenant, the business could file a lawsuit against the employee to enforce the restrictive covenant. To succeed in the lawsuit, the business has the burden to prove the existence of a legitimate business interest justifying the restrictive covenant. Fla. Stat. § 542.335(b). Legitimate business interests include, among other things, trade secrets and valuable confidential business information that does not qualify as a trade secret. Id. The question arises of how much detail about the trade secret or confidential information must the business provide in a lawsuit to satisfy the burden of proof. The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent 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.

To meet its burden, a business seeking to enforce a restrictive covenant to protect a trade secret or valuable confidential business information must disclose such information and prove that this information qualifies as a trade secret or confidential business information. “Generic allegations do not establish a legitimate business interest.” Lucky Cousins Trucking, Inc. v. QC Energy Resources Texas, LLC, 223 F. Supp. 3d 1221 (M.D. Fla., July 28, 2016). In Gould & Lamb, LLC v. D’Alusio, 949 So. 2d 1212 (Fla. 2d DCA 2007), a business sought an injunction against a former employee to prohibit alleged violations of a non-compete agreement. The business argued the non-compete agreement was supported by a legitimate business interest to protect trade secrets. The trial court denied an injunction and issued judgment for the former employee. Gould affirmed, holding that the business failed to prove the existence of a trade secret, and specifically quoted the definition of a trade secret found in Florida Statutes § 688.002(4). The court noted that the business relied on generic testimony of its president who “spoke in the briefest and most general terms of Gould & Lamb’s desire to protect ‘marketing plans, product plans, business strategies, financial information, forecasts, and the like.’”

Other cases have similarly denied injunctive relief for alleged breaches of restrictive covenants because the plaintiff business failed to disclose the alleged trade secret or confidential business information and failed to prove how the information constituted a trade secret or confidential business information. See Blue-Grace Logistics LLC v. Fahey, 653 F Supp. 3d 1172, (M.D. Fla., Jan. 26, 2023) (denying plaintiff’s motion for summary judgment for injunction and holding that plaintiff failed to explain what information was allegedly proprietary or confidential, and, where plaintiff was slightly more detailed, failed to explain the information’s value); Semper Food, LLC v. Ouellette, 2024 WL 3104066 (S.D. Fla., May 6, 2024) (denying motion for preliminary injunction to enforce restrictive covenant because plaintiff’s generic allegations of “business models and strategies” and “customer, supplier and vendor information, purchasing history margins and pricing information” was not sufficient for plaintiff to meet its burden of proving a legitimate business interest).

Proving the plaintiff business has a legitimate business interest in trade secrets or valuable confidential business information includes proving that the information was unique or proprietary. Again, generalized statements are insufficient. In Passalacqua v. Naviant, Inc., 844 So. 2d 792 (Fla. 4th DCA 2003), a plaintiff business sought an injunction against former employees to prohibit alleged violations of a non-compete agreement. After an evidentiary hearing, the trial court granted a temporary injunction. Passalacqua reversed because, among other reasons, the business failed to demonstrate the existence of a legitimate business interest. Passalacqua noted that the business’s CEO’s testimony that a sales manual constituted confidential information was insufficient. The sales manual was merely a compilation of widely used sales techniques. The court also stated that the CEO “did not articulate how any activity, method, or technique utilized by Naviant was unique or proprietary in any way.”

The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent 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.