FORT LAUDERDALE TRADE SECRET LITIGATION: EMPLOYERS MUST ADEQUATELY PROTECT THEIR CONFIDENTIAL TRADE SECRETS

A prevalent issue in Florida trade secret litigation is whether an employer adequately protected its trade secrets and confidential information. To qualify for protection under Florida Uniform Trade Secrets Act (“FUTSA”) and the federal Defend Trade Secrets Act (“DTSA”), an employer must show that it adequately maintained the secrecy of its trade secrets and confidential information. One way an employer can demonstrate these protective measures in trade secret litigation is by showing “had rules governing disclosure and confidentiality in its employee handbook.” Se. Mech. Services, Inc. v. Brody, 2008 WL 4613046 (M.D. Fla. Oct. 15, 2008). Courts also routinely find that evidence of an employer’s “password restricted” computer systems “are sufficient for the Court to draw a reasonable inference that the Plaintiffs took reasonable steps to protect the secrecy of their trade secrets.” Fortiline, Inc. v. Moody, 2013 WL 12101142 (S.D. Fla. Jan. 7, 2013). Florida courts will afford trade secret protection to an employer’s confidential information even if the employer does not require its employees to sign confidentiality agreements. Coihue, LLC v. PayAnyBiz, LLC, 2018 WL 7376908 (S.D. Fla. Feb. 6, 2018). Peter Mavrick is a Fort Lauderdale trade secret attorney, and also advocates for clients in Palm Beach, Boca Raton, and Miami, Florida. The Mavrick Law Firm represents corporations and their owners in business litigation, non-compete agreement litigation, trademark infringement litigation, employment law, and other legal disputes in federal and state courts and in arbitration.

A confidentiality agreement is merely a method by which a confidential relationship may be established. There are many other ways that this confidential relationship can be created. For example, Dotolo v. Schouten held a confidential relationship was formed where a person disclosed confidential information to a potential business partner. 426 So. 2d 1013 (Fla. 2d DCA 1983). Dotolo found:

The [recipients] were instructed that the formula was a trade secret and that the [disclosing party] wished to protect it. The lack of any express agreement on the part of the appellees not to use or disclose [the disclosing party’s] trade secret is not significant. The existence of a confidential relationship such as that in this case gives rise to an implied obligation not to use or disclose.

A legal obligation on behalf of the party receiving confidential information may be sufficient to maintain the element of secrecy under FUTSA or DTSA, even if there is not a confidential relationship. In XTec, Inc. v. Hembree Consulting Services, Inc., 183 F. Supp. 3d 1245 (S.D. Fla. 2016), the U.S. District Court for the Southern District of Florida found that disclosure of confidential information to the government did not necessarily defeat the requirement of secrecy for trade secret protection, because 48 C.F.R. § 27.402 “obligates the government to maintain the secrecy of proprietary data; thus, in this case, there was an accompanying mechanism to maintain [plaintiff’s] secrecy.”

Under Florida law, an employment relationship automatically places upon employees additional duties simply by virtue of the employment relationship itself. For this reason, an employer does not need to have an enforceable confidentiality agreement to enforce the confidentiality of trade secrets. “The lack of any express agreement on the part of the employee not to disclose a trade secret is not significant. The law will import into every contract of employment a prohibition against the use of a trade secret by the employee for his employee in the course of his employment.” Unistar Corp. v. Child, 415 So. 2d 733 (Fla. 3d DCA 1982). This issue was further explained by Florida’s Fourth District Court of Appeal in Lee v. Cercoa, Inc., which held as follows:

The initial question for determination is whether a valid cause of action exists to protect an employer’s trade secrets from disclosure or use by an employee (or former employee) absent an express contract restraining the employee from disclosing or using such secrets. We answer this in the affirmative. Where an employee acquires, during the course of his employment, a special technique or process developed by his employer, the employee is under a duty, even in the absence of an express contractual provision, not to disclose such skills, techniques or processes in his new employment for his own or another’s benefit to the detriment of his previous employer.

433 So. 2d 1 (Fla. 4th DCA 1983). Accordingly, business can enjoin a former employee to protect its trade secrets, even if the employee did not “not sign an employment agreement containing non-solicitation and non-disclosure provisions.” Merrill Lynch, Pierce, Fenner & Smith Inc. v. Dunn, 191 F. Supp. 2d 1346 (M.D. Fla. 2002).

Peter Mavrick is a Fort Lauderdale trade secret lawyer, and also 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.