MIAMI BUSINESS LITIGATION: TRADE SECRET OWNERSHIP

A company suing for trade secret misappropriation should be cognizant of whether it must prove ownership over the trade secret. Some trade secret statutes require ownership to establish the claim, while other statutes do not. For example, a Florida business can probably sue for trade secret misappropriation under the federal Defend Trade Secrets Act (DTSA) or Florida’s Uniform Trade Secret Act (FUTSA). While both statutes are similar, only DTSA requires the plaintiff to prove trade secret ownership. FUTSA merely requires proof of possession. The distinction between the two statutes is important because the burden of proving ownership can mean the difference between a successful lawsuit and an unsuccessful lawsuit. The Miami 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.

DTSA provides “[a]n owner of a trade secret that is misappropriated may bring a civil action under this subsection if the trade secret is related to a product or service used in, or intended for us in, interstate or foreign commerce. 18 U.S.C. § 1836. Federal courts interpret the language of this section literally. A trade secret plaintiff must therefore prove it owns the trade secret at issue. Nephron Pharmaceuticals Corp. v. Hulsey, 2020 WL 7684863 (M.D. Fla., Oct. 7, 2020). By contrast, FUTSA contains no reference to ownership of a trade secret. Courts have interpreted FUTSA’s lack of a reference to ownership as indicating a FUTSA plaintiff must merely possess the trade secret to assert a trade secret misappropriation claim. Treco Intern. S.A. v. Kromka, 706 F. Supp. 2d 1283 (S.D. Fla., April 7, 2010) (“Plaintiffs must establish that they owned or possessed the secret information and took reasonable steps to protect its secrecy.”).

This difference between DTSA and FUTSA is important because ownership may be difficult to establish when a company has multiple affiliates or subsidiaries. In Highland Consulting Group, Inc. v. Minjares, 74 F.4th 1352 (11th Cir. 2023), the plaintiff was an international company with various affiliates. The plaintiff alleged a former employee violated DTSA by stealing the plaintiff’s trade secrets and was using the trade secrets at a rival company. The former employee admitted the purported business information was a trade secret and that he misappropriated it. His only defense was that the plaintiff did not satisfy DTSA’s ownership requirement. Specifically, the former employee argued the plaintiff could not prove whether the defendant, as opposed to the affiliates, owned the trade secrets. The former employee’s argument was ultimately unsuccessful at trial because the plaintiff admitted evidence including trade secret documents containing the plaintiff’s marketing name and logo and testimony from the plaintiff’s owner that he developed the trade secrets. The jury found the plaintiff’s evidence was sufficient to prove its ownership.

The plaintiff in Highland made it more difficult on itself by choosing to sue under DTSA instead of FUTSA. The plaintiff could have avoided the issue, needless litigation on the matter, and avoided the risk associated with including the issue into the trial presentation by suing under FUTSA. Of course hindsight is always 20/20. But a well-advised plaintiff would have included a FUTSA claim in its Complaint to ensure it could avoid an ownership issue should one arise. The plaintiff would have needed only to prove it possessed the trade secret, which is much easier to do. Trade secret plaintiffs should keep this in mind because they may not be as fortunate as the plaintiff in Highland. For instance, in Delivery Kick Holdings, Inc. v. RJ Brooksher LLC, 2025 WL 896002 (M.D. Fla., March 24, 2025), the court denied the plaintiff’s motion for temporary injunction in a DTSA trade secret misappropriation lawsuit because the plaintiff failed to prove it owned the trade secret at issue.

The Miami business litigation lawyers of the Mavrick Law Firm also represent clients in Fort Lauderdale, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.