MIAMI BUSINESS LITIGATION: TRADE SECRETS CAN EXIST WITHOUT CONFIDENTIALITY AGREEMENTS

            Protecting trade secrets can be critical to a business. Trade secrets are defined as information that “(a) [d]erives independent economic value . . . from not being generally known to, and not readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (b) [i]s the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” Fla. Stat. § 688.002(4). For business information to qualify as a trade secret, the business must use reasonable efforts to protect it. Examples of reasonable efforts include requiring employees to sign confidentiality agreements, limiting access to only certain employees, using passwords to protect access to computers, among other means. WWMAP, LLC v. Birth Your Way Midwifery, 711 F. Supp. 3d 1313 (N.D. Fla., Jan. 10, 2024). Requiring employees to sign confidentiality agreements is usually one of the most important means taken to protect one’s trade secrets. However, in certain circumstances, business information can qualify as a trade secret even if the business did not require its employees to enter confidentiality agreements. 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.

            Premier Lab Supply, Inc. v. Chemplex Industries, Inc., 10 So. 3d 202 (Fla. 4th DCA 2009), is an example of this. The plaintiff developed a unique spooling machine for x-ray films. The plaintiff kept the machine in a separate room and allowed only the employees who operated the machine to enter. However, the plaintiff did not require employees operating the machine to sign confidentiality agreements. A former employee stole the machine. The plaintiff suspected that the former employee gave the defendant, an industry competitor who used the stolen machine to developed its own spooling machine. The plaintiff sued the defendant for trade secret misappropriation.

At trial, the defendant moved for directed verdict arguing that the plaintiff did not use reasonable efforts to protect the secrecy of the spooling machine. The motion was denied because there was sufficient evidence to demonstrate the plaintiff took reasonable efforts to protect the confidentiality of the machine despite the absence of confidentiality agreements. The plaintiff required the machine to be kept in a room that was separate from all employees except those allowed to operate it. In addition, the plaintiff was not required to obligate its employees to sign confidentiality agreements because the employees had a legal duty to keep the machine confidential. See Lee v. Cercoa, Inc., 433 So. 2d 1 (Fla. 4th DCA 1983), (“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.”).

            While the law can protect trade secrets when a non-disclosure agreement does not exist, it is unwise forego an agreement. The circumstances in which courts would recognize a trade secret without a confidentiality agreement are narrow. A business would be taking a significant risk by not requiring its employees to sign confidentiality agreements.

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.