What Protection Does Florida Law Offer for Trade Secrets?

What Protection Does Florida Law Offer for Trade Secrets?

There isn’t one uniform definition of a trade secret

February 22, 2022

When the Florida Legislature passed the Corporate Espionage Act back in June 2021, it represented yet one more protection for employers wanting to safeguard their organization’s trade secrets. As trade secrets are vital to a company’s survival, new legislation that promises to protect businesses from increasingly sophisticated attacks is always welcome.

What Is a Trade Secret?

There isn’t one uniform definition of a trade secret because laws protecting them are developed at both the state and federal levels. In fact, up until 1979, every state created its own trade secret definitions and rules. In 1979, that changed when the Uniform Law Commission published the Uniform Trade Secrets Act (UTSA), standardizing trade secret law across states. And in 2016, Congress passed the Defend Trade Secrets Act (DTSA) to manage interstate and international enforcement of trade secret laws.

While there are various definitions of the term, they all share several fundamental elements that agree a trade secret:

  1. Is not known or readily accessible by competitors.
  2. Has commercial value or provides a competitive advantage in the marketplace.
  3. Is something the information’s owner protects from disclosure through reasonable efforts to maintain its secrecy.

Florida’s Trade Secrets Law

Florida is one of forty-eight states that have adopted the federal government’s UTSA. The state’s own Uniform Trade Secrets Act (FUTSA) mirrors UTSA and defines trade secrets as information, including a formula, compilation, pattern, device, program, technique, method, or process that:

  • Derives potential or actual independent economic value from not being generally known by others who could obtain economic value from its use or disclosure.
  • Is the subject of efforts considered reasonable under the circumstance to maintain its secrecy.

Some examples of what qualifies as trade secrets under Florida law include:

  • The blueprints or designs for equipment or machinery.
  • Active customer lists compiled or acquired through the business’s industry and not readily available to the public.
  • Pricing and profit structures.
  • Construction bid documents that include underlying calculations or the bid development process.
  • Employer agreements with customers.

As you can see, what’s considered a trade secret varies widely under Florida business law. The state deliberately made its definition broad so to include a diverse range of information a business could seek to protect under the law. Over the years, however, several cases have narrowed FUTSA’s broad definition, creating some inconsistencies in what information should qualify as a trade secret.

Ultimately, in any legal case brought alleging trade secret misappropriation, the plaintiff has the burden of proof and must show the specific information it seeks to protect is secret and that the business has taken reasonable steps to protect its secrecy. Put another way, information a third party would generally know or have ready access to cannot qualify for trade secret protection.

There is one crucial exception to this general rule. In a Florida case entitled Sun Crete of Florida, Inc. v. Sundeck Products, Inc., the state’s Fourth District Court of Appeal interpreted trade secrets as “a plan or process, tool, mechanism, or compound [including] a unique combination of otherwise known components if the combination differs materially from other methods known in the trade.” So, even in cases where all the information’s publicly available, a unique compilation of that information may qualify as a trade secret.

Trade Secret Litigation

Under UTSA, a Florida business may receive injunctive relief, damages, and possibly attorneys’ fees if an employee or other person misappropriates a trade secret. And the recently enacted Corporate Espionage Act allows criminal penalties for a person who steals or traffics trade secrets. It also permits restitution and injunctive relief or the payment of royalties.

FUTSA also establishes a cause of action for trade secret misappropriation, which is defined as:

  • Acquisition of a business’s trade secret by a person who knows or has reason to know it was acquired by improper means; or
  • Disclosure or use of a trade secret of another without the implied or express consent by the person owning the trade secret. This holds whether the perpetrator used improper means to acquire knowledge of the trade secret themselves or who knew or had reason to know that they obtained the trade secret from or through a person who, among other things, used improper means to acquire it.

In cases of threatened or actual misappropriation, FUTSA allows injured parties to obtain injunctive relief, and they may also be entitled to damages. In cases of “willful and malicious misappropriation,” injured parties may recover exemplary damages and attorney’s fees.

Lastly, while on the face of it, The Corporate Espionage Act is focused on foreign interference, it might also provide additional domestic employer trade secret protections by combatting corporate espionage and keeping Florida businesses’ intellectual property safe within the state’s boundaries. Among other things, the new act:

  1. Establishes criminal offenses for anyone who traffics or endeavors to traffic trade secrets in Florida.
  2. Increases offense penalties, including up to 15 years in prison, for any person or entity who willfully steals or makes an effort to steal a trade secret for their own benefit.
  3. Significantly increases penalties for individuals or entities that violate the law on behalf of a foreign government.

Trade secret litigation is a highly complex area of business law that involves a business’s or person’s valuable and most confidential financial, technical, or other information that the holder considers trade secrets. Any business or person who suspects or believes one or more of their trade secrets has been misappropriated is advised to speak with an attorney about possible remedies.

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