Florida’s Uniform Trade Secrets Act: What Does It Mean for Your Business?January 1, 2016
Having an employee sign a non-compete agreement and/or a nondisclosure or confidentiality agreement is one way to protect your company’s trade secrets, and confidential and proprietary business information. However, often times companies may not have any agreements with their employees and a business mistakenly believes it has no way of protecting against the unauthorized disclosure of trade secrets or sensitive information. Even though these issues are not new in the business world, the misappropriation or theft (and potential misappropriation or theft) of trade secrets is a growing concern in a fast-paced information/digital age.
Fortunately, Florida has certain statutory protections and mechanisms to protect the confidentiality of one’s trade secrets, and protect against the disclosure of such trade secrets. Since 1988, Florida joined nearly every other state in adopting its own version of the Uniform Trade Secrets Act, which is located in Chapter 688, Florida Statutes. Although a written agreement may still provide more protections than the statute, the Trade Secrets Act can be a crucial safeguard and tool in protecting confidential information that a former employee — or anyone else — might be tempted to use in competition or divulge to a competitor.
What is a Trade Secret?
Pursuant to Section 688.002(4), “trade secret” means information, including a formula, pattern, compilation, program, device, method, technique, or process that:
(a) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and
(b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
Trade secrets may include CAD drawings or designs, computer or source code, the formula for chemical, financial or sales information, or client or customer lists. Florida courts have recognized a business’ confidential method used to set prices, rates, and profits as a trade secret. It is not always clear whether information qualifies as a trade secret and courts often struggle with with whether information is in fact a “trade secret.”
The Florida Uniform Trade Secrets Act provides two remedies for misappropriation of trade secrets. Section 688.002 defines “misappropriation” as follows:
(a) Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or
(b) Disclosure or use of a trade secret of another without express or implied consent by a person who:
1. Used improper means to acquire knowledge of the trade secret; or
2. At the time of disclosure or use, knew or had reason to know that her or his knowledge of the trade secret was:
a. Derived from or through a person who had utilized improper means to acquire it;
b. Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or
c. Derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or
3. Before a material change of her or his position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.
Using or disclosing a trade secret that was acquired by mistake or accident can also be a misappropriation if its owner took reasonable precautions to maintain its secrecy. It is not misappropriation if the trade secret was discovered by independent means or it is in the public domain.
The Florida Uniform Trade Secrets Act permits the owner of a trade secret to ask a court to issue an order or an injunction that prohibits specified individuals or entities from using or disclosing the trade secrets to others. Injunctive relief is available when the misappropriation of a trade secret has occurred or has been threatened. You may also be entitled to recover your legal fees and costs if you prevail.
Whether the court will grant an injunction, and if so, for what length of time, are questions that depend upon the facts of the case. Your business lawyer can advise you whether you have grounds for seeking an injunction if you fear that a trade secret is about to be disclosed. You should act quickly, however, to prevent the disclosure before it occurs as you may waive your rights.
When your trade secrets have already been used or disclosed without your consent, Florida law also permits you to sue for damages. The measure of damages depends upon the circumstances and the types of losses you have suffered. All persons or companies responsible for the misappropriation can be held liable, including those who acquired, disclosed, or used the secret to gain an economic benefit.
Any business or individual concerned about their trade secrets should speak to competent legal counsel to evaluate the options you have in protecting your trade secrets, including creating or updating your employment agreements. To determine whether you can seek injunctive relief or damages for a trade secret misappropriation, and the amount of damages to which you might be entitled, consult with a business attorney. The business and litigation attorneys at Marshall Grant PLLC can assist you with evaluating your case and seeking the best possible solution. For more information, please contact us at 561-361-1000 or email us at [email protected].
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