Trade Secrets

Trade secrets are a type of intellectual property recognized by state law. Under statutes governing trade secret protection in most states, a trade secret is defined as a formula, practice, process, design, instrument, pattern, or compilation of information that is not generally known or reasonably ascertainable, by which a business can obtain an economic advantage over competitors or customers.

Trade secrets and the legal protections they are afforded are perpetual and do not expire as long as the owner of the trade secret takes reasonable steps to ensure the secrecy of the trade secret is maintained.

Florida law defines a trade secret as “information, including a formula, pattern, compilation, program, device, method, technique, or process that:

(a) Derives actual or potential independent economic value 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.

The Florida Uniform Trade Secret Act is based upon the Uniform Trade Secret Act, which is a model law that has been used by more than 40 states that have enacted trade secret protection laws.

Under Florida law, in certain limited circumstances, customer lists may constitute trade secrets. Non-compete agreements and confidentiality agreements (or non-disclosure agreements) may be utilized with employees, independent contractors, and other third parties to provide additional protection of customer lists, trade secrets, and other confidential and proprietary information.

Trade secret protection is useful to protect confidential and proprietary information of the types identified in the statute from misappropriation by others. Trade secret protection can be used in conjunction with non-compete agreements to restrict former employees in their interaction with a client’s competitors.

Violations of trade secret protection laws by misappropriation of a trade secret can subject the offender to liability for damages and injunctive relief.

Under Florida law, the unlawful “misappropriation” of a trade secret can occur in several ways.

First, misappropriation of a trade secret occurs when a trade secret of another is acquired by a person or business entity who knows or has reason to know that the trade secret was acquired by improper means. The Florida Uniform Trade Secret Act provides examples of “improper means” that include theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy or espionage through electronic or other means.

Second, misappropriation of a trade secret also occurs when a trade secret is disclosed or used without express or implied consent from the trade secret owner by a person or business entity who used improper means to acquire knowledge of the trade secret.

Third, misappropriation of a trade secret also occurs when a trade secret is disclosed or used without express or implied consent from the trade secret owner by a person or business entity who, at the time of the disclosure or use, knew or had reason to know that his or her knowledge of the trade secret was:

(i) Derived from or through a person or business entity who had utilized improper means to acquire it;

(ii) Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or

(iii) Derived from or through a person or business entity who owed a duty to the trade secret owner seeking to maintain its secrecy or limit its use.

Finally, misappropriation of a trade secret also occurs when a trade secret is disclosed or used without express or implied consent from the trade secret owner by a person who, before a material change of his or her 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.

Similar definitions of misappropriation of trade secrets are applied under the trade secret protection laws of other states.

For more information concerning how to protect and enforce your trade secret rights, or for assistance with the drafting or negotiation of a non-compete agreement or confidentiality agreement, please contact one of our attorneys.