Florida Trade Secret Law

Florida is one of many states that have adopted the Uniform Trade Secrets Act.

As a business owner in the Sunshine State, you probably rely on many forms of intellectual property law to protect your company. These might include laws concerning copyright, trademark, and patent. Another important form of intellectual property is trade secrets. In Florida, what laws protect your business's trade secrets?

Defining Trade Secrets

Trade secrets often comprise customer lists, sensitive marketing information, non-patented inventions, software, formulas and recipes, techniques, processes, and other business information that provides a company with a business edge.

Information is more likely to be considered a trade secret if it is:

  • not known outside of the particular business entity
  • known only by employees and others involved in the business
  • subject to reasonable measures to guard the secrecy of the information
  • valuable, and
  • difficult for others to properly acquire or independently duplicate.

Protecting Trade Secrets With Nondisclosure Agreements

A common way for Florida businesses to protect their trade secrets is by having employees sign nondisclosure agreements (NDAs). These are written contracts between employers and employees that attempt to prevent the employee from disclosing confidential information after leaving the company.

For example, if you own a software company in Jacksonville, an NDA with an employee could prevent that person from disclosing your proprietary code to a future employer, for a certain period of time. The employee knows that if he or she discloses the code, or misappropriates it in some fashion, your business will be able to sue for breach of the NDA.

Misappropriation of Trade Secrets in Florida

Florida is one of the many states that have adopted the Uniform Trade Secrets Act (UTSA). Florida’s trade secret law can be found at Fla. Stat Ann. Secs. 688.001 et seq.

The statute defines "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."

Florida’s version of the UTSA refers to the theft of trade secrets as misappropriation. Under Florida law, "misappropriation" means the acquisition of a trade secret by someone who knows or has reason to know that the trade secret was acquired by improper means, such as theft, bribery, misrepresentation, or breach of or inducement of a breach of duty to maintain secrecy. It also includes the disclosure or use of a trade secret without consent by someone who used improper means to acquire knowledge of the trade secret, for example, an ex-employee who discloses company secrets to a rival.

Florida's "Reason to Know" Standard

Florida prohibits use of trade secrets by a company that has “has reason to know” that the material constitutes a trade secret. This is known as constructive knowledge (versus actual knowledge). In other words, even if a Florida company was unaware it possessed purloined trade secrets, it can still be prosecuted under Florida law if it should have known.

Penalties for Misappropriation in Florida

Under Florida law, a trade secret thief can be prevented from disclosure by court order, known as an injunction. This is true for both actual or threatened misappropriation. The injunction can last for as long as necessary "to eliminate commercial advantage that otherwise would be derived from the misappropriation." In exceptional circumstances, a court may condition an injunction on the payment of a reasonable royalty to the trade secret's owner. In other words, the infringer could continue to use the trade secret so long as he or she pays to do so.

A victim of trade secret theft can also seek financial compensation. The amount will be based on measuring the actual loss attributed to the theft or the profits (or “unjust enrichment”) acquired by the trade secret thief. Under Fla. Stat Ann. Sec. 688.004, damages "can include both the actual loss caused by misappropriation and the unjust enrichment caused by misappropriation that is not taken into account in computing actual loss."The financial damages caused by the misappropriation "may be measured by imposition of liability for a reasonable royalty for a misappropriator’s unauthorized disclosure or use of a trade secret."

In egregious situations, a Florida court can award punitive damages up to twice the amount of any award. Attorney fees will also be awarded in cases where the court finds that the trade secret theft was willful and malicious.

Florida's Statute of Limitations

Pursuant to Fla. Stat Ann. Sec. 688.007, an action for trade secret misappropriation must be brought within three years "after the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered." Consequently, if you believe that your company is the victim of a trade secret theft, you should act quickly to retain an attorney and potentially to initiate litigation.

Federal Law on Trade Secrets

In addition to Florida’s rules regarding trade secrets, certain federal rules also apply in Florida. The Economic Espionage Act of 1996 makes the theft of trade secrets a federal crime. The Act prohibits the theft of a trade secret by a person intending or knowing that the offense will injure a trade secret owner.

The Act also makes it a federal crime to receive, buy, or possess trade secret information knowing it to have been stolen. The Act’s definition of “trade secret” is similar to that of the Uniform Trade Secrets Act.

The penalties for a violation of this statute include a potential prison term of 15 years and fines up to $5 million, depending on whether the defendant is an individual or a corporation. A private party can still sue for trade secret theft even if the federal government files a criminal case under the Economic Espionage Act.

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