If an employee resigns and starts working for a competing company, the former employer’s trade secrets may be at risk of being disclosed. Whether the former employee kept those trade secrets in their mind, e-mailed them to a personal email, or physically walked out of the office with them in hand, the former employer needs to act fast to prevent the disclosure of those trade secrets to a competitor and any irreparable harm. Luckily, Florida law offers several shields of protection to employers whose trade secrets have been stolen or misappropriated.
What is a Trade Secret?
A trade secret is defined as 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
The term “trade secrets” includes “any scientific, technical, or commercial information, including financial information, and includes any design, process, procedure, list of suppliers, list of customers, business code, or improvement thereof, whether tangible or intangible, and regardless of whether or how it is stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing.” Fla. Stat. § 812.081(1)(f).
Some examples of trade secrets under Florida law include the following:
- Active customer lists which were acquired or compiled through the owner’s industry, and not just a compilation of information that is readily available to the public (Sea Coast Fire, Inc. v. Triangle Fire, Inc., 170 So. 3d 804, 808 (Fla. 3d DCA 2014));
- Construction bid documents that contain information about the bidder’s underlying calculations or bid development process (Lewis Tree Serv., Inc. v. Asplundh Tree Expert, LLC, 311 So. 3d 206, 212 (Fla. 2d DCA 2020));
- The design of equipment or machines (Premier Lab Supply, Inc. v. Chemplex Indus., Inc., 94 So. 3d 640, 646 (Fla. 4th DCA 2012));
- The company’s pricing and profit structure (Thomas v. Alloy Fasteners, Inc., 664 So. 2d 59, 60 (Fla. 5th DCA 1995)); and
- An employer’s agreement with its customers (VAS Aero Servs., LLC v. Arroyo, 860 F. Supp. 2d 1349, 1358 (S.D. Fla. 2012))
What Are Some Remedies for Employers?
In 1988, Florida enacted the Uniform Trade Secrets Act, Chapter 688 of the Florida Statutes, which permits injunctive relief, damages, and possibly attorneys’ fees if a person misappropriates a trade secret. More recently, in 2021, Florida enacted the Combating Corporate Espionage in Florida Act, Section 812.081, Florida Statutes, which created criminal penalties for a person who steals or traffics trade secrets, and permits restitution, and injunctive relief or the payment of royalties.
Uniform Trade Secrets Act
Under the Uniform Trade Secrets Act, Chapter 688, Florida Statutes, if a current or former employee misappropriates a trade secret, the employer may be entitled to an injunction, damages, and possibly attorney’s fees. Under the Uniform Trade Secrets Act “misappropriation” means:
- 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
- Disclosure or use of a trade secret of another without express or implied consent by a person who:
- Used improper means to acquire knowledge of the trade secret; or
- At the time of disclosure or use, knew or had reason to know that her or his knowledge of the trade secret was:
- Derived from or through a person who had utilized improper means to acquire it;
- Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or
- Derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or
- 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
Fla. Stat. 688.002(2).
If an employee misappropriates a trade secret, as defined above, the employer may be entitled to the following remedies under the Uniform Trade Secrets Act:
- Injunctive Relief: If the employee actually or threatens a misappropriation of trade secrets, the employer may apply to the court for an injunction. An injunction is a court order which will restrain the employee from beginning or continuing to misappropriate the trade secrets. Fla. Stat. § 688.003.
- Damages: An employer may recover damages for the actual loss caused by misappropriation and the unjust enrichment caused by the misappropriation that is not considered in computing actual loss. Damages may also be measured by imposition of liability for a reasonable royalty for the employee’s unauthorized disclosure or use of a trade secret. Fla. Stat. § 688.004.
- Attorney’s Fees: If the employee willfully or maliciously misappropriated a trade secret or files a motion in bad faith to terminate the injunction, and the employer prevails, the employer may be entitled to attorney’s fees. However, if the employer claims, in bad faith, that the employee misappropriated its trade secrets, and the employee prevails, the employee may be entitled to their attorney’s fees. Fla. Stat. § 688.005.
Combating Corporate Espionage in Florida Act
On October 1, 2021, the Combating Corporate Espionage in Florida Act, found within Section 812.081, Florida Statutes, became law. Under Section 812.081, Florida Statutes, if a current or former employee steals or traffics a trade secret, they may be subject to criminal penalties, and the employer may be entitled to restitution, injunctive relief, or the payment of royalties.
Criminal Penalties:
- Under Section 812.081(2), Florida Statutes, if a person willfully and without authorization obtains, uses, or endeavors to obtain or use a trade secret with the intent to either temporarily or permanently: (a) deprive or withhold from the owner the control or benefit of the trade secret; or (b) appropriate a trade secret for his or her own use, or for the use of another person not entitled to the trade secret, commits theft of a trade secret, which is a felony of the third degree.
- Under Section 812.081(3), Florida Statutes, if a person traffics in, or endeavors to traffic in, a trade secret that he or she knows or should know was obtained or used without authorization, commits trafficking in trade secrets, which is a felony of the second degree.
Restitution: If an employee steals or traffics a trade secret, the employer may recover restitution from the employee, including the value of the benefit derived from stealing or trafficking the trade secret, any expenses for research and design and other costs of reproducing the trade secret. Fla. Stat. § 812.081(5).
Injunctive Relief: If the employee unlawfully obtained or used a trade secret, the employer may apply to the court for an injunction. Fla. Stat. § 812.081(7).
Payment of Royalties: If an injunction is inequitable, the court may condition the employee’s future use of the trade secret on the payment of a reasonable royalty. Fla. Stat. § 812.081(7).
Conclusion
If a current or former employee steals trade secrets from an employer, the employer may seek relief under the Uniform Trade Secrets Act and the Combating Corporate Espionage in Florida Act. An employer can bring claims under both the Uniform Trade Secrets Act and the Combating Corporate Espionage in Florida Act to stop the employee’s continued use of the trade secrets and may recover damages, restitution, or royalties from the employee for using the trade secret.