GENERALLY, WHAT CONSTITUTES A TRADE SECRET IS A QUESTION OF FACT

Posted on December 25, 2020December 25, 2020 by Edward Garber

In construction, contractors maintain competitiveness by compiling, combining, utilizing, or developing proprietary and unique systems. The systems can be from a cost standpoint (determining general conditions or general requirement costs and percentages including percentages for insurance) or can be with respect to certain construction assembly or delegated design components. Such proprietary and unique systems are trade secrets to the contractors and efforts are taken to identify such information as confidential when proposing on a project. Contractors would not want such systems disclosed to others because it would dilute and impact what they believe is valuable and makes them competitive in the marketplace.

Florida’s Uniform Trade Secret Act (“FUTSA”) creates a statutory cause of action for the misappropriation of trade secrets. (FUTSA is set forth in Florida Statute s. 688.001 en seq.) FUTSA displaces or “preempts all claims [such as common law claims] based on misappropriation of trade secrets.” Alphamed Pharmaceuticals Corp. v. Arriva Pharmaceuticals, Inc., 391 F.Supp.2d 1148, 1167 (S.D.Fla. 2005). See also Fla. Stat. s. 688.008.

Florida Statute s. 688.002 (found here) defines the terms “trade secret” and “misappropriation.”

Of relevance, generally what constitutes a trade secret is a question of fact. See DigiPort, Inc. v. Foram Development BFC, LLC, 45 Fla.L.Weekly D2814 (Fla. 3d DCA 2020) (citation omitted).

This is because ‘a trade secret can exist in a combination of characteristics and components, each of which, by itself, is in the public domain, but the unified process, design and operation of which in unique combination, affords a competitive advantage and is a protectable secret.” Accordingly, ‘[e]ven if all of the information is publicly available, a unique compilation of that information, which adds value to the information, may also qualify as a trade secret.’

Id. (internal citations omitted).

By way of example, in DigiPort, an information technology company sued a building owner for violation of FUTSA as well as common law claims associated with the trade secret misappropriation. The information technology company claimed it proposed the design of a single, centralized data center for computer hardware where tenants could rent space or use cloud computing services the company provided. The owner hired a different company to perform the same services and the information technology sued arguing that the owner utilized and disclosed the trade secret information to design and construct the same data center with a different vendor. The owner claimed the idea was not novel and such data centers were already in existence. The trial court granted summary judgment in favor of the owner on the company’s FUTSA claim but the appellate court reversed finding that there was a QUESTION OF FACT as to whether the data center the company proposed “contained elements which by themselves may be readily ascertainable in the public domain, but when viewed together may still qualify for trade secret protection.” Digiport, supra (internal citation omitted). (The appellate court did however affirm summary judgment against the company as to a common law misappropriation claim since it was premised on identical factual allegations as the FUTSA claim and was preempted by FUTSA.)

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

QUICK NOTE: STEPS TO PROTECT AND AVOID THE “MISAPPROPRIATION” OF A “TRADE SECRET”

Posted on October 11, 2020October 11, 2020 by Edward Garber

Florida’s Uniform Trade Secret Act (included in Florida Statute s. 688.001 en seq.) defines the terms “trade secret” and “misappropriation.” These definitions (found here) are important in that just because 1) we deem something a trade secret does not, in of itself, make it so, and 2) we deem someone to have misappropriated a trade secret does not, in of itself, make it so.

If a party deems something to be a trade secret they should identify the document or paper as “confidential trade secret” as the first-step in preserving the confidentiality of that information. The party should also consider entering into an agreement with the party that may receive that information to maximize the protection of such confidential trade secret information during the parties’ agreement.

For instance, as it pertains to construction, perhaps there is estimating information, general conditions information (calculations or rate), insurance or bond mark-up information, or constructability, design or systems recommendations that a party, at least during a material portion of a joint venture or teaming-type of arrangement, or solicitation, wants to protect from disclosure as the disclosure would impact that party’s competitiveness in price or scope. In such case, a party may want to identify such material documents as “confidential trade secret” and, as feasible, enter into an agreement to maximize the confidentiality. Just keep in mind, and although repeated, it is important to consider that just because a document is labeled as a trade secret does not make it so. Notwithstanding, this does not mean steps should be avoided to best protect information that a party believes derives economic value to them because it is information that makes them competitive in the market. A party should absolutely take steps to protect such information and, as necessary, preserve a trade secret misappropriation claim (as a just-in-case).

For more information regarding asserting a cause of action for misappropriation of a trade secret, check out this article. This article discusses what a party must due to properly assert a misappropriation of trade secret claim to survive a motion to dismiss.

JUST BECAUSE YOU LABEL IT A “TRADE SECRET” DOES NOT MAKE IT A “TRADE SECRET”

Posted on January 12, 2018January 12, 2018 by Edward Garber

Everything is a “trade secret,” right? Nope. What if I mark it as a “trade secret?” Still nope. But, you already knew those answers.

This is an especially important issue when dealing with public entities, as demonstrated by the recent opinion in Raiser-DC, LLC v. B&L Service, Inc., 43 Fla. L. Weekly D145a (Fla. 4^th DCA 2018). In this case, Uber and Broward County entered into an agreement regarding Uber’s services at Fort Lauderdale airport and Port Everglades. Per the agreement, Uber furnished monthly reports relating to the number of pickups and drop-offs, as well as information relating to the fee associated with the pickups and drop-offs. Uber marked these reports as constituting trade secrets. It did so to preclude this information from being disclosed to the public.

Yellow Cab made a public records request to Broward County relating to Uber’s trips at Fort Lauderdale airport. Broward County responded by producing redacted records and it did not disclose the monthly reports marked as trade secrets. Yellow Cab filed a lawsuit against Broward County for violating Florida’s Public Record’s Act. Uber intervened in the lawsuit.

Broward County was ultimately required to produce the monthly reports from Uber even though the reports were marked as trade secrets. Why?

Florida has a public policy that public records are in fact public. See Florida Statutes s. 119.01. Florida’s Public Records Act is construed liberally so that the public can copy public records. Raiser-DC, LLC, supra, citing Christy v. Palm Beach Cty. Sheriff’s Office, 698 So.2d 1365, 1366 (Fla. 4^th DCA 1997).

Just because a party labels a document to a public entity (such as Broward County) as constituting trade secret information does not make it so. Stated differently, calling a document a trade secret does not in of itself make the document exempt from public disclosure. It is not that easy. Even the appellate court explained: “Nothing indicates the fees or total pickups [from Uber] provide an advantage to Yellow Cab or that Uber derives independent economic value from keeping that information secret.” Raiser-DC, LLC, supra.

When dealing with a public entity, it is always good practice to identify those documents you believe constitute trade secrets as confidential, trade secrets. This way, at a minimum, you are at least preserving this right to prevent this document from being disclosed to the public. But, again, just because you unilaterally label it as a trade secret does not mean it is not subject to challenge. It is, and this means that the document you believe is a trade secret may not actually be a trade secret and is subject to public disclosure.