What is a ‘Trade Secret’? And how is it protected?

Many business owners and entrepreneurs have information they want to protect.  But what sort of information falls under the context of a trade sect?  And what is a “Trade Secret”? Well, it depends on the context.  Generally, “trade secrets” involve information.  Florida has its own definition for trade secret in the Florida Uniform Trade Secrets Act, which defines “trade secret” 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.

Now that we know what a trade secret is, or at least how it’s defined, how is it protected?  Well, this is why the above definition is important.  See, to protect a trade secret, you first have to prove that it actually is a trade secret.  To determine that, the Courts will usually look at three things:

1.  A trade secret must not be generally known to others.

First, to be a trade secret, the information must not generally have been known by others — especially to those who might profit from its use or disclosure.

Thus, it is essential that it cannot be commonly known in the industry.  Rather, it must be unique to the owner.  For example, in one lawsuit, Maxxim Medical Group tried to argue that its “custom procedure trays” were a trade secret.  The court analyzed the actual tray, which was a prepackaged set of sterile instruments for specific surgical procedures designed by the customer and packaged by the vendor based on directions received from the particular customer.  Each tray was physician specific, operating room specific, and hospital specific. The Court concluded that the information Maxxim had identified as “confidential” was not confidential at all but actually well-known in the industry and not “unique” to Maxxim. Therefore, it was not a trade secret.

2. It must “not be readily ascertainable.”

Next, a trade secret must not be readily ascertainable by that others who might profit from its use or disclosures.  In other words, it cannot be something that your competitors can simply figure out on their own.

For example, a customer list can be a trade secret where it is not readily ascertainable by the public, such as where it is compiled over confidential negotiations with customers and contains information as to specific customer discounts.  E.g., Bright House Networks, LLC v. Cassidy, 129 So. 3d 501, 506 (Fla. 2d DCA 2014).  On the other hand, a prospective customer list, such as one of social fraternities and sororities, obtained from commercially available materials would not qualify as a trade secret. E.g., Sethscot Collection, Inc. v. Drbul, 669 So. 2d 1076, 1078 (Fla. 3d DCA 1996).

Third, if reasonable efforts, under the circumstances, were not made to maintain its secrecy of the information, it is not a trade secret.  In other words, to protect something as a trade secret, you need to treat it like a trade secret.

This can be done by making reasonable efforts such as marking documents as “confidential,” and treating them as confidential.  Other efforts include drafting non-disclosure and secrecy agreements to prevent disclosure of the trade secret by third parties.

I one case, a company had supplied documents to the county without marking them as “confidential.” Because no reasonable efforts had been taken to protect the secrecy of the information, it was found to not be a trade secret.  Cubic Transp. Sys., Inc. v. Miami-Dade County, 899 So. 2d 453, 454 (Fla. 3d DCA 2005).

Do you have questions about protecting a trade secret? Feel free to call the Orlando lawyers at Cynthia Conlin, P.A., at 407-965-5519.