In recent days, we have discussed common business disputes, the divulgence of trade secrets, and how both can affect your business. Today, we are continuing our discussion on trade secrets and former employees.

As mentioned, the court can take legal action through an injunction to stop former employees from divulging trade secrets – but what is a trade secret and what is not?

The Florida Statute that governs this topic is the Uniform Trade Secrets Act (Florida Statute §688). The law prohibits the misappropriation of trade secrets, including the acquisition, disclosure, and use of the information to the disadvantage of the owner of the trade secret.

Without a non-compete agreement in place, to prevent a former employee from working with a competitor you must prove the former employee had knowledge of your trade secrets and that he/she either divulged, attempted or threatened to divulge those secrets to your competitor.

This rule was established by a Florida case in the early 1990’s – Mach Corp vs Seagate Tech – to protect the employee’s right to seek employment in their field and work in direct competition with their former employer, in the absence of proof that trade secrets were exposed.

The court opined that knowledge of trade secrets, working with the competition, and mere suspicion is not enough to justify the issuance of an injunction against a former employee.

Are all Business Processes Considered Trade Secrets?

No. In Thomas v. Alloy Fasteners, Inc, the employee (Thomas) developed customer lists and engaged in cold-calling during his employment with Alloy Fasteners, Inc. When he left Alloy, Thomas took the customer lists with him and continued to reach out to the prospective customers.  Thomas never signed a non-compete agreement with Alloy.

The court ruled that “there is nothing magical or secret” about the customer lists and cold-calling method used by Thomas. Furthermore, because the potential customers’ names and contact information could be obtained from public sources, there was no secret as to the class of likely customers.

“Customer lists may not qualify as trade secrets unless the employer presents evidence that they are the product of great expense or effort, that they are distillations of larger lists, or that they include information not available from public sources. If the information on the lists is easy to obtain merely by looking at the advertisements, maga­­zine, periodicals, in addition to many other sources, local newspapers and the yellow pages, they will not qualify as trade secrets.”

In the absence of a non-compete agreement, Thomas was free to reach out to the customer lists.

Next week, we will discuss ways to prove the existence of a trade secret. Subscribe to our feed to be notified when the new articles are published.