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Proving Entitlement to a “Trade Secret”

Posted by David Adelstein on March 24, 2019
Trial Perspectives

A recent case, Managed Care of North America, Inc. v. Florida Healthy Kids Corp., D735a (Fla. 1st DCA 2019), discusses the standard in proving entitlement to a “trade secret,” as defined by Florida law (below).  

In this case, bidders submitted proposals to a public body in response to an Invitation to Negotiate. In responding to the proposal, one of the bidders marked certain pages confidential as a trade secret, which is not uncommon.   A losing bidder sought to obtain this information under Florida’s Public Record’s Act and the bidder maintaining the trade secret protection filed a motion for declaratory relief asking the trial court for a declaration as to whether the information it marked confidential was exempt from public disclosure under Florida’s trade secret protection. 

Section 812.081(1)(c), Florida Statutes, defines “trade secret” as:

[T]he whole or any portion or phase of any formula, pattern, device, combination of devices, or compilation of information which is for use, or is used, in the operation of a business and which provides the business an advantage, or an opportunity to obtain an advantage, over those who do not know or use it. The term 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. Irrespective of novelty, invention, patentability, the state of the prior art, and the level of skill in the business, art, or field to which the subject matter pertains, a trade secret is considered to be:

      1. Secret;
      2. Of value;
      3. For use or in use by the business; and
      4. Of advantage to the business, or providing an opportunity to obtain an advantage, over those who do not know or use it

when the owner thereof takes measures to prevent it from becoming available to persons other than those selected by the owner to have access thereto for limited purposes.

The First District Court of Appeal held that once the bidder maintaining the trade secret protection proved: (1) the information was used in the operation of its business; (2) the information provided the business an advantage or the opportunity for an advantage; and (3) importantly, the bidder took measures to prevent its disclosure (and, of course, the information is NOT readily accessible to the public), “the information is deemed protected trade secrets; and, by its very nature, the trade secrets are considered, as a matter of law, to be “of value.” Managed Cared of North America, supra.    Separately proving “of value” is not a required element of establishing the information is a trade secret. However, to prove entitlement to a trade secret, the “party must not only label the information as secretive [or confidential], but must also prove a business advantage or an opportunity to obtain an advantage.”  Managed Care of North America, supra. Once the party satisfies this burden, the information is “as a matter of law and by its very nature, considered ‘of value.’”  Id

 

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.

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