Inevitability of Inevitable Disclosure Under Florida's Uniform Trade Secrets Act

Author:Mr William Hamilton
Profession:Holland & Knight LLP
 
FREE EXCERPT
Co-Written By Mr John M. Guard

On July 20, 2001, a Florida state trial court judge relied on the doctrine of

inevitable disclosure to enjoin a former employee from aiding or assisting a

competitor against his former employer. At stake in the case was whether a

long-time engineering employee could, days after leaving the employment of FMC

Corporation, establish a relationship with a rival competitor, which

manufactured a clone of FMC's juice extractor machine (the extractor). During

his 10 years of employment, the employee had been involved in the engineering

and design of components for the extractor, research and development relating to

the extractor, and knew specific customer information including pricing and

strategy information.

Florida is one of 40 states, including the District of Columbia, that have

adopted the Uniform Trade Secrets Act. The statute provides that "actual or

threatened misappropriation may be enjoined." Fla. Stat. §688.003(1)

(emphasis supplied). The language of the statute itself does not clearly define

what constitutes "threatened misappropriation," and Florida courts

have not precisely defined the term. Courts in approximately 10 other states

have adopted the doctrine of "inevitable disclosure." Under this

doctrine, courts have found a threatened misappropriation when an employee takes

a position with a new employer that will necessarily require the employee to use

his or her former employer's trade secrets. Florida courts have commented that

it is not necessary for an employer to "let the cat out of the bag"

before an injunction can be issued.1

In Fountain, the plaintiff/employer was engaged in the sale of

polyurethane products throughout the United States. The defendant/former

employee had worked as the chief production supervisor for the plaintiff and had

signed as a condition of his employment both a nondisclosure and a noncompete

agreement. The defendant left the plaintiff and began working for a competitor.

The trial court, under both the nondisclosure and noncompete agreements

temporarily enjoined the defendant from disclosing trade secrets and working for

the competitor. The Third District Court of Appeal, upholding the decision,

stated "[i]n short, we think that his knowledge of trade secrets would be

"so intertwined" with his employment as to render ineffective an

injunction directed only toward a prevention of disclosure."2

In the FMC case, Judge Maloney relied on Fountain along with Pepsico

v. Redman to support the issuance of the injunction. Pepsico...

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