On February 24, 2016, Florida Governor Rick Scott signed Senate Bills ("SB") 180 and 182, which exempt financial information deemed to be a trade secret from public disclosure under Florida's Sunshine Laws. The acts take effect on October 1, 2016.
While a key goal of the legislation is to attract qualified private sector businesses seeking public-private partnerships ("P3") to Florida and encourage those businesses to enter into contracts with the state by assuaging their fear of disclosure of their trade secrets the expansion of the definition of trade secret may have important implications for companies transacting business in Florida, irrespective of whether they are engaged in public-private partnerships.
This article walks through the recent amendments to Florida's trade secret statutes, discusses the possible impact of those amendments on civil litigation, and provides guidance to companies transacting business in Florida.
Previously, Section 812.081 of the Florida Statutes which criminalizes trade secret theft did not specifically reference financial information in its definition of "Trade secret." SB 180 amended Section 812.081 as follows, with the amended language reflected via underlined text:
"Trade secret" means the 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:
- Of value;
- For use or in use by the business; and
- 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.
Trade Secrets--Financing Statements--Crimes and Offenses, 2016 Fla. Sess. Law Serv. Ch. 2016-5 (C.S.S.B. 180).
In order to qualify as a trade secret, financial information must meet the specific criteria of Section 812.081(2), as amended, with the amended language reflected via underlined text: "Any person who, with intent to deprive or withhold from the owner thereof the control of a trade secret, or with an intent to appropriate a trade secret to his or her own use or to the use of another, steals or embezzles an article representing a trade secret or without authority makes or causes to be made a copy of an article representing a trade secret commits a felony of the third degree, punishable as provided in s. 775.082 or s. 775.083." Id.
Impact of Amendments
The amendments clearly impact P3 procurement in Florida by allowing private companies to bid on government contracts without the fear that the financial information disclosed by the bidding company will end up in the public domain and, more specifically, in the hands of the bidding company's competitors.
The amendments, however, could influence courts handling civil disputes even beyond just the P3 context, even though the amendments changed only the definition of trade secret under a criminal statute.
A litigant seeking to safeguard its trade secrets by citing to the definition of "Trade secret" in Section 812.081 would find support in Section 812.035 of the Florida Statutes. Section 812.035 provides an avenue by which a litigant may assert a claim for misappropriation of financial information. Section 812.035 provides that "[a]ny aggrieved person may institute a proceeding" and that "relief shall be granted in conformity with the principles that govern the granting of injunctive relief from threatened loss or damage in other civil cases, except that no showing of special or irreparable damage to the person shall have to be made." Fla. Stat. Ann. 812.035(6).
One question that may arise in the future is whether and how Section 812.081 should be read in conjunction with Florida's Uniform Trade Secrets Act, Fla. Stat. Ann. 688.001, et seq. ("UTSA"). Under the UTSA, which provides recourse for the misappropriation or threatened misappropriation of trade secrets, as defined by the statute, misappropriation is defined as the:
- Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or
- Disclosure or use of a trade secret of another without express or implied consent by a person who:
- Used improper means to acquire knowledge of the trade secret; or
- At the time of disclosure or use, knew or had reason to know that her or his knowledge of the trade secret was:
- Derived from or through a person who had utilized improper means to acquire it;
- Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or
- Derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or
- Before a material change of her or his position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.
Fla. Stat. Ann. 688.002(2). Both damages and injunctive relief are available under the statute. Damages may include both the actual loss caused by misappropriation and the unjust enrichment caused by misappropriation. Id. at 688.004(1). The court also may award exemplary damages. See id. at 688.004(2). Injunctive relief may also be available for any actual or threatened misappropriation of a trade secret. See id. at 688.003.
Because the Florida Legislature did not amend the UTSA to add financial information to the definition of trade secret in the UTSA, litigants may argue that the amendment to Section 812.081 should be read as supporting the position that financial information constitutes a trade secret under the UTSA and that an injunction is appropriate to remedy a financial information trade secret misappropriation. This reading is supported by the Florida legislature's goal of protecting trade secret information in the broad sense.
SB 182 which, as the companion to SB 180, creates an exemption to Florida's public records laws by protecting a financial information trade secret from public disclosure provides that "[t]he Legislature's intent is to protect trade secret information of a confidential nature which includes, but is not limited to, a formula, a pattern, a device, a combination of devices, or a compilation of information used to protect or further a business advantage over those who do not know or use the information, the disclosure of which would injure the affected business in the marketplace. Therefore, the Legislature finds that the need to protect trade secret financial information is sufficiently compelling to overrise this state's public policy of open government and that the protection of such information cannot be accomplished without these exemptions." 2016 Florida Senate Bill No. 182, Florida One Hundred Eighteenth Regular Session, 2016 Florida Senate Bill No. 182, Florida One Hundred Eighteenth Regular Session.
Those opposing the broadening of the definition of trade secret under the UTSA may dispute the above argument. They may argue that financial information does not constitute a trade secret under the UTSA because the UTSA has its own definition of "trade secret" which, unlike the criminal statute, has not been amended. Instead, the UTSA continues to read as follows:
"Trade secret" means 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.
Fla. Stat. Ann. 688.002(4).
Regardless of how courts come down on this issue, they also will need to wrestle with the meaning of "financial information" in the context of Section 812.081 because of the Florida legislature's decision not to define financial information in the context of these amendments.
A Few Things to Consider
- Litigants may argue about whether financial information is or is not included as part of the definition of trade secret under the UTSA because it is not explicitly discussed as part of that definition.
- Even with the changes to Section 812.081, companies transacting business in Florida should contemplate explicitly including financial information in their contractual definitions of trade secrets and confidential information.
- Despite the addition of financial information to the definition of trade secret under Section 812.081, financial information trade secrets will only be protected if Section 812.081(2) is fully satisfied.