On October 1, 2016, a State-passed bill amending the definition of a “trade secret” to expressly include “financial information” will take effect. This seemingly small change could have substantial impacts on any businesses handling and/or disclosing financial information. It will also impact the negotiation and enforcement of restrictive covenants, submission procedures for government contracts, and conduct in legal proceedings.
Florida has a civil statutory scheme for protection of trade secrets (Uniform Trade Secrets Act ) and a criminal statute to address crimes associated with trade secrets (Fla. Stat. 812.081).
The amendment, which only modifies the criminal statute, ensures that misappropriation of a business’ financial information is criminally punishable; however, the impact of the amendment will likely reach beyond the criminal realm.
While businesses typically keep their financial information confidential, often the financial information is not afforded the type of protections that other trade secret information is provided. Litigants have tried to apply trade secrets concepts to financial information; however, the application has always been murky. This amendment clearly establishes that financial information can be trade secret information, and although the Uniform Act was not similarly amended, there is now a compelling argument that financial information is protectable under the Uniform Act.
In light of this statutory change, businesses should consider an audit of their handling of financial information to ensure that the safeguards in place are sufficient to maintain the trade secret status of such information. Additionally, businesses should consider the impact of the change on their contracts. Expressly including financial information within the scope of trade secrets may allow a business to expand and/or reinforce properly prepared restrictive covenants supported by proper handling of financial information. Lastly, businesses need to confirm that their disclosure of financial information in response to proposal requests or in connection with litigation, directly or as a third party, is handled sufficiently to ensure that protections are not lost.