Theft of Trade Secrets Threatens Florida’s Small Businesses

The phrase “theft of trade secrets” conjures mental images of international espionage and a suave, globe-trotting spy. Of course, as the U.S. Federal Bureau of Investigation has warned, economic espionage is a real threat to large corporations, costing the American economy billions annually and even placing our national security at risk. However, theft of trade secrets is a menace with serious consequences for small businesses too. 

Your trade secrets are any formulas, practices, processes, designs, instruments, patterns of commercial methods or compilation of information that aren’t generally known or reasonable obtainable by others and that your business utilizes for a competitive edge. Examples could be anything from the secret ingredient of your grandmother’s pasta sauce recipe used by your restaurant to the customer databases your real estate company has complied over the years. Some trade secrets are eligible for patent protection, but not all. Intellectual property attorneys in Orlando can help you identify and protect those trade secrets, and take action when they are stolen or at risk.

In many cases, small business trade secrets are taken by those we once trusted, such as former employees. That was exactly what allegedly happened in a case recently before the U.S. Court of Appeals for the Seventh Circuit

According to court records, plaintiff is a maker of custom machines that can be used to make products that meet specialized industry requirements for those in the auto, aerospace and medical equipment fields. Defendants were former employees who struck out on their own and started a similar competing company, allegedly benefiting from the theft of trade secrets and trade mark infringement against his former employer. It’s not clear from the appellate filing what exactly those secrets were, but plaintiff sued defendants for trademark infringement and theft of trade secrets.

When defendants failed to participate in the lawsuit, plaintiffs won a default judgment for $715,000. Five months later, plaintiff again sued defendants, alleging the company had engaged in additional unfair and illegal competition. Both sides reached a settlement in the second case, with defendants agreeing their liability insurer would pay $75,000 and abide by an anti-slander agreement, or else face an additional $250,000 damage payment.

When this matter concluded, defendants filed a motion arguing the settlement of the second lawsuit released them from the judgment in the first. Plaintiff responded it never intended to release defendant from earlier judgment, noting the pre-settlement demand in the second lawsuit made no mention of the previous default judgment. The parties had never even discussed the previous lawsuit during settlement talks. However, the district court sided with defendants on this one, noting that regardless of plaintiff’s intention with the second settlement, the language of the settlement in the second case unambiguously released defendant from its obligation to pay on the first judgment. Courts are entrusted to enforce the terms of contracts as they are written, without weighing evidence that is extrinsic.

This case highlights why it is so essential to trust any business litigation only to an attorney with a proven track record of success. You need someone who not only knows the law, but will meticulously review even the boiler plate language of any contract, to ensure nothing like this is overlooked.

Protecting Your Trade Secrets

It also underscore the importance of fiercely protecting the trade secrets of your small business. The U.S. Small Business Administration recommends doing so by:

  • Identifying your trade secrets.
  • Keeping your trade secrets confidential.
  • Educating your employees and administrators about protecting trade secrets.
  • Understanding the protections you are afforded under the law. (Example, while there is no law that provides for any registration of trade secrets for protection, many states do have laws prohibiting theft or disclosure of trade secrets. Florida, for instance, outlines its protections in F.S. 812.081, criminalizing the offense as a third-degree felony.)
  • Take civil action for violations of trade secret laws.

Our dedicated Orlando intellectual property attorneys can help you with each of these important steps.

Contact the Florida business attorneys at The Chidolue Law Firm, serving Orlando and Lake Mary, by calling (407) 995-6567 or email us.

Additional Resources:

Engineered Abrasives, Inc. v. American Machine Products & Service, Inc., Feb. 13, 2018, U.S. Court of Appeals for the Seventh Circuit

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