Florida Adopts Inevitable Disclosure of Trade Secrets Doctrine
September 1, 2001
In a decision of great significance to Florida employers, a Florida circuit
court recently prohibited an individual from commencing employment with a
competitor of his former employer under the "inevitable disclosure" of
trade secrets doctrine. The inevitable disclosure doctrine reasons that some
competing jobs are so similar to prior employment that an employee cannot
perform them without improperly disclosing the trade secrets of his former
employer. The doctrine provides a powerful weapon for employers because it
eliminates the need to find actual evidence that a former employee has stolen or
used trade secrets, which can be difficult and time consuming.
The case, FMC Corporation v. Jose Fagundo and Citrus Technologies &
Services, Inc., (Case No. GCG 01-01972, 2001), involved a former employee
who had access to his employer’s trade secrets and, upon termination,
attempted to use them to the disadvantage of his former employer.
FMC manufactures and leases juice extractors. The defendant, Jose Fagundo,
was employed by FMC for 10 years and had access to FMC’s trade secrets and
confidential information. Following an employment dispute, Fagundo left FMC
after signing a severance agreement that contained a non-disclosure provision.
Within days after leaving FMC, Fagundo formed a competing business called Citrus
Technologies & Services, Inc. He established a business relationship with a
foreign manufacturer of juice extractors, and attempted to sell these extractors
to FMC clients he had serviced while at FMC. During some of these sales calls,
Fagundo failed to mention that he was no longer employed by FMC. He also sent
letters to a number of FMC clients claiming that the foreign-manufactured
machine was superior to FMC’s product.
FMC sued Fagundo and his corporation and sought a preliminary injunction to
prevent Fagundo from wrongfully competing against FMC. The court issued the
injunction, relying on the inevitable disclosure of trade secrets doctrine. The
court reasoned that the Florida trade secrets statute prohibits threatened
misappropriation of trade secrets in addition to their actual disclosure. It
then ruled that Fagundo’s actions on behalf of his new company were so similar
to his duties for FMC that he could not work for the new company without
disclosing FMC’s trade secrets; in other words, that his mere employment
constituted threatened misappropriation of trade secrets.
By allowing employers to stop competition in the absence of a covenant not to
compete or proof of actual misuse of trade secrets, the Fagundo decision
provides an important weapon for employers seeking to prevent wrongful
competition by former employees. Employers must be aware, however, that to
receive trade secret protection, they must take specific precautions to ensure
their company’s information remains secret.
Appropriate and necessary precautions should include limiting confidential
information to only those employees who have a need to know it to perform their
jobs; keeping confidential information in separate computer databases with
limited access; keeping hard copies of confidential documents in locked files;
and clearly designating confidential materials with stamps and other signifiers,
such as different-colored and clearly marked envelopes. Finally, employers would
be wise to require all employees and independent contractors to sign agreements
that contain confidentiality provisions that prohibit the disclosure of trade
secrets and confidential materials both during and after employment.
William Hamilton, Bill Dufoe and John Guard of Holland & Knight
represented FMC
For more information, contact Mindy Leeds at 1-888-688-8500 or via e-mail at
mrleeds@hklaw.com.
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