Inevitability of Inevitable Disclosure Under Florida's Uniform Trade Secrets Act
October 23, 2001
John M. Guard- Tampa
William F. "Bill" Hamilton- Tampa
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 is the
seminal case supporting inevitable disclosure doctrine, where the U.S. Court of
Appeals for the Seventh Circuit created the inevitable disclosure doctrine. Pepsico
Corp. v. Redman, 54 F.3d 1262, 1269 (7th Cir. 1996). The Seventh Circuit in
that case defined the inevitable disclosure doctrine as protecting "not the
general skills and knowledge acquired during his tenure with Pepsico . . . but
rather the particularized plans or processes developed by Pepsico . . ., which
are unknown to others in the industry and which give the employer an advantage
over competitors." See id. at 1269.
Judge Maloney found that the employee in his new relationship with the
competitor would give the clone manufacturer a competitive advantage from the
information that he gained from FMC. Additionally, the court found that the
clone manufacturer was only interested in the employee for the information he
gained through employment with FMC. The court termed the inevitable disclosure
doctrine as threatened disclosure. In short, the court found that the trade
secrets were "so intertwined" with the employee's current employment,
and FMC, therefore, had shown a clear legal right to relief and enjoined the
employee from "cooperating, assisting, or working" with the clone
manufacturer.
Judge Maloney additionally dispatched with an argument based on a ruling out
of the Southern District of Florida in Del Monte Fresh Produce Company v.
Dole Food Company, Inc., 2001 W.L. 668383 (S.D. Fla. May 24, 2001). In Del
Monte, the Southern District refused to adopt the inevitable disclosure
doctrine under FUTSA, noting that no Florida court had used the doctrine or
cited cases containing the doctrine.3 The Del Monte court additionally
held that, to be entitled to an injunction for threatened misappropriation, the
plaintiff must present evidence of a clear and present danger. To this last
point Judge Maloney responded that the Del Monte reading of threatened
disclosure was too narrow and threatened to eviscerate FUTSA. He commented that
"[f]ew persons intent on trafficking in trade secrets advertise their
intent. In order to have any practical effect, threatened disclosure must
include inevitable disclosure."
The FMC case is important for several reasons. First, it more clearly defines
what, until now, has been a gray area under FUTSA - what constitutes threatened
misappropriation. Second, it confirms Florida's acceptance of the inevitable
disclosure doctrine under FUTSA after Fountain introduced inevitable disclosure
to Florida law. Third, it promotes uniformity as Florida joins the growing
number of jurisdictions under the Uniform Trade Secrets Acts that have already
accepted the inevitable disclosure doctrine.
William F. Hamilton is a partner and JohnÿM. Guard is an associate in
Holland & Knight LLP's Tampa office. Both Mr. Hamilton and Mr. Guard, along
with William Dufoe, a partner in the firm's Lakeland office, and Ashley Moody,
an associate in the firm's Tampa office, represented the plaintiff, FMC
Corporation. Contact any of these lawyers at 1-888-688-8500.
1See Thomas v. Alloy Fasteners, 664 So. 2d 59,
60 (Fl. 5th DCA 1995).
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2See id. at 234 (emphasis added).
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3Del Monte involved a person that had supervised the research and
development department for Del Monte for a number of years. The former
employee had limited knowledge of research actually conducted on a project
similar to one by his new employer Dole. The former employee also knew about
litigation between the parties concerning that project. Dole recognized the
potential trade secret problem and took preventive measures to prevent
disclosure, including employing him in an unrelated division and issuing a
directive not to communicate with the former employee about the project and
the litigation.
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