Your business probably has many proprietary assets. However, if you are in the professional services or sales industries, one of the most valuable – and jealously guarded – possessions your business may have is your client/customer list. These lists typically are the product of a great deal of effort in terms of developing, growing and cultivating. What, then, should you do if someone has obtained improper access or made wrongful use of your business’s client list? Depending on the specific facts, you may have various legal claims available here in Florida. One thing you should definitely do is reach out to an experienced South Florida commercial litigation attorney to discuss your options.
Under Florida law, a customer list or a client list may qualify as a trade secret. Proving that it is a trade secret is important because, if you do that, then the law allows you to seek an award of damages for “trade secret misappropriation.”
So, you may wonder, how do I know if my list is a trade secret or not? A recent ruling from the Fourth District Court of Appeal reviews many of those answers.
In that case, the owner of the client list was a Palm Beach County-based tax preparation and financial planning firm. According to the company’s lawsuit, three of its former employees managed to copy its entire server, including the list. Allegedly armed with that information and data, the ex-employees formed their own competing accounting and financial planning firm and began soliciting the company’s clients.
The former employer included in its complaint a claim for trade secret misappropriation. The jury found the defendants liable and awarded the company more than $255,000 in damages.
What you must prove to establish ‘trade secret misappropriation’
The appeals court, in upholding the decision of the jury, looked to the Florida Statutes. Section 688.002 says that a trade secret is an information that has “independent economic value, actual or potential,” that it derives 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 also is also the object of reasonable efforts to “maintain its secrecy.”
There are two keys here. One, the information must have independent value that comes from the fact that it is secret. Two, the possessor must take steps that are “appropriate under the circumstances” to keep it secret.
In terms of a customer list or client list, that means a few things. One, it cannot be simply a “compilation of information commonly available to the public” because that would fail the first half of the statutory test. Instead, you must have evidence that your list “was the product of great expense and effort, that it included information that was confidential and not available from public sources, and that it was distilled from larger lists of potential customers into a list of viable customers for [a] unique business.”
This employer had that sort of evidence. Its client list not only had the clients’ names and addresses, but it also had copies of their past income tax returns, in addition to the supporting information the company used in creating those tax returns. This, clearly, was more than just pieces of information you could get from a Google search.
The employer also had expended a great deal of time, effort and financial expense developing that list, and it used reasonable methods to keep it secret. The list was sheltered within the company’s server and was password-protected.
All of those pieces of proof were enough to undergird a viable – and, in this case, successful – claim of trade secret misappropriation.
When someone has absconded with or misused, some trade secret or other proprietary item of your business, the harm can be massive. Whether it was an app, a method or a client list, that thing’s loss of secrecy can do great damage to your business’s current and future success. To protect your business in these kinds of situations, you need a diligent and powerful advocate on your side. Count on the knowledgeable and determined commercial litigation attorneys at Stok Kon + Braverman, armed with our many years of experience, to give you the strong and effective legal representation your business deserves.
Contact us online or by calling (954) 237-1777 to schedule your consultation.