Many of us have read about concerning trends in foreign espionage targeting American businesses’ intellectual property, particularly out of China. In response, Florida recently enacted the Combating Corporate Espionage in Florida Act, which became effective October 1, 2021. While designed to better secure intellectual property from theft by agents of foreign governments, the law also creates important new considerations for employers who wish to protect their businesses’ trade secrets, or who wish to hire employees away from competitors.
Most importantly, it is now a second-degree felony in Florida for any person who steals or traffics in trade secrets. Any employee who, without permission, takes trade secrets or confidential business information from their employer risks serious criminal liability. The act also establishes that a trade secret can include information or documents stored in electronic form.
In addition to increased criminal penalties, Florida has the ability to order restitution against an employee who steals or traffics a trade secret. That restitution is specifically defined by the act as including the “value of the benefit derived from the offense, including any expenses for research and design and other costs of reproducing the trade secret that the person has avoided by committing the offense.” Essentially, the more expensive and time consuming it was for the business to develop the trade secret, the greater the restitution.
The act also provides the right for businesses to seek an injunction to stop the illegal use of their trade secrets and, “in exceptional circumstances,” the right to recover a reasonable royalty for the use of a trade secret. Although the Florida Uniform Trade Secrets Act and the Florida Valid Restraints of Trade or Commerce statute provide for similar relief, businesses can now bring claims under all three to stop the use of a stolen trade secret and recover compensation.
Below are some best practices to protect your business from potential claims and disputes over trade secrets.
#1 Restrict Employee Access to Trade Secrets and Confidential Business Information
Be proactive. Employers should ensure that only the necessary employees have access to protected information, and only when needed (i.e., “need to know”). This may involve consulting with your IT personnel regarding how to prevent access to protected information from unauthorized users. You should never keep protected information on a company server accessible by everyone.
You should also ensure that any access, downloading, or printing, of your business’s protected information is logged and recorded. Consider prohibiting employees from using their personal devices to access company data. Doing so will make monitoring access and recovering protected information easier, especially when an employee leaves the company.
It also beneficial for your business to create a process for immediately disabling the employee’s access to the company network, data, and e-mail upon termination of employment. Employers should keep track of protected information that may be in the employee’s possession and determine the process for returning that information. You should have your IT professional, or a third-party provider, review the former employee’s forensic activity to determine if there was any suspicious activity, including: printing excessively, printing outside of the normal business hours, printing protected information, and emailing company information to a personal account. Again, that process is far easier when employees are restricted from accessing protected information from their personal devices.
#2 Take Extra Care When Hiring Competitors’ Employees
Florida’s new law creates liability for your company as well if you hire a new employee who brings with them confidential information or trade secrets from their previous employer. Your company can be liable for the restitution discussed above if a court finds that you benefitted from, or trafficked in, another company’s confidential information or trade secrets. Be careful and ensure that the new employee has not taken, used, or disclosed any protected information.
#3 Create a Policy to Protect Trade Secret and Confidential Information.
Ensure that your company has a written policy detailing the procedures surrounding employee access to confidential information. A sample provision is provided below. Whenever new policies are implemented, you must ensure that employees receive notice and confirm their receipt and understanding. Additionally, consider whether confidentiality agreements are necessary for employees who routinely have access to confidential and trade secret information. An experienced employment attorney can help you draft these agreements.
We can draft new policies for your business addressing confidential business information, and electronic privacy. Please contact us at your convenience.Joshua B. Loren and Bruce E. Loren of Loren & Kean Law are based in Palm Beach Gardens and Ft. Lauderdale. Loren & Kean Law is a boutique law firm concentrating in construction law and employment law. Mr. Joshua Loren focuses his practice on construction, labor and employment law, only representing the interests of employers and business owners. The firm represents businesses in a wide range of disputes, including OSHA investigations and citation contests, DOL investigations, discrimination claims, and state and federal wage litigation. They can be reached at [email protected] or [email protected] or 561-615-5701.