Co-Written By Mr John M. Guard
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.3The 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.
1See Thomas v. Alloy Fasteners, 664 So. 2d 59, 60 (Fl. 5th DCA 1995).
2See id. at 234 (emphasis added).
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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