H.B. 1523, the Combating Corporate Espionage in Florida Act (“the Act”) amends existing Florida Statute 812.081 to broaden the range of criminal and civil penalties for those who misappropriate trade secrets. The bill takes effect on October 1, 2021.
What is A Trade Secret?
Trade secrets are an entity’s proprietary information, such as a recipe, algorithm, database, or customer list. Generally, a trade secret can be any information that has commercial value or provides a competitive advantage, not known or readily accessible by competitors, maintained under reasonable efforts to maintain its secrecy. Forty-eight states and D.C. have adopted the Uniform Trade Secrets Act (“UTSA”) and the Defend Trade Secrets Act (“DTSA”) provides increased protection. Keeping information a trade secret can bypass the time, expense, disclosure requirements associated with patent applications. Patents also expire after 20 years, whereas trade secrets can be maintained indefinitely.
What Are the Penalties Under the Combating Corporate Espionage in Florida Act?
Theft of a trade secret remains a third degree felony, but has risen from level 1 to level 3 on the offense severity ranking chart. Trafficking in those trade secrets now carries a new second-degree felony. If the theft is for the benefit of a foreign government, the offense is ranked an additional level higher.
If a person is convicted of violating the statute, a court must order restitution, including the value of the benefit derived from the offense. This can include any expenses for research and design, plus other costs of reproducing the trade secret which the person has avoided by committing the offense. The bill also creates a civil cause of action for victims of trade secret theft, entitling them to injunctive relief or royalties where injunctive relief is not equitable.
These remedies are already available under the Florida Uniform Trade Secrets Act, but companies can now bring claims under both statutes. The definitions of a trade secret are different under the two statutes, and a company would have to succeed on just one.
A person who confidentially discloses a trade secret under seal in a legal proceeding or to an attorney, law enforcement officer, or government official for purposes of reporting or investigating an offense is protected from criminal and civil liability.
Will the Combating Corporate Espionage in Florida Act Affect Me?
Most trade secret cases in Florida involve American employees moving from one company to another. The Act is billed as a new tool that will help prosecutors fight foreign governments and their agents who steal trade secrets. However, critics fear that the law casts too wide a net and could catch these employees in run-of-the-mill trade secrets disputes or discourage talented researchers from coming to the state.
The Act may have other unintended consequences, such as increasing the risk of a claim being brought against a former employee who takes materials. The law adds the ex-worker’s new employer as a potential target because it affects anyone who obtains the trade secret, even if the information is not used. In other words, the Act, unlike many others around the country, makes mere possession sufficient to constitute a theft of trade secrets. The mere threat of criminal penalties and longer potential prison sentences is enough to constrain employee mobility and have a new employer get cold feet.