Is a Compilation of Information a Trade Secret?
The definition of a trade secret essentially encompasses any information that can be used in or by a business and holds enough value and confidentiality to provide an actual or potential economic benefit over competitors.
Due to the broad range of information that can qualify as a trade secret, the answer to whether a compilation of information is a trade secret is not black and white nor a one size fits all answer. The upside of its broad definition is that it enables the nature of a trade secret to adapt as the business landscape evolves.
Generally, however, the Florida Uniform Trade Secret acknowledges that a compilation may constitute a trade secret. Specifically, section 688.002(4) of Florida Statutes broadly defines a "trade secret" as:
"[I]nformation, including a formula, pattern, compilation, program, device, method, technique, or process that:
(a) Derives independent economic value, actual or potential, 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
(b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy."
The issue of whether a particular compilation of information is a trade secret will necessarily depend on a variety of facts. At large, a compilation of information may be eligible for trade secret protection where the compilation took great effort and expense, has value, is secret, is used within or by the business, and provides a competitive advantage. The same holds true even where some pieces of the underlying information contained in the compilation are in the public domain or accessible through proper means. This issue was addressed by the court in Digiport, Inc. v. Foram Development BFC, LLC, 314 So. 3d 550 (Fla. 3d DCA 2020). There, the court explained:
“a trade secret can exist in a combination of characteristics and components, each of which, by itself, is in the public domain, but the unified process, design and operation of which in unique combination, affords a competitive advantage and is a protectable secret.” Accordingly, “[e]ven if all of the information is publicly available, a unique compilation of that information, which adds value to the information, also may qualify as a trade secret.”
Id. at 553 (alteration in original) (internal citations omitted).
Therefore, even if certain elements of information contained in a compilation are publicly available, Florida law recognizes that a combination of elements or characteristics that create a unique process, design, or operation that provide a competitive edge and is kept secret may qualify as a trade secret.
For example, in Bridge Financial, Inc. v. J. Fischer & Associates, Inc., 310 So. 3d 45 (Fla. 4th DCA 2020), the court addressed how a customer list can constitute a trade secret, stating “[a] customer list can constitute a ‘trade secret’ where the list is acquired or compiled through the industry of the owner of the list and is not just a compilation of information commonly available to the public.” Id. at 48 (quoting E. Colonial Refuse Serv., Inc. v. Velocci, 416 So. 2d 1276, 1278 (Fla. 5th DCA 1982)). However, to qualify as a trade secret, the customer list must be a “product of great expense and effort … include information that [i]s confidential and not available from public sources, and … distilled from larger lists of potential customers into a list of viable customers for [a] unique business.” Id. (alteration in original and added) (quoting Zodiac Records Inc. v. Choice Env’t Servs., 112 So. 3d 587, 590 (Fla. 4th DCA 2013)).
With respect to the secrecy requirement, it need not be absolute. In other words, the absolute best security measures available is not the legal standard when evaluating secrecy. Rather, the presence of reasonable security measures to safeguard the confidentiality of the compilation will suffice. Reasonable security measures can include, but are not limited to:
securing executed confidentiality and nondisclosure agreements that adequately address the confidential nature of the compilation and the associated rights, duties, obligations, and violations for breach from internal and external parties.
requiring those with access to attest to their understanding that the compilation and underlying information must be closely guarded.
limiting access only to those with a need-to-know.
storing records on password protected and encrypted folders and servers.
including clear duties of confidentiality and disciplinary actions for the unauthorized use or disclosure in an employee handbook.
The overall goal to satisfy the secrecy requirement is the ability to demonstrate that the compilation of information would be difficult or expensive for others to acquire without engaging in wrongful conduct.
A compilation of information may qualify for trade secret protection even where pieces of the underlying information are in the public domain or readily accessible through legitimate means. As trade secret protection is a complex legal area, the specific measures to establish a compilation as a trade secret will vary. These measures should include appropriate methods that document the efforts and expense involved in compiling the information, implementing reasonable security measures that demonstrate secrecy, showing use by or in the business, and underscoring its value and uniqueness as a competitive advantage.
The information provided in this post is for general informational purposes and not intended as legal advice or legal opinion for any individual matter. Keep in mind that legal developments or changes to law may occur in the future and, as such, the information contained in this post may not be the most up-to-date legal or other information. Do consult your own attorney for any legal advice you may require. If you do not have an attorney and would like to explore a potential engagement for my services, please reach out to me via the contact submission form or by using the contact information provided in my bio.