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IMA Executive News & Views Blog

Summary Judgment Upheld in Favor of Competitor-Defendant Because Plaintiff Failed to Sufficiently Protect its Alleged Trade Secrets

by Steven Grimes and Shannon T. Murphy

Winston & Strawn LLP is an IMA Member

In August 2018, the Eleventh Circuit affirmed summary judgment in favor of the defendant boatmaker in Yellowfin Yachts v. Barker Boatworks, LLC on, among other claims, alleged violations of Florida’s Trade Secret Act because no reasonable jury could conclude that the plaintiff boatmaker had taken reasonable measures to protect its purported trade secrets, as required.

Yellowfin had filed suit in 2015 alleging, among other things, that its vice president of sales downloaded hundreds of files from Yellowfin’s server, including customer specifications and drawings, when he left the company, and then used that valuable information to start a competitive business. Even though Yellowfin protected the information at issue by limiting access to less than 5% of employees in the company, maintaining it on a password-protected computer system, and giving verbal admonishments not to share the information with third parties, the Eleventh Circuit concluded that “Yellowfin effectively abandoned all oversight in the security” of the information at issue because Yellowfin:

  • Had encouraged the vice president to store the information on a personal laptop and phone and never asked him to delete the information from those personal devices when he left the company;
  • Had not instructed the vice president to secure the information on his personal devices;
  • Allowed the vice president to have access to the information even though he had refused to sign a confidentiality agreement; and
  • Had not marked the information as confidential.

TIP: Companies need to proactively consider what reasonable measure they can take to protect their trade secrets from the moment an employee is hired, such as by requiring confidentiality agreements and robust training, through when the employee leaves the company, including collecting or deleting company data in the employee’s possession.

 

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