The document provides an overview of a presentation on legally protecting trade secrets, customers, and employees. It discusses Florida laws on restrictive covenants, outlines five types of covenants, and explains how to draft enforceable agreements. It emphasizes having a plan to consistently enforce agreements through cease and desist letters and litigation if needed. The presentation aims to help businesses understand how to effectively protect their legitimate business interests through restrictive covenants and trade secret law.

1. Covering Your Assets: How to Legally
and Effectively Protect Your Trade Secrets,
Customers, and Employees
Presented by:
Phillip B. Russell
Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
100 N. Tampa Street,Suite 3600
Tampa, Florida 33602
(813) 221-7265 (dd); (813) 966-6598 (cell)
phillip.russell@ogletreedeakins.com

2. Something to Consider
•When an employee leaves your company
and takes customers, trade secrets,
confidential information, other employees,
or all of these,
•How does that make you feel?

3. Something Else to Consider
•This is not about how you feel!!!!
–Ego and pride are your worst enemies.
•Protecting your business assets is a business
decision that utilizes the law as your protection.
•Like all other business decisions you make, you
must have a plan!

4. YOUR SPEAKER
•Employment lawyer for businesses only
– Since 1995
•HR Florida’s Legal Counsel
•Member of
–HR Tampa
–Big Bend SHRM
–SHRA
•Nationally recognized speaker on workplace
legal topics
•Runs adventure races!

5. Our ROI’s for Today
1. Understand Florida’s statutory and common
laws regarding employees’ duty of loyalty and
unfair competition.
2. Draft and implement non-solicitation, non-
disclosure, and non-compete agreements.
3. Implement a powerful enforcement and
litigation strategy.

6. The Current “Mood”
•Recent Right Management Polls
–Out of 1,400 workers, 84% planned to look
for a new job in 2011
–Out of 3,000 workers, many had been
approached by another company, and 56%
of those with managerial titles reported being
contacted by other employers
–Out of 330 employers, 3 of every 4 had
employees working remotely

7. What Are Restrictive Covenants?
•Agreements with an employee not to
engage in certain post-employment
activities.

8. Five General Types of Covenants
•Non-Compete: Don’t Work for the Competition
or Open a Competing Business
•Non-Solicitation: Don’t Solicit our Customers
•Non-Disclosure: Don’t Disclose our
Confidential Information or Trade Secrets
•No Pirating: Don’t raid our Employees
•Invention Assignment: Intellectual Property
belongs to the Company (trailer clauses)

9. Restrictive Covenants
•PUBLIC POLICY
–Generally disfavors restrictive covenants as
a restraint on free trade
•BUT
–Limited statutory exception is to protect
legitimate business interests
–Section 542.335, Florida Statutes

10. Florida Statutory Requirements
•Reasonable in Time
•Reasonable in Area
•Reasonable in Line of Business
•In writing and signed by the person against whom
enforcement is sought
•Plead and prove one or more legitimate business
interest (LBI)
•Restrictive covenant is reasonably necessary to protect
the legitimate business interest(s) justifying the
restriction
•Supported by valuable consideration

11. Legitimate Business Interests (LBI)
1. Trade Secrets, § 688.002(4)
2. Valuable confidential business or professional
information that otherwise does not qualify as a trade
secret.
3. Substantial relationships with specific or existing
customers, patients, or clients
4. Customer, patient, or client good will associated with
(a) ongoing business or professional practice by way
of a trade name, service mark, or trade dress, (b) a
specific geographic location, or (c) a specific
marketing or trade area
5. Extraordinary or specialized training.

12. Extraordinary or Specialized Training
•Goes beyond what is usual, regular, common, or
customary in the industry
•Employee attains a unique skill or advanced degree or
sophistication in an existing skill
•Will vary from industry to industry and requires a
factual determination by the court
•Following directions on a box or reading the manual
are not sufficient!
•Hiring persons with little or no experience and putting
them through extensive training would strongly suggest
extraordinary or specialized training

13. Legitimate Business Interests
•“Any restrictive covenant not supported by a
legitimate business interest is unlawful and is
void and unenforceable.”
–Fla. Stat. § 542.335(1)(b)

14. Defenses
•Overbroad
•Overlong
•Otherwise not reasonably necessary to protect
the established legitimate business interest(s)
•The company seeking enforcement no longer
continues in business in the area or line of
business that is the subject of the action, but
only if such discontinuance is not the result of a
violation of the restriction.

15. Defenses
•Other pertinent legal and equitable defenses
–Prior Breach by the Employer (e.g., failure
to pay)
–Statutory Violation by the Employer (e.g.,
FLSA)
–Selective Enforcement
•Public health, safety, and welfare (extremely
narrow)

16. Time Frame Presumptions
•If not based on the protection of the trade
secrets, restrictive covenants are:
•Presumptively reasonable
–any restraint 6 months or less in duration
•Presumptively unreasonable
–Any restraint more than 2 years in duration

17. Time Frame Presumptions
•If based on the protection of the trade
secrets, restrictive covenants are:
•Presumptively reasonable
–any restraint 5 years or less in duration
•Presumptively unreasonable
–Any restraint more than 10 years in
duration

18. Prohibited Defenses
•Individualized economic or other hardship
•Generalized public policy assertion
–Public policy defense must specifically
articulate the applicable public policy and
the court must find the public policy
substantially outweighs need to protect the
legitimate business interest(s)

19. How Must Courts Construe Restrict
Covenants?
•In favor of providing reasonable protection to all
legitimate business interests established by the
enforcing party
•Cannot use any rule of contract construction
that requires a narrow reading against the
restraint of the drafter

20. Remedies
•Injunctive Relieve – violation of an enforceable
restrictive covenant creates a presumption of
irreparable harm for injunctive relief
–Temporary Injunction w/ bond
–Permanent Injunction w/ bond
•Damages
•Attorneys’ Fees and Costs
–Prevailing Party
–Even if no contractual provision or a one-sided
contractual provision

21. Other Claims
•Breach of Duty of Loyalty
•Trade Secret Misappropriation
•Computer Fraud and Abuse Act
(federal statutory claim)
•Civil Theft

22. Other Claims – Against New Employer
•Tortious Interference
–Suing employee’s new employer for
causing employee to violate a valid
agreement
–Usually must make new employer
aware of restrictions and give them a
chance to stop (Need to show intent)

23. Drafting Agreements and Restrictive
Covenants
•Stand-alone Agreements, or
–“Business Protection Agreement”
•Provisions in Employment Agreement
–Typically for executives or high-end sales
positions
•Avoid “off the shelf” forms; customize covenants and
agreements by position or type of position

24. Important Provisions - Introductory
•Identify the parties
– Employer should also include related entities,
successors, and assigns
•Describe the company’s line of business and
geographic areas in which it does business,
but allow for changes
•Describe the employee’s line of business and
geographic scope covered by employee, but
allow for changes
•Identify the consideration (e.g., employment
or continued employment)

25. Important Provisions – Legitimate
Business Interests
•Articulate the specific LBI’s sought to be
protected
•Emphasize the employer’s investment in its
employees, customers, trade secrets,
confidential information, and business
strategies and plans

26. Important Provisions – Restrictive
Covenants
•Non-disclosure of Trade Secrets or
Confidential Information
–Specifically define trade secrets or
confidential information; generic terms are
not sufficient
–Time period w/ extension clause
–Return of property, including devices and
files
–Include disclosure and use

27. Important Provisions – Restrictive
Covenants
•Non-Solicitation of Customers
–Passive and active solicitation
“solicit or accept business from”
–Time period with extension clause
–Customers with whom employee had
substantial contact

28. Important Provisions – Restrictive
Covenants
•Non-Solicitation of Employees
–Passive and active solicitation
“solicit or accept employment of”
–Time period with extension clause
–Employees with whom employee had
substantial contact

29. Important Provisions – Restrictive
Covenants
•Non-Competition
–Time frame with extension
–Geographic scope
–Line of business
•These are NOT preferred by the Courts, so they must
be drafted very carefully and enforcement expectations
must be minimal.
•“Everyone has a right to earn a living doing what they
do.”

30. Important Provisions - Remedies
•Temporary Injunction
•Permanent Injunction
•Damages
•Liquidated Damages
•Attorney’s fees and costs
•Waiver of Jury Trial?

31. Important Provisions – Other Legal
•Governing Law
•Jurisdiction
•Venue
•Severability of unenforceable items
–Blue pencil or severability clause
•Modification
•Assignment
•Construction
•Waiver of prior breach
•Employment At Will Has Not Changed!!!!

32. Who Can/Should Be Subject to
Restrict Covenants?
•Current or former employees, independent contractors,
or agents
•Best practice – executives, sales, technical,
engineering, and similar positions:
–Anyone who knows the “Coca-Cola Formula” of
your business
–Anyone who has relationships with your customers
–Anyone who could recruit your talent
•But, not everyone in your business because you would
dilute your LBI argument

33. Choice of Law and Venue Issues
•Covenants can be rendered unenforceable if
they are:
•Invalid under chosen state law; or
•contrary to home state’s public policy
•Venue – Choice of venue and venue transfer
issues
–Personal jurisdiction
–Minimum contacts to Florida

34. New Enforcement Issue – Social Media
•Can you include social media sites in your
agreements?
•Can you require a former employee to de-
connect from social media site contacts they
have?
•Other issues?

35. TRADE SECRETS

36. Trade Secrets
•THE BASICS
–Some information should be kept secret
–Uniform Trade Secrets Act (“Act), adopted
by many states, including Florida
–Purpose is to “prohibit misappropriation of
a company’s trade secrets and provide
remedies to those that have been harmed”

37. Trade Secrets
•PROTECTING TRADE SECRETS –
DEFINITIONS
–Misappropriation:
Knowingly taking and/or possessing
trade secret information by improper
means; or
Disclosure or use of company’s trade
secret without consent by someone who
acquired the information knowing it was
to remain secret.

38. Trade Secrets
•PROTECTING TRADE SECRETS – DEFINITIONS
–“Trade Secrets”
Information;
That derives independent economic value;
Which is not generally known or readily
ascertainable by “proper” means by others who
would economically benefit from their use; and
Which is the subject of reasonable efforts to be
kept secret and secure from disclosure

39. Trade Secrets
•PROTECTING TRADE SECRETS –
DEFINITIONS
–“Information” can include both technical and
non-technical items such as drawings,
financial data, or lists of actual or potential
customers or suppliers.
Useful;
Not Generally known; and
Provides a competitive advantage (has
monetary value).

40. Trade Secrets
•PROTECTING TRADE SECRETS –
DEFINITIONS
–“Reasonable Efforts to Maintain Secrecy”
Must show that steps have been taken to
prevent disclosure – not just “private”
Mark info as “CONFIDENTIAL”
Computer passwords
Departing Employees

41. Trade Secrets
•REMEDIES FOR VIOLATIONS OF ACT
–Injunctive Relief – preliminary and
permanent
–Monetary damages
Actual Loss
Compensation for “unjust enrichment”
Royalties
Attorneys fees
–Respondent Superior

42. ENFORCEMENT STRATEGY
•This is a business decision, so like other
business decisions, have a strategy and
plan in place

43. Your Plan
•Draft effective restrictive covenants
•Consistent agreements for similar positions
•Review at least annually
•Discuss with new hires or when agreements are
revised
•Keep signed copies in a secure place
•Enforce consistently for similar positions – or
know why you are not going after a particular
person!

44. Your Plan
•For all terminations, send a reminder letter with
a copy of the agreement
•For all possible violations, send initial cease and
desist letter
•Follow-up on time; don’t let it sit
•Review social media site activity
•Preserve all evidence, physical and electronic,
to prove the violations

45. Your Plan
•Thoroughly investigate and gather all evidence
of violations
•File the lawsuit
–Supported by very detailed factual
allegations; the more detail, the better the
enforcement chances
–Do NOT file an enforcement action based
only on suppositions and suspicions;
remember, attorneys’ fees and costs go both
ways!

46. Your Plan
•File a motion for temporary injunctive relief
–Supported by detailed affidavits and
documentary evidence
–Set a hearing as soon as possible
•Conduct the hearing
–This is where most cases are won or lost, so
prepare like you are going to trial!

47. Your Plan
•Post-hearing
–Losing party typically wants to resolve the
case with some injunctive or other relief
•Do You Continue?
–Depends on the evidence

48. Your Plan – Final Point
•These are expensive and risky cases to litigate.
•Best way to manage the litigation risk and
expense is to have solid agreements with
consistent enforcement so employees know you
will invest your time and money in going after
former employees who violate their agreements.

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