By Joshua Salinas and Jessica Mendelson
A Florida District Court of Appeal recently confirmed that plaintiffs in trade secret misappropriation cases must identify their trade secrets with reasonably particularity before conducting discovery. AAR Mfg., Inc. v. Matrix Composites, Inc., No. 5D11–3802, 2012 WL 3870419 (Fla.App. 5 Dist., 2012). The Court of Appeal, however, rejected the notion that, as a threshold matter, the plaintiff was also required to prove the existence of its trade secrets.
Plaintiff Matrix Composites, Inc., manufactures and designs carbon fiber composites for the aviation, medical, and space industries. For example, these critical composite structures are used in F22 fighter jets and are extremely useful for stealth and weight reduction. (Also check out this great video from Matrix’s website about the use of composites in fighter jets).
The case arose when Matrix sued a competitor, AAR Manufacturing, in Florida state court alleging misappropriation of trade secrets pertaining to various product molding processes.
During discovery, Matrix requested certain documents from AAR pertaining to AAR’s trade secrets. AAR filed a motion for a protective order to prevent the discovery of its own trade secrets on grounds that discovery could not continue until Matrix first identified its own trade secrets with reasonable particularity. The trial court denied AAR’s motion for the protective order, finding Matrix had identified its own trade secrets with reasonable particularity. Accordingly, the trial court ordered AAR to produce the requested discovery documents to Matrix within sixty days.
AAR petitioned the District Court of Appeal of Florida, Fifth Circuit for relief from the order denying its motion for the protective order. In particular, AAR argued that the trial court failed to make a “threshold finding” that Matrix’s allegedly misappropriated trade secrets actually existed before ordering AAR to disclose its own trade secrets.
The Court of Appeal denied AAR’s petition in part. The court recognized that, in trade secret misappropriation cases, a plaintiff is required to identify its trade secrets with reasonable particularly before proceeding with discovery. (See Del Monte Fresh Produce Co. v. Dole Food Co., 148 F.Supp.2d 1322 (SD. Fla. 2001).
The Court of Appeal, however, rejected the notion that the trial court was required to make a “threshold finding” regarding the existence of trade secrets in misappropriation. Specifically, the Court of Appeal rejected any “threshold finding” requirement that may derived from the recent Revello case. (See Revello Medical Management, Inc. v. Med-Data Infotech USA, Inc. 50 S.3d 678, 679 Fla. 2d DCA 2010) (stating that prior to proceeding with discovery in trade secret cases, “[t]he plaintiff must, as a threshold matter, establish that the trade secret exists”).
This case is significant because the Florida Court of Appeal has set the record straight with respect to the pre-discovery requirements for trade secrets misappropriation cases. Florida does not have a pre-discovery trade secret identification statute (see e.g. California Code of Civil Procedure § 2019.210), but this procedure is well established through Florida case law. It appears that the 2010 Revello case overly expanded these pre-discovery requirements to add a threshold finding that trade secrets exist. The Court of Appeal used the instant decision to eliminate any further confusion regarding pre-discovery trade secret identification.