Order Requiring Production Of Software Source Code Quashed

In Revello Medical Management, Inc. v. Med-Data Infotech USA, Inc. (2D10-534), the Second District granted a petition for certiorari and quashed a trial court order requiring the production of software source code.  The court described the facts as follows:

In simple terms, Med-Data claims that one of its former employees developed a software program to aid in medical insurance billing and that the employee took the program with him when he began working for Revello.  Revello is marketing a computer program that Med-Data claims is based on its trade secrets.  Med-Data sought to discover the computer source code used in Revello's program and, over Revello's objections that its program was a trade secret, the circuit court ordered it to produce the program to Med-Data's expert.  Revello seeks a writ of certiorari to quash the order.  

The court's analysis is copied, almost in its entirety, below:

In response to a defense discovery request for its computer source code, Med-Data stated: "[a]s to source codes, [Med-Data] declines to publish the exact nature of the trade secrets."  Under Florida's "at issue" doctrine, "[w]hen a party has filed a claim, based upon a matter ordinarily privileged, the proof of which will necessarily require that the privileged matter be offered in evidence," he waives his right to claim that the matter is privileged in pretrial discovery....Thus it is clear that Med-Data has neither identified with reasonable particularity the nature of its claimed trade secret nor established that it exists.  As such, it was not entitled to discover the computer source code used in Revello's program.

Still, Med-Data is entitled to some protection of its alleged trade secret in pretrial discovery.  Ordinarily such matters should be submitted to the circuit court to conduct an in-camera review.  But because the alleged trade secret is a computer program, the evidence of its existence likely will consist of computer source code.  We presume this from the fact that Med-Data is seeking to discover the computer source code of Revello's program in order to prove that Revello has misappropriated the alleged trade secret.  If the circuit judge does not have the requisite experience in examining such code, he may wish to appoint a neutral computer expert to review MedData's program.  If it is established that Med-Data indeed has a trade secret to protect, the court may revisit its discovery request for Revello's computer source code and Revello's objections to discovery and craft similar protection for Revello's alleged trade secret.

*Disclaimer: GrayRobinson, P.A. was involved in the above-referenced action.

Eleventh Circuit Analyzes Non-Compete Agreement in Florida

In Proudfoot Consulting Co. v. Derrick Gordon (08-14075), the Eleventh Circuit issued a published 48 page opinion relating to a non-compete agreement and Fla. Stat. § 542.335. The court provided a comprehensive analysis of Florida's non-compete law, one portion of which is quoted below:

In 1996, Florida adopted Fla. Stat. § 542.335, which "contains a comprehensive framework for analyzing, evaluating and enforcing restrictive covenants contained in employment contracts." Envtl. Servs., Inc. v. Carter, 9 So.3d 1258, 1262 (Fla. Dist. Ct. App. 2009). For a restrictive covenant to be valid, "[t]he person seeking enforcement of [the] restrictive covenant shall plead and prove the existence of one or more legitimate business interests justifying the restrictive covenant." Fla. Stat. § 542.335(1)(b). Section (1)(b) of the statute enumerates a non-exhaustive list of "legitimate business interest[s]." Among these are: (1) "[v]aluable confidential business or professional information that otherwise does not qualify as trade secrets"; (2) "[s]ubstantial relationships with specific prospective or existing customers, patients, or clients"; and (3) "[e]xtraordinary or specialized training."

In addition, to be enforceable, restrictive covenants must be reasonable with regard to time, area and line of business. Fla. Stat. § 542.335(1). Once an employer establishes a prima facie case that the contractually specified restraint is "reasonably necessary to protect the legitimate business interest[s] . . . justifying the restriction," the burden of proof shifts to the employee to show that "the contractually specified restraint is overbroad, overlong, or otherwise not reasonably necessary to protect the established legitimate business interest[s]." Fla. Stat. § 542.335(1)(c). If the court finds that the "contractually specified restraint is overbroad, overlong, or otherwise not reasonably necessary to protect the legitimate business interest[s]," the court is required to "modify the restraint and grant only the relief reasonably necessary to protect such interest or interests." Id.

"The violation of an enforceable restrictive covenant creates a presumption of irreparable injury to the person seeking enforcement of a restrictive covenant." Fla. Stat. § 542.335(1)(j). This presumption, however, is rebuttable. JonJuan Salon, Inc. v. Acosta, 922 So. 2d 1081, 1084 (Fla. Dist. Ct. App. 2006).

Temporary Injunction Order Must Make Specific Factual Finding for Each Element of Injunction

In Jouvence Center for Advanced Health, LLC v. Jouvence Rejuvenation Centers, LLC (4D08-4753), the Fourth DCA reversed the entry of a temporary injunction. The injunction order enjoined the appellant "from continuing use of Appellee[s']...patient files and proprietary information and establishing an injunction bond of $1000."

“A trial court's ruling on a temporary injunction comes to the appellate court with a presumption of correctness, reversible only upon a showing of a clear abuse of discretion...A party seeking a temporary injunction must prove: (1) that it will suffer irreparable harm unless the status quo is maintained; (2) that it has no adequate remedy at law; (3) that it has a substantial likelihood of success on the merits; (4) that a temporary injunction will serve the public interest...The party must also establish that it has a clear legal right to the relief sought...Finally, a trial court must make clear, definite, and unequivocally sufficient factual findings supporting each of the required elements before entering an injunction."

"the trial court neglected to make specific findings of fact regarding the four elements which must be shown before a preliminary injunction may be entered, and we reverse and remand for the trial court to make the required findings. Whether additional evidence is needed in order to make the necessary findings, we leave to the trial court’s determination."

Non-Compete Agreements, Injunctions and Lost Documents

In Environmental Svs. v. Carter (5D08-3224), Judge Orfinger has an excellent analysis of non-compete agreements, along with a discussion about injunctions and lost originals. If these topics are of interest to you, the extensive analysis is worth reading.

Permanent Injunction Must Specify Reasons for Entry

In Premier Lab Supply, Inc. v. Chemplex Indus., Inc. (4D07-3933) the Fourth DCA reversed the entry of a permanent injunction because "Based on the clear wording of the rule [Rule 1.610 (c)], the specificity requirement applies to both temporary and permanent injunctions." The injunction failed to specify the reasons for its entry and, therefore, was improper. The court also discussed trade secrets and the plaintiff's successful claim.