Confidentiality agreements are essential tools for protecting valuable business interests in Florida. However, these agreements must be carefully crafted to comply with Florida law, particularly Section 542.335 of the Florida Statutes. This post addresses the key requirements for valid confidentiality agreements under Florida Law.
Legal Framework
In Florida, confidentiality agreements are considered restrictive covenants subject to Florida's law governing restraints of trade or commerce. Rauch, Weaver, Norfleet, Kurtz & Co., Inc. v. AJP Pine Island Warehouse, Inc., 313 So. 3d 625, 630 (Fla. 4th DCA 2021) (explaining that confidentiality agreements are considered a restraint of trade, and their enforcement is analyzed under Section 542.335 of the Florida Statutes). These agreements must meet specific statutory requirements to be valid and enforceable.
Key Requirements of Confidentiality Agreements
Written and Signed
The first requirement is that the confidentiality agreement must be in writing and signed by the person against whom enforcement is sought.
Legitimate Business Interests
Florida courts will only enforce confidentiality agreements that protect “legitimate business interests.” Section 542.335(1)(b) recognizes five primary categories of legitimate business interests:
Trade secrets as defined under Florida law.
Valuable confidential business information or professional information that otherwise does not qualify as trade secrets.
Substantial relationships with specific actual or prospective customers, patients or clients.
Customer, patient or client goodwill associated with either: (a) an ongoing business or professional practice, (b) a specific geographic location, or (c) a specific marketing or trade area.
Extraordinary or specialized training.
This list is not exhaustive. Florida courts view "a 'legitimate business interest' [a]s an identifiable business asset that, if misappropriated, would give its new owner an unfair competitive advantage over its former owner. White v. Mederi Caretenders Visiting Servs. of Se. Fla., LLC, 226 So. 3d 774, 784-785 (Fla. 2017). In this regard, “the determination of whether an activity qualifies as a protected legitimate business interest under [Section 542.335] is inherently a factual injury, which is heavily industry – and context-specific.” Id. at 786 (alteration in original) (citations omitted).
Additionally, it's important to highlight that Florida courts require evidence that an interest is a “legitimate business interest”, meaning general assertions won’t do. A true legitimate business interest should be capable of being described, quantified, and proven.
Reasonable Necessity
The restrictions in a confidentiality agreement must be reasonably necessary to protect legitimate business interests. This requirement goes beyond merely showing that a business has interests worth protecting—it requires the ability to show that the specific restrictions in the agreement are properly tailored to protect those interests. In other words, the restrictions of time, scope, and territory (where applicable) shouldn’t be broader than necessary to protect those interests.
Time Limitation
To be valid, a confidentiality agreement should include a reasonable time limitation to strengthen its likelihood of enforceability. For example, in Rauch, Weaver, Norfleet, Kurtz & Co., Inc. v. AJP Pine Island Warehouse, Inc., 313 So. 3d 625, 629 (Fla. 4th DCA 2021) the court found that the indefinite time restriction could potentially render the confidentiality agreement void. Notwithstanding, courts have the authority to modify overly broad restrictions to make them reasonable, a practice known as "blue penciling."
Geographic Limitation
If appropriate, a confidentiality agreement should also include a reasonable geographic limitation that is tied to the legitimate business interests sought to be protected.
Florida courts generally evaluate geographic restrictions based on where a business operates and where its confidential information would have value. For example, if a business only operates in certain Florida counties, a statewide restriction might be deemed overly broad unless the business can demonstrate a legitimate need for such extensive geographic coverage.
Florida courts consider factors such as the company's market presence, customer locations, and the territorial scope of its competitive advantage when assessing the reasonableness of geographic limitations.
Notably, some confidentiality agreements may not require geographic limitations at all, particularly when protecting information that has value regardless of location, such as trade secrets or proprietary technology. However, when geographic restrictions are included, the terms must be justified by specific business needs rather than serving as a general restraint on competition.
Key Takeaways
To strengthen the likelihood of having an enforceable confidentiality agreement:
get it in writing
get it signed
identify the types of confidential information sought to be protected
specify a reasonable time restriction
where relevant, specify a reasonable geographic limitation, and
include adequate language connecting reasonably necessity to protecting your legitimate business interests
Closing Remarks
Understanding Florida's legal framework for confidentiality agreements is important to protect your legitimate business interests. Even seemingly straightforward agreements can face significant enforcement challenges if they don't meet Florida’s legal requirements. Florida courts maintain a delicate balance between protecting legitimate business interests and preventing unreasonable restraints on trade. Successful implementation of confidentiality agreements requires careful consideration of both statutory requirements and business needs.
As you seek to protect your interests, working with experienced legal counsel can help ensure that your confidentiality agreement serves its intended purpose while remaining compliant with Florida law.
The information provided is for general informational purposes only and is not intended as legal advice or opinion for any individual matter. You should consult your own attorney for any legal advice you may require.
If you would like to explore how Venus Caruso can assist you, reach out to schedule a complimentary consultation using the contact form or by emailing venus@carusolawoffice.com.
