Firm Prevails In Trade Secret Action on Behalf of Second Largest CBD Retailer in the United States

The firm recently prevailed in the defense of its client in a multiparty federal court action in which the Plaintiff sued the second largest CBD retailer in the U.S., for misappropriation of trade secrets and deceptive and unfair trade practices. The case, Healthcare Resources Management Group, LLC v. Medterra CBD, LLC et al. (Case No. 9:20-cv-81501-WM), was litigated in the U.S. District Court for the Southern District of Florida.

In the lawsuit, Plaintiff alleged that the firm’s client (“Client”) misappropriated Plaintiff’s alleged “secret formula” for a CBD-based cooling cream and sold the cooling cream to its retail customers without compensating Plaintiff. Plaintiff also sued the developer of the cooling cream formulation and the manufacturer.

The lawsuit was the second action filed by Plaintiff against the Client within a year. In the first action (“First Action”), the Court dismissed the case without prejudice on procedural grounds. Several months after the dismissal of the First Action, however, Plaintiff re-filed the lawsuit (“Second Action”).

After a year of litigation in the Second Action, the Court granted the firm’s motion for summary judgment, directed to Plaintiff’s claims under the Florida Uniform Trade Secrets Act (“FUTSA”), the federal Defend Trade Secrets Act, and the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”). The Court, thus, dismissed Plaintiff’s claims against the Client.

The underlying allegations in Plaintiff’s Complaint were that the Client was liable for misappropriating Plaintiff’s secret formula where (a) the Client was bound by a non-disclosure agreement (NDA); and (b) the Client knew Plaintiff had a proprietary formula in the CBD-based cooling cream and, nonetheless, proceeded to commercially utilize the formula to generate significant profits.

In conducting its analysis, the Court determined that as to Plaintiff’s process for “blending and mixing” the ingredients and its “step-by-step manufacturing instructions,” Plaintiff never provided that information to the Client. The Court also determined that Plaintiff did not provide any rebuttal evidence that the Client knew the CBD-based cooling cream was Plaintiff’s alleged trade secret, or that the Client knew of any of Plaintiff’s processes or instructions as to how the cream was manufactured. Further, the Court determined that Plaintiff had only provided a partial ingredient list to the Client, and that the Client was simply a retailer, which did not employ chemists or have a lab, and did not formulate or manufacture anything.

The Court granted summary judgment in the Client’s favor on Plaintiff’s claims for misappropriation of trade secrets and FDUTPA, and the Client is now pursuing an award of its attorney’s fees incurred in both actions.

If you know someone who is involved in a dispute involved an alleged theft of trade secrets or deceptive and unfair trade practices, contact us at 561-659-7878.